eBay

momcqueen · ‎08-24-2015

Shoppers Will Sacrifice Delivery Speed for Lower Shipping Cost

By Ina Steiner
EcommerceBytes.com
August 24, 2015

Online sellers know there's no such thing as free shipping, but promotions and policies from big retailers and online marketplaces may have online shoppers thinking otherwise, and dealing with buyer expectations around shipping is a huge challenge.

A study by Purolator International found that shoppers may be more reasonable than one might think. The shipping/logistics provider found the cost of shipping was identified most often as the single most important concern in terms of the delivery of their purchases, and most shoppers chose extended delivery times for their online purchases....

http://www.ecommercebytes.com/cab/abn/y15/m08/i24/s01

There's no surprise there. My worry is Canadian buyers who assume shipping is, actually, 'free' for the seller because of the ease with which it is thrown around by the HUGE online etailers who have much different bulk-managed deals with carriers.

mr.elmwood · ‎08-24-2015

@mjwl2006 wrote:

Shoppers Will Sacrifice Delivery Speed for Lower Shipping Cost
By Ina Steiner
EcommerceBytes.com
August 24, 2015

Online sellers know there's no such thing as free shipping, but promotions and policies from big retailers and online marketplaces may have online shoppers thinking otherwise, and dealing with buyer expectations around shipping is a huge challenge.
A study by Purolator International found that shoppers may be more reasonable than one might think. The shipping/logistics provider found the cost of shipping was identified most often as the single most important concern in terms of the delivery of their purchases, and most shoppers chose extended delivery times for their online purchases....

http://www.ecommercebytes.com/cab/abn/y15/m08/i24/s01

There's no surprise there. My worry is Canadian buyers who assume shipping is, actually, 'free' for the seller because of the ease with which it is thrown around by the HUGE online etailers who have much different bulk-managed deals with carriers.

I disagree with that assumption. My belief is that customers, all customers everywhere, want to pay the posted price with no add-on amounts. To the customer, all add-on amounts are taxes that the seller benefits from.

This happened to me, a few years back.

Fella comes into the liquor store and wants to buy a 2L beer. $5.20 + taxes + deposit = $6. He is hopping mad because I am over-charging him with taxes and fees because the Merchants Hotel price is $6 "NO TAXES" he screams at me. Yeah, $6 is more than $6. He kept screaming at me that $6 was more than $6 and I was cheating him.

The hotel hid the add-on fees in the price and our store could not do that, provincial law. Exact same price, but, he wanted the all inclusive price.

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pierrelebel · ‎08-24-2015

"He kept screaming at me that $6 was more than $6 and I was cheating him."

And, as we all know, the buyer was right because... the buyer is always right.

73rhc · ‎08-24-2015

I don't like the blanket statement that huge retailers offer free shipping. Many have restrictions. Minimum purchase and location of the buyer.

I live in Quebec. Try ordering something from Lowes.ca. They won't deliver here.

Old Navy. Minimum purchase required. Many others are the same.

Costco.ca free shipping on mostly, if not, everything. But online prices are higher than the warehouse.

The list goes on.

pierrelebel · ‎08-24-2015

It is true that not all retailers offer "free shipping". However, many do.

More so when shopping online.

Taking in the context of this discussion board, Canadian sellers selling on eBay (and other online venues) face competitors (mostly Americans) with a substantial percentage offering "free shipping" domestically (within the USA). More than 50% of all eBay listings listed on eBay.com offer "free shipping:" to American buyers.

That competition is real and it is a challenge for most Canadian sellers to offer competitive shipping rates from Canada to potential American and overseas buyers.

rose-dee · ‎08-24-2015

One thing that popped out for me in that report was that the study quoted was done by Purolator. I'd imagine their delivery times are mostly very short anyway, probably 2 or 3 days within the U.S.

Given the choice between adding an extra day or two to that lightning-fast shipping, or paying an extra $X, I can see why Purolator would say most customers would accept the trade-off.

Ina Steiner of course is only reporting what Purolator reported, but it does leave one with the impression that most eBay sellers would find this to be the case, which I don't think is true. Perhaps those who can afford Purolator...

I do think eBay, with its front-end ads for 60% off plus shipping, etc., has conditioned buyers to expect free shipping on eBay. They've also encouraged sellers to offer it, through various means. Ultimately we may all have no choice but to do what 'mr. elmwood' suggests and make prices a one-stop deal in order to meet buyer expectations.

That will be a challenge for Canadian sellers listing low to mid-range value items that require parcel shipping (or tracking). Not so much for those selling higher-priced items or articles that are small and under the magic 2.0cm thickness.

73rhc · ‎08-24-2015

@pierrelebel wrote:
It is true that not all retailers offer "free shipping". However, many do.

More so when shopping online.

Taking in the context of this discussion board, Canadian sellers selling on eBay (and other online venues) face competitors (mostly Americans) with a substantial percentage offering "free shipping" domestically (within the USA). More than 50% of all eBay listings listed on eBay.com offer "free shipping:" to American buyers.

That competition is real and it is a challenge for most Canadian sellers to offer competitive shipping rates from Canada to potential American and overseas buyers.

The OP was talking about huge online retailers. This reads as the big box stores, et al. Hence, my reply.

My remarks were pertaining to online selling.

Also, take a look at some of the return policies. I ordered clothing through Forever 21, for my daughter. The clothing didn't fit. Return was at my expense. Old Navy, on the other hand, sends prepaid return labels.

So back to my original post. Buyer beware of "free shipping"!!!

momcqueen · ‎08-24-2015

My opinion is less about retail stores with an online presence and more about etailers such as Amazon which have a very different business model with no brick-and-mortar point-of-sale locations. Shipping with Amazon is 'free' at a lower shopping-bag-total and always 'free' with a Prime membership.

