Is free post ever free?

No primary category set

With the recent incentives to offer free post, it’s more than likely we’ll see eBay expanding the number of categories for which it’s compulsory in the near future.

The one argument sellers often put forward against free post, is that currently they don’t pay fees on postage charges, but that in my opinion is of less importance as a simple fees adjustment is all that’s needed. The question really is how desirable is free post and packing both for buyers and for sellers.

Amazon: The utopia for free shipping

Without a doubt free carriage is a great incentive to add more items to your order. With a tiny order value of just £5.00 to qualify for free Super Saver Delivery on Amazon UK it’s a reality for many buyers already, and that doesn’t include those who’ve paid £47.97 for unlimited next day deliveries with Amazon Prime.

Free postage removes an excuse for buyers not to make a purchase, and knowing that the price you see is the price you pay simplifies the buying decision.

3rd Party Sellers

eBay however is in a different situation to Amazon, who have the advantage of scale. The thousands of smaller merchants who make up eBay’s seller base, simply can’t negotiate the same rates as Amazon from carriers.

Even on Amazon as soon as you start to purchase from 3rd party sellers on Amazon delivery charges start to mount up. For a book the delivery cost is £2.75 per item, and if you’re purchasing rare or used items delivery charges start to stack up.

Multiple items

On of the biggest concern I have with compulsory free postage on eBay is that buyers have a dis-incentive to purchase multiple items from one seller. That includes both adding additional items from the sellers shop and buying multiple quantities from one individual eBay listing.

To give an example I have one particular product line for which the packed weight is 2.5kg. The most cost effective way to ship on a tracked delivery is via courier, however I can combine shipping for up to 12 units (up to 30kg) for the same price.

As soon as I include the cost of shipping in the purchase price of a single item (there’s no such thing as “free” post!), customers who buy more than one unit will pay additional and unnecessary costs. Buyers will end up over paying for shipping and currently there’s no way on eBay to give a discount off the purchase price for multiple items.

99p No Reserve Auctions

eBay was built on their auction business and it’s a fact that 99p NR auctions are still one of the best ways to achieve the best end price on eBay. Offering free post could leave sellers with an item sold at less than what it will cost to ship it and it’s likely many will simply increase their start prices to ensure that this doesn’t happen.

An eBay where the standard start price is £4.99 No Reserve just doesn’t have the same appeal.

Service differentiators

If carriage is included in the item price buyers will have no easy way to distinguish between a £10.00 item which will be delivered in a weeks time via Royal Mail Standard Parcels and an identical item for £14.00 which will be delivered tomorrow by a 24 hour courier.

Both sellers may offer both delivery options but it’s the seller who offers the worst option as standard who will appear to buyers as having the best price.

Sellers including fast and guaranteed delivery services as standard will either simply be priced out of the market or be forced to use the slowest, untracked, cheapest service to compete. That’s not going to be a great buying experience. Even if sellers offer the cheapest possible delivery method with an optional upgrade to next day delivery I suspect many buyers will expect the service but will not opt to pay for an upgraded delivery method.

If eBay force sellers to provide free delivery, unlike Amazon who with Prime guide their most loyal customers to the premium delivery options, the best eBay sellers will be forced to offer the worst possible delivery options in order to compete, or may simply be driven off the site entirely.

What do you want?

As a buyer what’s important to you? Do you prefer a quick and secure delivery or are you happy to wait days or even a week to receive your purchase to save a few pennies? Let us know in comments below

36 Responses

  1. the best eBay sellers will be forced to offer the worst possible delivery options in order to compete, or may simply be driven off the site entirely.

    Offering the worst possible delivery options is one of the best ways to get driven off the site. That’s what DSRs are for.

  2. @ # 2

    I’ve always had the terms that I refund minus the actual cost of shipping so shipping for free makes no difference to me regarding that.

  3. I am a great advocate of FREE shipping, the AuctionPax empire was created with a free shipping model – uber£’s later proves it does work and buyers love it !

    This doesn’t mean it will work for everybody though, commodity buyers who mainly use BIN will love it, collectable buyers will not care, they ‘expect’ to pay something for delivery and normally buy in auction format, and ‘used item’ buyers will want as cheap as possible and/or free for both BIN or auction format – it is the latter that will cause concerns for many sellers, as we can already see for the hobby sellers selling DVD’s etc.

  4. Well we offer free postage on all our jewellery sites and one some items free next day delivery as well. Our prices are the same or cheaper than others but we just take it on the chin to push sales through and think it makes a massive difference to.

    When you look at some big sites they charge a flat rate of £3.95 I have noticed and haven’t gone over to free postage. If your customers are still buying then why bother?

    I think the way you could make yourself stand out is by offering a standard free delivery thats the slower one and then offer a next day option or even a slightly quicker option. We are trialing on one site 4 options and its working well, most pick the cheaper, about 80% then the other 20% pick through the rest of the selection.

    Oh and I have recently signed up to Amazon Prime and love it! Although it does make me loyal to buying on Amazon now……….

