Wednesday, October 1, 2008

My eBay shipping experiment

What do people most value in their eBay shopping experience? Actually spending less, or just feeling like they got a good deal?

eBay is really starting to push for sellers to offer "Free Shipping". This is, of course, an obvious ploy for more fees - after all, they earn a fee only on the sale price, not on shipping and handling. (I'm not even going to touch on the problem of fee avoidance)

The question is, does free shipping draw more buyers, and can you still make the same (or more!) profit that way.

So, for the moment, I'm running an experiment. I know my standard profit margin on items where I charge S&H - for 6 weeks or so, I'm going to offer "free shipping" but with a higher minimum bid, and see how it works out. Let's run some numbers so you understand what I'm talking about.

Let's say my standard item is a shirt. I bought it for $3.99, and typically sell it for $19.99, including $5 for S&H (total price to buyer - $24.99).

eBay takes a listing fee of $0.55 and a final value fee of $1.75. (We'll ignore PayPal fees, since they would be the same) If shipping costs $4.75 (normal price), that leaves me with a total "profit" $13.95 to cover my gas, time, bills, etc.

Now, if I move the $5 S&H price into the original listing price here's how my fees work out.

Listing fee = $0.55, Final value fee = $2.19. Profit = $13.51. I've lost $0.44 for the privilege" of offer Free Shipping.

However, if my Free Shipping listings generate more business, and my items sell for more than minimum bid...I will quickly make up that amount. Should be an interesting experiment.

And in case you are wondering - no, I don't plan to run this with Etsy as well. Mostly because Etsy, unlike eBay, does NOT list shipping cost when you search for items - so having free shipping won't catch anybody's eye in a list of products.

What do you think - would Free Shipping draw you in?


TailoredTreasure said...

I love your jewelry and what a great article! How did you get into jewelry making?

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