eBay actively encourages sellers to offer free shipping and handling on items via rating rewards, higher search placement and initiatives such as “Fast ‘N Free.” While these benefits are undeniable, providing free shipping is not necessarily advantageous to every eBay seller’s business as I will explore here.
Free shipping = lower fees?
One important point to start with is that sellers pay final value fees on the item price plus shipping and handling costs. This means that offering free shipping does not cause the seller to pay less fees. eBay’s fee calculator helpfully demonstrates that a seller will pay the same fees whether they roll the shipping costs into the fixed price of the item and offer free shipping or charge an additional shipping fee.
With the fee question out of the way, here are the biggest considerations to think about when considering shipping options.
Free shipping benefits
Guaranteed 5-star shipping and handling rating
Sellers who offer free shipping receive a 5-star shipping and handling charges detailed seller rating automatically which the buyer cannot change. This is a straightforward way to receive guaranteed good feedback and can lead to a much better seller rating overall.
There is some evidence that eBay’s Best Match search system rewards sellers who offer free shipping by placing them higher on the results list. There are various other factors that contribute to the Best Match results, but reducing or removing shipping costs have a critical impact.
Competitive edge over other sellers
Depending on the type of items a seller has for sale, offering free shipping can help to stand out from the crowd. It is also true that in some categories, many sellers offer free shipping and thus a seller charging an additional fee would struggle to find sales due to this.
Buyers are attracted to free shipping
Free shipping with an item is a bonus and some buyers will specifically be looking for this option. There is a reason so many big online retailers offer free shipping and that is because it is appealing to purchasers. A seller with free shipping may receive more traffic and therefore more sales.
Reasons against offering free shipping
Personal cost of shipping
While most sellers offering free shipping will include some of all of the shipping rate in the cost of an item, there is other sellers who will not do this, in order to remain competitive in their categories. This means losing some profit to cover the shipping cost.
Appearance of higher priced items
The main item price is in a bolder and larger font than the shipping price. A item with a lower price of $79.99 with $10 shipping may receive more visits and purchases than an item priced at $88.99 with free shipping. Not all buyers have strong math skills or the time to calculate the difference.
It encourages buyers to expect free shipping
The more eBay sellers who offer free shipping as standard, the more it is expected everywhere on eBay. Buyers are used to websites like Amazon offer free shipping for purchases over a certain amount – free shipping is going over and above what is normal for online retail.
To go free or not?
A proponent of the benefits of free shipping, eBay offers some tempting advantages to offering free shipping on listings. As with many other decisions eBay sellers need to make concerning their business, choosing whether or not to provide free shipping is a personal choice that must take into account the seller’s niche and competition. The great thing is that sellers can choose on a listing to listing basis whether to offer free shipping or not, allowing for some trial and error to see what works for the individual seller.
An interesting side note:
eBay India started to require sellers to include the shipping cost within the item price for all domestic shipments starting 3rd August 2015. The reason given was that the old system caused ‘inconvenience to buyers.’ A look to the future for other eBay markets around the world? Only time will tell.
Do you offer free shipping on your listings? Why? And if not, why not? Let us know what you have found to work best for your eBay business