    Stu

  5. I hope that eBay does not implement the a “discount for multiple purchase” facility, which would totally negate the whole point of free shipping.

  6. When we sell things that can go via Royal mail we tend to charge half the RM cost for postage. Helps with the DSRs as buyers think they are getting a good deal on the postage.

    DSRs are all in the mind of the buyer, you just gotta make them think the way you want them too.

  7. I have been trading Media products full time since September 2008. Like most professional sellers I sell across different platforms, ebay, Amazon and now my own website shop (still under construction – so a bit rough around the edges.) Back in September 2008 I constructed over 1,500 listings and promoted ‘Multiple purchases discount’ within text and category / product cross-links. The requirement to offer free postage on dvds necessitated a lot of editing, and more is on the way as ebay move towards free postage for cd’s.

    As I started to populate my own shop I needed to make a decision concerning postage charges. I opted for Free UK postage, because I can still offer ‘Multiple purchases discount’ on the total cost of products purchased. Ebay are clearly moving towards Free postage across a wide range of products and really should be looking at some viable method of allowing ‘Multiple purchases discount’.

    I now sell the same products across three platforms with different purchase and postal prices. Ridiculous as it sounds but with the removal of listing and selling fees (soon to increase) as postage in incorporated into the sell price, I can sell cheaper on my own site for a bigger profit.

    The loss of 10 to 20 pence on a single (Free Post) item might not sound much, but sell 50 items a day and it soon adds up.

    Closing comments- I only opened my own shop because I’m feed up with ebays constant policy changes, which includes the requirement to Offer Free Postage. I am now focusing on sales outside of ebay.

    I’m one very small fish in a very big pond and as an individual my actions will have no effect on ebay. However like the 10 and 20 pence accumulating sum, put enough small fish together and the total becomes significant.

  8. #6 As a buyer I recently bought two car headlamps on auction. The carriage charge for each was £10 (I won the items for just £4.99). I’d soon not pay £20 for delivery when they turn into £14.99 start price items but can both be shipped in the same box.

    For heavy items shipping by courier, especially for low cost but heavy items, there are huge savings for buying multiples but they’ll be wiped out if buyers are forced to offer free post.

    #5 Interesting “4 options and its working well, most pick the cheaper”. Trouble is that means 80% of buyers would pick the “free” option which would be the “I’m not tracked, please steal me and do a chargeback” option because there’s nothing the seller can do to stop you 🙁

  9. Interesting ASQ this morning for a heavy item (printer)

    Dear mountcomp,
    You have another of these machines for sale in which I am interested. If you add Buy-it-now I will do so so we can combine shipping.
    kind regards,
    xxxxxx

  10. I would much prefer offering a flat rate P&P per order which is what I do on my website and the likes of next do, encouraging ordering multiple items.

    Another issue with ‘free postage’ is that you can’t take out the postage element of the price of an order when issuing a refund for returns of non faulty items, so have to issue a full refund.

  11. #11 You have to give a full refund anyway regardless of being faulty or not, so long as the return falls within the given timescales etc.

  12. #9 Can’t think of any major online retail players who offer % discounts on multiple purchases. Why?

    The whole point of free shipping is to create uniformity & ease in the “shopping experience”. Adding the ability for different sellers to offer different % discounts in different circumstances destroys that. It seams like some are determined to create a rod for there own (& others) backs.

  13. #12 yes but more than half of returns come back after the 7 days covered by DSR

  14. Chris is true that if its free and not trackable then people may steal but I think it depends on the price of the item and what you are selling, I think these are the most important things to think of when thinking of offering free postage….it really does go down to what you sell!

    Yes 80% take the free option but the other 20% are secure and they are often the more expensive items that customers want to get quicker and on some options we make a little on the delivery so its starts to balance itself out.

    Stu

  15. #13 There aren’t any that I know of, but there *are* plenty that have a price for delivery for the first item with all additional items free.

    Thing is a real example – A buyer purchased 10 items from me at £5.00 each with delivery charge of £8 for 24 hour courier delivery – total cost £58.00

    If I gave free carriage I would have to price the individual items at £5 plus £8 = £13.00. If the same buyer then bought 10 they’d be paying £130.00

    How can I price orders like that to be reasonable without specifying the shipping separately? I’m certainly not going to lose money on single item orders so to give free shipping I have no option but to massively overcharge which isn’t great for buyers.

    The one thing I can foresee is sellers making more use of best offers to give discounts for multiple purchases (and probably stating they do in the listings), but that assumes buyers don’t dismiss your items as overpriced in the first case and understand how best offers work.

    Frankly it’s massively over complicated and although I’m broadly in favour of free shipping it really isn’t a one size fits all solution.

  16. #16 Not just “steal”, but I’ve lost count of the number of “missing” parcels I’ve had this year which were “with your neighbour”, “waiting to collect from the sorting depot”, “signed for by the chap in your companies goods in and sat there a week” etc.

