It’s almost the New Year and from the 27th January all DVD sellers will have to offer free postage and packing, but will it really increase sales? The guys at Terapeak have run some reports looking at eBay UK DVD listings and the effect a free postage offer has on sell through rates and final values:
|Contains “Free Post DVD”||£8.69||1056||54.17%|
|Contains “Free Postage DVD”||£8.75||2414||45.03%|
|Contains “DVD”, Does not contain “Free”||£6.90||1.3m||30.76%|
Whilst the data only highlights listings which specify free shipping in the item title the results are staggering. Sell through rates increase by almost 15% just for including “Free Post” in titles. Not only that but final values are up to 25% higher for items calling out the free postage offer.
eBay have been offering incentives to sellers to offer free post, not only in the UK but around the world. 2009 is likely to see more categories move towards a free post model with listing promotions encouraging free post in categories where it’s optional. For the DVD category the sales data speaks for itself – buyers do appear to prefer listings with free shipping.
If you’d like to research eBay sales data, to celebrate the Christmas holiday, there is a 12 day free trial offer available until January 2nd. “The 12 Days of Terapeak” gives you the entire holiday period to explore Terapeak and research the categories of interest to you.
I’ve been using Terapeak to look at the effect of including “Free Post” on the computer products that I sell and the results are similar to those for DVDs. Check out your own categories and let us know the results.
Good morning Chris, thanks for posting this, I can now do something constructive other than stuff myself to the gills.
That’s good and all but do you have more information? I noticed that the population size for the free shipping titles is about 0.25% of the ones without. Any info about the seller’s themselves? What about DVD’s that had free post but didn’t have it in the title? What was the average postage fee for the non-free ones?
I’d definitely like to see how this plays out when the changes go into effect. I still doubt there will be much difference. What it will mean is a smoother and quicker buying experience and removal of certain sellers.
Only have the data for titles that include free post in the title, but it’s significant either way – I’ll definitely be doing some experimentation with it.
If you want to explore individual sellers sales stats Terapeak allows you to do this so take advantage of their free trial while it’s available 😀
The conclusion that appears to have been reached by the title of this post (increases price) may be wrong – in fact the opposite may be true.
The conclusion reached is based on a search of selling prices for DVD’s with and without free postage.
However many DVD’s sell at less than 1.99 (in fact in the pricing ranges given on terapeak, more DVD’s sell in this price range than any other). However when selling at such a low price, intuitively this would not allow free shipping.
Consequently the search on free shipping will not provide an average selling price weighted down by these very low priced (but high volume) sales. Whereas the search without free shipping will have the average sales price weighted down by these low priced DVD’s.
The result obtained is therefore somewhat predictable purely as a result of too wide a population of data.
It is therefore better to put in a filter to obtain a more representative result, whereby the very low priced DVD’s are not included.
If the price of between £6.00 and £9.99 is searched (this removes the low priced DVD’s where free shipping would not be viable, and also large boxed sets and job lots). This price range is the third highest selling price range. The results are somewhat different to those quoted above:
Contains “Free Post DVD” £7.35 163 77.91%
Contains “Free Postage DVD” £7.58 346 46.24%
Contains “DVD”, Does not contain “Free” £7.99 147,197 43.77%
The highest selling price is being achieved where shipping is paid for on top of the selling price!
Even this search, I would argue, is too broad brush. It would be better to search on individual titles, and with similar condition (new). Only then would you be nearing a result that could be relied upon to base business decisions upon.
The bottom line is that when working with statistics, it is important to consider what may be skewing the results. Failure to do so can easily lead you to reach a totally wrong conclusion.
Good riddance too. I hate Powersellers who charge ridiculously high postage to try to con bidders and avoid eBay charges. I avoid professional sellers wherever possible.
@ # 4
It wasn’t necessarily the seller’s fault. I hate high shipping too but probably not for the reason you do.
When selling on eBay I almost always ended up in a category that was dominated by low prices and ridiculous shipping costs. The only way to sell anything in those categories was to do the same. I actually did a two week long test on one of my products and found shifting the price down $3 and S&H up by $2.50 I went from selling 0.5 / week to 3 / day. I never liked being forced to do that especially since I know customers hate it. It was never about avoiding fees. I was only saving $0.13 in FVF but making over 20x the sales.
With capped shipping this practice ends. I’ve always applauded the capping of shipping rates and suggested this years ago. Now if eBay would just bring it to the categories I sell on .com …
It’s probably a dumb question, but as an “out of towner” I will ask – what does it cost to actually mail a DVD within the UK?
#7 a single DVD in case is £0.78 for 1st class postage.
Thanks Super Max,
That gives some perspective to comparative prices.
Kind Regards, Kevin
It looks like within the US it would cost about double that for first class with no tracking, delivery confirmation, or insurance. Our first class also means you can expect delivery in about 3 days in most circumstances.
Seems the op indicates not having free shipping gets higher prices, once the total received is taken into account. Not to mention the non free shipper paid less FVF, and maybe less insertion fee.
In Canada the cost to mail a dvd domestically, no tracking or insurance is C$2.02 (GBP 1.15). But on Jan 12 that DOUBLES, so we can’t even mail a DVD across the street for the allowed .com shipping charge.
To europe it presently costs C$7.52 (US$6.25), no tracking, no insurance. Were not exactly sure what happens to that one Jan 12 other then its going up, but you can see what kind of fee increase it is to do “free” shipping and pay the FVF on that.
Not to mention being near impossible to keep DSRs up when sending outside the country, particularly to the USA..
Also for countries with low import thresholds before tax/duty/brokerage fees kick in, the buyers who understand how it works tend to like lower price/higher shipping.
Eg, if I bought something like a DVD from an American at $15+$10 S&H I would never pay anything. If I bought the same thing at $25, and the American marked the form at $25(as most would), I’d be subject to paying $8.25 when I received my item.
# 8 Add a PIP box or jiffy, a invoice / address label and you can add 10 to 20 pence to this cost. And unless your postie collects personally, there is the time / travel factor in posting items.
It all adds up. Sell 10 x dvds a day and you looking at £10 per day.
This has got to be accounted for somewhere – no such thing as Free
My tested experience is that offering free postage was a big mistake. Google Base doesn’t like it. Listings of previous good selling products slid down the search results fast as the best match doesnt seem to favour free post and sorting by lowest cost incl postage certainly does not give an accurate result.
We had around 100 products with free postage and sales resumed the day I re added postage.
Don’t do it until you have to.
Your Analysis is dumb at its best for 2 good reasons
1)Sellers with free post are getting higher sales from those who do not offer free post? If so, once everyone is offering free post, the advantage is clearly gone. Its the same reasoning with undercutting your opponent, you get more sales, but once your competitors do the same, you realise that you have screwed yourself.
2)Your say that the FVF is higher for DVD of free postage, but you conveniently did not add shipping price. Sellers without free postage could have a higher profit margin for all you know. Suppose your analysis was right even after adding postage, it will have prove that the majority of buyers on Ebay are retarded. Why pay more to have free postage?
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