FREE SHIPPING! Sounds Great! But. . . For Whom?

As a seller, we have to go with the flow, and that flow is now, Free Shipping!  Sounds great, but who really benefits from these free shipping offers?  Lets examine this a bit more closely from all angles.

• Does the buyer benefit, getting a great deal?
• Does the seller benefit, enjoying higher sales volumes?
• Does eBay benefit, collecting more seller fees?

Lets examine this from the buyers standpoint first!  Buyers are intelligent - they realize they are paying shipping costs embedded in the cost of their item.  However, it could be a better deal for the buyer who lives the greatest distance from the seller, than for the buyer who happens to be in the same shipping zone as the seller!  The United States is divided into zones, the closer the zone to the seller, the lower the actual shipping costs can be.  A buyer who happens to be in the same zone as the seller ends up paying the higher shipping cost since it is embedded in the item price;  in essence, as if he/she lived several zones away!  The closer buyer may have been able to pay less if shipping had been calculated based on distance and priced separately of the purchase price of the item.  With eBay now requiring that shipping costs be included in all listings, our conclusion is that there seems to be little advantage for the buyer to purchase an item with free shipping.

Now, lets examine free shipping from a seller's standpoint.  Since eBay gives search preference results for those listings that offer free shipping, sellers must seriously consider adding this option to their listings or risk that their listings will be returned so far down any search results that buyers will never find them!  Sellers must pay a final value fee to eBay based on the selling price of an item which includes the 'free shipping'.  The advantage for the seller to add shipping to the cost of an item is that in addition to ranking higher in search results, sales with free shipping will help boost the sellers total sales figures since shipping is included in the sales totals, thus helping the seller more quickly achieve and maintain Power Level status, where they benefit from fee discounts and other perks.

Finally, lets take a look at free shipping from eBay's standpoint.  eBay collects fees on the final value price of an item, be it an auction or store purchase.  When sellers do not offer free shipping on an item, eBay only collects a fee based on the item sale price, excluding shipping.  However, when sellers include shipping in their item cost as 'free shipping', eBay collects final value fees based on this total cost which of course included shipping.  The result is, eBay makes more money!

So, who wins?  It depends. . . .The buyer could win based on his/her location from the seller.  The seller wins (and loses) by gaining a higher dollar volume in sales, but having to pay higher eBay fees since shipping is included in the item price.  Finally, eBay always wins by collecting more fees.

This article is based soley on our experience as an eBay seller for a number of years, and is our opinion based on our observations.  If you feel this article has merit, we would appreciate a vote so we may gauge its value and worth to the community.  If you have other thoughts or experiences with free shipping, please send us an email - we'd be interested in hearing other opinions.

Thanks so much for taking the time to read this guide!

Inga

Wexford House Auctions