    I honestly believe that a quality delivery (ie tracked) gives a supremely better service and also that “free” delivery will lead to many more sellers selecting the crappiest service just to compete. Ultimately in the long run more buyers will get a poorer slower and generally worse service and that ain’t a good thing.

  17. On eBay, including the postage charge in the item cost is not generally in the interest of the buyer. For most transactions:

    It penalises multiple purchases
    It incentivises the seller to find the cheapest postage service, not the best for the customer
    It confuses price comparisons with sellers not offering free P&P

    eBay’s blind fixation with free postage shows just how little they really understand the way that buyers use the site. They should be promoting transparent pricing and great value on combined postage for multiple purchases.

  18. In my opinion a fixed postage rate works, free postage works but free postage and then a discount for multiple purchases doesn’t.

    If the true postage cost is high and the goods value is low I don’t think offering free postage is really an option. Free postage only works well if the postage price can be absorbed into a realistic end price. ie a high value item or an item were the postage cost in not great.

  19. #21

    Hi Sue,

    Thanks for the links. I believe there are some interesting subtleties at play.

    I believe buyers are attracted to ‘free’ postage offers where the offer is genuine, i.e. normal prices still apply and the free postage offer is a genuine saving off the total price. At Savvy Row we offer free postage – it’s genuinely free because we offer the same items in our ebay shop, at the same item price, but exclusive of postage. We fund the free postage through FVF savings, we use the same postage service, and our customers make a genuine saving.

    Where permanent pricing is inclusive of postage, I believe that most buyers can work out that the postage cost is built into the price. What they do welcome is the transparency – the price you see is the price you pay.

    Another thing is how the question is asked: Are you attracted by free postage? Of course! Now ask Chris’ buyer (post #17) if they prefer to pay £50 plus £8 combined postage, or would they prefer to pay £130 with ‘FREE’ postage included!? We used to buy all our mailing supplies from one ebay seller – when they went ‘free’ postage the total cost of our purchases went up by 25%. We haven’t bought anything off them since. We could have contacted them to ‘negotiate’ but why would we spend our time doing that when there are plenty of other suppliers?

    If eBay want free postage to work on their site they need to come up with an automated discounting system for multiple purchases.

  20. Paul, so why do you not have discounting for multiple items bought via your website?

  21. Paul, so why do you not have discounting for multiple items bought via your website?

    Simple! Because the free postage is genuinely free not just smoke & mirrors! We don’t pay FVFs on our own website and we choose to pass that saving on to our customers because we want to grow our off-ebay sales.

    The multiple item discount I proposed for eBay is effectively a work round to avoid paying multiple postage costs that have been absorbed into ‘free postage’.

  22. I sell lower value items where the usual number of items per order is more than 1. Usually in the range 3-10 but sometimes many more. For most orders customers pay just 1 shipping charge.

    Shipping included pricing would see me out of business. I am not in favour of ‘free’ shipping with multi purchase discounts, item prices would appear too high and the whole process just too cumbersome.

    A capped rate would be the only concession that I could live with (and happily would).

  23. Paul, postage is never genuinely free. You do not pass the savings you make in posting items together on to your customers. It is just the same 🙂

  24. Jimbo,

    If you can buy the exact same item for £50 plus postage in our ebay shop, then £50 including postage from our website is much more like free postage than most:grin:

  25. “Thing is a real example – A buyer purchased 10 items from me at £5.00 each with delivery charge of £8 for 24 hour courier delivery – total cost £58.00

    If I gave free carriage I would have to price the individual items at £5 plus £8 = £13.00. If the same buyer then bought 10 they’d be paying £130.00”

    I get what your saying Chris and as I said FREE postage isn’t for everyone but I still think it makes a difference to sales.

    Also don’t knocked standard 1st class as we send a large amount through this and 99% of the time no issues, although now I have said that there will be lol

    Stu

  26. Maybe it is a culture thing within Ebay?

    Maybe they spend a lot of their time looking at what other sites are doing (like Amazon, Overstock), instead of looking in the correct place.

    At those things that the “customers” (the sellers) want?

    Maybe this is Ebays problem?

    Their eyes are on the competition rather than the customer…

    Mark

  27. Mark I think you are right, too much focus on becoming Amazon but without the systems, expertise or resourses to do it properly. Remember the failed eBay express, they don’t seem to have learned anything from that.

  28. Free shipping looks to be the way forward unfortunately. The likes of Amazon, Play, and Love Honey have made it a realistic expectation for buyers. It’s ony natural that eBay will follow suit.

    We’ve switched a lot of our sales onto free shipping, and like Chris points out, we’ve had to change to the cheapest delivery option availavble to us (Royal Mail 2nd Class). There’s just no other way we could afford to do it while keeping costs down.

    Customers seem to prefer it, but in reality they are getting a worse deal (overall costs are the same, but shipping times are slower). And they don’t benefit from buying multiple items.

  29. Sue your becoming a right spoil sport 🙁 I was hoping for a pun fest and a million double entendres 😀

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