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I thought this article was really good. Highlights:
-Author makes the case that:
People don’t just hate paying for shipping, they hate it to literally an irrational degree. We know this because our first attempt to address this was to show, in the shopping cart and checkout process, that even after paying shipping, customers were saving money over driving to their local bookstore to buy a book because, at the time, most Amazon customers did not have to pay sales tax. That wasn’t even factoring in the cost of getting to the store, the depreciation costs on the car, and the value of their time.
-Great name for the style in which people shop at amazon (and also to a lesser extent ebay): spearfishing (as distinct from window shopping).
Like Jay I hate, philosophically, the idea of “free shipping”. Still, I wonder if baking shipping costs into prices is the right way to go after all. Seems like smarter people than us with better data think so.
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If you can bake in the costs of shipping, it can make sense. If you sell books, its easy to bake in the price to ship next door vs across the country. iPhone cases. Little doo dads. Light weight, homogenous inventory makes this easy.
But for those of us with a large variation of eights and sizes, it’s very difficult to bake in free shipping. How do you price an item that weighs 20lbs that you want free shipping. Its either too expensive to the person in the next county, or too cheap to the person in California.
Amazon sellers really count on volume sales to mask the losses of shipping costs and returns. We just dont sell enough volume to handle those losses.
Its the commodity seller vs vntage seller conundrum.
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I am one that dislikes paid shipping as a shopper because it makes it harder to compare prices. For one-off more unique/vintage/expensive items like many here sell, I can see that paid shipping could be a better model.
About 99% of my items have free shipping, or free to the continental U.S. shipping, and I have been doing that for over 5 years. It works for me but I have a different type of product line (NOS auto parts).
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As a buyer, Free Shipping is the best. As a seller, free shipping isn’t free. We each have to do that math for own business.
Old Dad, you really have an Amazon-like business. From what I understand, you sell new car parts in large volume. I bet if you didn’t offer Free Shipping, then you couldn’t compete against all the other sellers who offer the same exact product.
This morning we sold a vintage Curio wall hanging cabinet with a glass front. The shipping cost was $40 since its fairly large, heavy, bulky, and delicate. I just wouldnt feel comfortable offering free shipping on an item like this. I find that many vintage buyers would wonder why an item is so expensive nit thinking about the expensive cost of shipping.
We’ve built a sustainable business of selling 30-50 items a week. I bet sellers like you do 5x+ that amount.
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I don’t see us as an Amazon-like business. We were selling on eBay for about 4 years before expanding to sell on Amazon. We sell NOS (new old stock) auto parts which typically fit 1990-2010 models, with some parts for older and newer models. I’m pretty sure the typical eBay or Amazon customer has never bought or is interested in what we sell but there is a definite demand.
We source and buy what would otherwise be scrap (trash) and make it available to folks who need or want it.
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I apologize. I shouldn’t describe your store since I’ve never seen it. Just piecing together what I’ve heard you mention.
–Do you have a lot of competition in this category?
–Do they offer free shipping?-
There are 2 or 3 other sellers for most listings I sell on over on Amazon, maybe up to 10 or more on very common parts. I generally see the same 3-5 other sellers but not on every listing but I don’t pay a lot of attention to that.
In general, prices are higher on Amazon and using the same price there will make me competitive or lowest and I can often sell for a higher price there. I generally hold the Buy Box on 30-50% of my items, many of which I am the only seller.
Most 3rd party sellers on Amazon offer free shipping (of course all the FBA sellers do), I rarely see a seller who charges shipping having the Buy Box.
It’s a jungle over there (a jungle river) and it’s not the same as eBay. It’s strictly business and what is good for Amazon, sellers get treated better currently on eBay. It’s 1/3 of my sales buy 1/2 of my problems or more.
Oh, by the way, there is no need to apologize at all, if I came across as upset it wasn’t intended. I’ve listened to most of the podcasts you and Ryanne do and I can see we have many of the same general ideas and outlook on selling (and life too I think).
Sell (whatever you can find cheap) and be free.
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Understood. I think Free Shipping comes into play if our competitors are pushing Free Shipping, thus outselling us.
For our categories, any seller offering Free Shipping is going to put themselves out of business.
How do you build in Shipping costs to make it affordable to the person close to you, but not lose money if you ship across the country?
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We have an advantage in that we are in the center of the country with a narrower spread on shipping costs. Most of my items are light enough to go first class, or they can ship in a flat rate box or the USPS cubic rate on small heavy items. For heavier large items I only have free shipping to the Continental U.S. I take into consideration expected shipping cost when sourcing items and stay away from heavier and odd-sized items.
I rarely lose money on an order due to shipping cost, it just all averages out in the bigger picture. Since I don’t specify shipping service, just economy or extra cost expedited, I can choose the lowest cost shipping option that will get the order to the buyer on time.
I used to use calculated shipping and was worried about the effect of free shipping on profit. The total shipping as a percentage of sales is actually lower, while sales went up noticeably.
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Two or three years back a Leicester eBayer got prosecuted for running his business using (cough) “pre-loved” stamps. I think he purchased bulk lots of stamps on part covers, and sorted through them for the ones that missed being cancelled. The glue’s some kind of synthetic stuff (used to be gum arabic) which can be softened with solvents. Not sure how he got detected- the glue does get weakened so it might be that the stamps dropped off in the sorting machines.
I did offer free postage on all listings, but now I just work on a rough four-band costing (letter, large letter, small and medium parcel) and charge at cost- which of course I have to pay eBay and PayPal fees on. Reason being that I was getting offers on low-value stuff which I’d be happy to accept except that they’d be below the cost of shipping.
Last sale was a match striker to a US customer- cost of striker £10, cost of shipping via GSP to the customer approximately £20 of which £2.90 was for me posting it to the GSP hub. Not sure how much of that £20 was customs fees. I have some objection to people getting charged customs on old stuff- I was advised by Royal Mail staff not to declare the value on the CN22 label because of possible theft and “they’re not interested in the odd parcel”. Problem with GSP is that these fees can’t be avoided, and sometimes they’re exorbitant (Australia).
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