Thursday, September 29, 2011
Free Shipping?
For online sellers, this has been a hot-button topic. Many sellers feel that free shipping reduces their profit margin so as to not be profitable. It of course depends on the item being sold, and the wholesale price. One aspect I don't see much conversation about is returns. When items purchased with free shipping are returned, the seller absorbs the loss on the initial shipping charges, even if the buyer is just returning the item because they changed their mind. Do buyers really like free shipping? I would love for buyers and sellers alike to weigh in on this topic as we go into the Christmas selling season.
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11 comments:
I switched to free shipping on ebay when they "forced" me to. I raised my prices a bit to cover the shipping. I'm still very competitive price wise, selling below what most others do when you take into consideration item cost + shipping. Although I thought buyers would be savvy enough to realize this, now I'm thinking maybe not. So I'm getting ready to start another ebay ID that does NOT offer free shipping, because I think the slightly higher prices are turning people off. I'll compare sales of the two to be sure.
I've got free shipping set up in my Bonanza booth right now, because I send a coupon in all my ebay packages encouraging them to shop with me on Bonanza. I figure it's much easier for them to notice the price difference as I charge less on Bonanza. If I switch to charging for shipping on ebay, I'll switch my Bonanza store too.
My personal preference is that I like it better. No more emails questioning shipping costs for buying X, Y, and Z. No more refunding when the customer goes ahead and pays without waiting for an invoice. It's saved a lot of time for me.
Free shipping works for me on light weight items. Saves on shipping cost complainants. If a buyer sees high shipping cost the first time they click on bonanza I don't think they would be back.
For the few people I've talked to when the topic has come up about purchasing online (without me initiating it), they have said they purchase on the internet and got excited when they said it was "free shipping." These were women and I have to give them credit in the respect that they are smart women.
When I was only a buyer and saw free shipping for the first time, I thought to myself "there's no such thing as free shipping. It always cost something to mail."
I think there are some folks who will always feel the way I did, and there are some folks who will feel they are getting free shipping is the way I see it.
Looking at it from my seller's point of view NOW is the fact that I can sometimes get something for such a good deal to where I can be competitive enough to allow free shipping.
I have a second booth on Bonanza where I have prices set with free shipping and prices without free shipping just to try it out. I have sold a few items so far with free shipping. But I have to say those listings that had free shipping truly were a good deal that reflected free shipping.
For myself, I am more about the total cost when shopping. I hope this helps :)
Yes...This is definitely a hot topic at the moment. It's good to test the waters as Heavenly Makeover is doing.
I offered free shipping for a month last sprint at the Bay, and I sold to Hawaii (which I never ever have before) & Alaska. Wasn't selling anything to the Midwest where I'm from. My items are quite heavy and it doesn't pay me to go that route.
I think it's a psychological mindset for some buyers. But not all as I consider the entire price when I purchase something.
Some buyers just don't want to mess with figuring out the shipping costs. So, there's good and bad. But, if I sold all lightweight items, I would definitely go that route.
Also, I would state it as "Shipping included" instead of Free Shipping,
For sellers that say they can't afford the free shipping, do you raise your item's prices to make up for the difference? Or are you selling at the same price as always and just absorbing the shipping cost out of your profit?
I think ebay wants us to absorb it, but my profit margins are not that wide. I'd loose money with every sale. My concern is that a buyer compares my $7 item with the same item from another seller at $5 but doesn't notice that the other seller charges $3 shipping. I am concerned that I may be missing sales this way. I do like that ebay's sort goes on price + shipping so the buyer can see which is the better price if they sort...
If the wording was changed, I might feel more inclined to use it. There is NO SUCH THING as free shipping, it's Shipping Included. There are people out there who actually think that there IS free shipping, I'm not kidding. We all know that we can not go to the Post office or any other carrier and have our items sent for free, so why mislead the public, call it was it really is.
"Free" shipping is definitely the way to go.
So much easier than having to discuss the matter with buyers.
bish
There are pros and cons to using free shipping. One, as another poster said, shipping is NOT free and is misleading to the buying public. So, call it what it is...shipping included. Conditioning buyers to expect something for nothing doesn’t serve anyone well – you, manufacturers, or the economy – as is being proven right now during hard economic times when people have less to spend.
Plus, when offering free shipping, it has to be accounted for in your profit margin. Otherwise, you'll run yourself out of business. You’re supposed to be earning a decent profit, not paying to sell your products.
You also have to keep in mind what buyers are seeing in search results when shopping. Most search engines don't show the total cost of an item. They only show the item price. So, while the total cost of your item might be cheaper than a competitor's, your item still appears to be more expensive in most search results. Most shoppers go by what they see upfront, not realizing there will be additional charges. So, unless a buyer is a thorough comparison shopper, you could be losing sales.
What I do is offer free shipping on items that are more costly to ship. A buyer tends to get turned off by higher shipping; particularly on larger, heavier items. So, that's one good thing about using free shipping because it shows the buyer the total cost upfront, preventing them from looking at item price and shipping separately.
Fortunately, I'm centrally located, so there isn't much of a difference between shipping to the east or west coasts. So, while free shipping might be doable for those centrally located, it really doesn't work well for those who aren’t. Your profit margin will decrease if there is too much variation in shipping costs.
There are other smaller things I offer free shipping on, but only when it doesn't drive my visible prices above a competitor's prices without shipping. For the most part, it doesn't serve me well competitively to offer it on items with low shipping costs. Especially when a competitor is offering an item at a really low price with inflated shipping.
The thing is, what they see in search results is the first impression a buyer gets. So when they see your "higher" price, they're not realizing that it's shipping included and actually costs less than your competitor's item. It’s only human nature to form first impressions and let them influence a decision. Particularly when it comes to spending money – and even more so when money is tight.
Plus, at Bonanza, you pay fees on the total price when offering free shipping rather than getting a break on the first $10 of shipping. So that's something else to consider.
The bottom line is that from a seller's point of view, free shipping is a farce. Not only is it not free, but it has other disadvantages to offering it -- for both buyer and seller. The buyer could be missing out on a better deal simply because they didn't see it upfront. Unfortunately, most buyers don't understand how it all works.
So, while free shipping might be appealing to some buyers, it won't do you much good to offer it if: (1) Your items are appearing to be more expensive in search results even when they aren't; (2) You're not accounting for the variations in shipping costs in your profit margins; and (3) It's costing you more to produce an item because you're paying higher final value fees.
Some of my items are free shipping but like noted above nothing is free. If the buyer wants to return an item with free shipping. They may assume since they didn't pay for it the first time why should they have to pay to return the item.
On many venues, if you set shipping costs to Zero, then an icon or banner will appear that mentions free shipping, free USA shipping etc. Many resent this.
You can set it for 1¢ then put the price at $8.99 or whatever, and make your own graphic "That's Shipped!" or "Shipping Included" or something. Doesn't make a half bad watermark either.
I've found this works when:
The shipping function on the website is messed up, or
You just want to 'blow out' the item at cost, or
You want to streamline the buying decision/purchasing flow, eliminating as many forks in the road as possible.
No matter how clearly you explain it or plainly you state it, there will always be those folks who suspect a "gimmick".
There is no such thing as free shipping.
Wally
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