On AuctionBytes today there is a Letter To The Editor from a writer who signs themselves “Still Hopeful for Success on eBay”. Auntie May would say “Good luck with that, Pal”
I agree with the majority of what Still Hopeful says, neatly summarized in the final paragraph
“To make a long story short…if it’s not right for the seller to make monies on shipping or insurance…than neither should ebay/paypal. There are ways they can segregate the shipping fees from the final sales price, through their algorithms, as an act of good faith and practice what they preach.”
In my view, for PayPal fees it makes no difference where the handling is allocated. We have always paid for payment processing as a percentage on the total transaction and this is industry standard practice. The eBay fees are a different matter because this amounts to a hefty sneaky fee increase.
Click on the spreadsheet to enlarge, it will open in a new window or tab. The ’silent fee increase’ is between 26% and 157% depending on the sales format chosen. In my handy dandy mini spreadsheet the the first set of figures are fixed price with the same item offered at auction below. The auctioned item sold with one bid at the starting price. Postage is $5 throughout.
In July I bought one pair of jeans from JC Penney, the shipping was $9.45. They were just work jeans, Lee I believe, and by the time they got here they had cost almost $50. They are good jeans but at that price I will need a pay raise to go shovel ‘end product of horses’ up at our ranch. This month I bought three pairs at Costco for what one pair cost at Penneys and they do their job which is to cover my situpon.
Interestingly, at the eBay Store, which was a stand alone website last time I looked, shipping to South Dakota for one key-chain was quoted at $7.
Some little doodad as seen on TV is invariably $7 for shipping and add another $7 for processing the second ‘free’ item. eBay ‘expert’ The Video Professor charges $6.95 to ship his ‘free’ DVD. * UPDATE: as of November 2009 the ‘professor’ now charges $9.95 to ship his ‘free’ video. These are industry standards and buyers pay them daily. If they don’t like it they don’t buy, and many are making that choice as I did with my jeans.
The eBay Standard
Dinesh Lathi, eBay eBay VP of Seller Experience has been pushing free shipping hard since the Spring 2008 eCommerce Summit in New Orleans where he said
“The fact of the matter is that free shipping is the standard for eCommerce now. Sellers who want to meet buyer expectations need to aspire to that. It is our job, the people here on stage, to help you do that. So, there are definite things in the works at eBay that will help you accomplish that. Look for that soon. “
That seed has grown and borne (def. #3) bitter fruit, eBay will soon require that sellers charge no more than exact postage and roll insurance costs and handling charges into the item price. eBay would prefer the percentage of listings with ‘free’ shipping increase from the current approximately 30% to 100% The sheer hassle of the new policy added to the inherent danger to DSRs may do a lot to accomplish that goal.
Obviously sellers are not delighted by prospect of paying eBay inflated commission on out of pocket shipping costs. There are other considerations too. Where is the incentive to the buyer to purchase more than one item? How can you up-sell when each item must be priced to cover shipping costs as a one off sale?
It is indisputable that insurance has been an income producing racket among certain types of eBay sellers for years. By insisting insurance costs be added to the base sale price eBay has neatly mandated an increase to their own revenue stream while squeezing sellers already tight margins even harder to maintain pricing parity.
In the USA most people do not realize that our postage and insurance costs are relatively inexpensive compared to other countries. My friend Kevin in Australia wrote to me:
“I have had two requests for additional insurance charges on items in the $20 to $24 range in the last two weeks. At a minimum of $8.40 for an international transaction, it moves from me taking my risks (as I do - I do refund when claims are made that items have not arrived, after confirming that the buyer has supplied correct basic information - ie: postal address), to me either being rendered unviable or ignoring a valid buyer’s request for an additional service.”
What does the buyer think?
- 74% of eBay shoppers were ’satisfied’ or ‘very satisfied’ with their eBay experience in Q4-08
- 71% were ’satisfied’ or ‘very satisfied’ with their experience Q1-09
- 69% were ’satisfied’ or ‘very satisfied’ with their experience Q2-09
- What will the numbers be for Q3-09?
I can’t speak for the average buyer but quite often free shipping doesn’t work for me. I look at the total cost, how much to get the item in my hand from the seller. For commodities I don’t always go for the lowest price, I am willing to pay more to a seller who is friendly and professional. If an item ships ‘free’ most of the time I am simply paying more.
Crystal Ball Department
The Crystal Ball Department contains no facts. Educated guesses, gut feelings and opinions work here.
Where is all this going?
- There will be a sharp decrease in traffic as the new and improved Best Match launches in September.
- Historically traffic has taken months to recover from Best Match changes.
- Last quarter is not a good time of year to run that risk.
- I think many smaller sellers will give up on eBay.
- Some medium sized sellers may not survive past the holiday season.
- Very large sellers (ChannelAdvisor client sized) will probably survive, they have teams of researchers working on their behalf.
- Selection and choice will decline further as merchants move off the platform.
What do you think?