The point I was trying to make is that 'free' shipping is so commonplace that I think shoppers demand it but hold its actual value in little regard. As in, the average buyer has NO idea what it costs to ship something from point a to point b. I don't have to tell anyone here that postage costs are assessed on volume: the more a seller ships, the less they are charged by their delivering agent on a per-piece basis.

As an ebay seller, I add nothing for handling, pass along all postal discounts I can find, and subsidize shipping costs wherever possible. I don't, however, suppose that the buyer has any real idea of the value of those efforts. While most shoppers would be highly insulted to find a handling fee added to their postage cost, they still consider the cost of shipping it to be throw-away expense and one that adds no value to their purchasing experience: 'Paying postage is annoying because it increases the cost of my purchase and I get nothing here that I couldn't get on (name a competitor) for free. That place ships for free, everyplace should. Why can't they? I am going to be angry about this. I will buy it because they are the only place that has what I want in stock but I will feel ripped-off by the postage costs anyway.'

For more information on the manner in which Amazon is able to offer to ship its own products for free while subsidizing that at the cost of its third-party merchants, see the story here:

http://www.ecommercebytes.com/cab/abn/y15/m08/i11/s05

I'll get you started....

".... Sellers may be interested in reading a recent GeekWire analysis of Amazon's second-quarter earnings in which it found that the marketplace made more from shipping revenue as a percentage of shipping costs in Q2. It said Amazon's revenue from shipping rose to cover nearly 60 percent its shipping costs for the quarter.

"That's a new high, according to analysis conducted by Geekwire, up from a low of 36.2 percent in the fourth quarter of 2011.

In fact, according to Amazon Q2 earnings, while worldwide shipping costs rose 29% year over year, its shipping revenue rose 57%. As GeekWire noted, some of that comes from higher Prime membership fees for customers and from revenue from FBA shipping programs...."

(I will note this is ecommebye's take on an article that I have not studied myself. I don't know how much it has been spun.)

momcqueen · ‎08-24-2015

@pierrelebel wrote:
It is true that not all retailers offer "free shipping". However, many do.

More so when shopping online.

Taking in the context of this discussion board, Canadian sellers selling on eBay (and other online venues) face competitors (mostly Americans) with a substantial percentage offering "free shipping" domestically (within the USA). More than 50% of all eBay listings listed on eBay.com offer "free shipping:" to American buyers.

That competition is real and it is a challenge for most Canadian sellers to offer competitive shipping rates from Canada to potential American and overseas buyers.

To expand that point, when I offer 'free' shipping on select products I carry, I'm adding an average of $12 CAD to my asking price to cover the cost of service by Canada Post Expedited Parcel (domestic lettermail is obviously assessed differently) to almost everywhere in Canada. For a Canadian in the northern or remote parts of country, that makes it an attractive offer. To an American, that makes it an unattractive option since, for a variety of reasons, I can't extend the same 'free shipping' offer to them. For Americans shopping within America, the 'free domestic shipping' options from my competitors are endless. I can't compete but, at the same time, I can't afford to alienate that customer base.

Therefore, it leaves ebay sellers in Canada between a rock and a hard place. Every item with 'free shipping' has to be judged on its own merit. The 'combined shipping' rules for discounts have to be carefully considered because one combination of products might be feasible while remaining reasonably profitable for its seller but another could represent real losses. Same for the Markdown Manager 'free shipping' promotions available.

I've said it once and I'll say it again but I will jump for joy when ebay Canada is able to roll out its own ability to create Promotions like does ebay.com. I have my fingers crossed for the Fall Update. It would make me so happy.

gifts_of_elegance · ‎08-25-2015

This topic has been discussed in Auctionbytes. Please see http://www.ecommercebytes.com/C/blog/blog.pl?/pl/2015/1/1420488982.html

pjcdn2005 · ‎08-25-2015

To expand that point, when I offer 'free' shipping on select products I carry, I'm adding an average of $12 CAD to my asking price to cover the cost of service by Canada Post Expedited Parcel (domestic lettermail is obviously assessed differently) to almost everywhere in Canada. For a Canadian in the northern or remote parts of country, that makes it an attractive offer. To an American, that makes it an unattractive option since, for a variety of reasons, I can't extend the same 'free shipping' offer to them. For Americans shopping within America, the 'free domestic shipping' options from my competitors are endless. I can't compete but, at the same time, I can't afford to alienate that customer base.

You should be able to do some work arounds so that you don't have to charge U.S. buyers the full shipping cost when you have already added $12 into the price of the item. I don't know if this is the norm for your listings but I noticed at least one item that has free expedited parcel shipping within Canada and charges $14 to the U.S. for TP. In a situation like that I would probably charge the U.S. $3.99 or $4.99 for shipping rather than the full cost. I know that you like to used tracked shipping but for that particular item which is $23, I would use small packet air and have free shipping for the U.S. as well. I realize that you might already do this...I only looked at a few of your listings.

Another suggestion......if adding $12 in to the price seems like too much, add in $6 and then charge $6 for shipping. You could then charge less than the full amount to the U.S.and that might help you to be more competitive.

rose-dee · ‎08-26-2015

I have some additional suggestions to add to what 'pj' has said, that you might want to consider to at least mitigate the U.S. shipping problem. This is more of a "mix-it-up" strategy, but could conceivably be combined with the ideas above.

I don't know what your U.S./Canadian buyer proportion is, but if you have (or are after) a larger U.S. customer base, you could try shifting some of the cost of free shipping within Canada around. For example, offer free shipping domestically only on items that are best sellers, or only on the slower sellers (or vice-versa). Or, use free shipping only on the higher priced items, or only on certain makes/models, etc. etc.

Or -- another option -- increase your domestic shipping rates across the board but run "free shipping" automated markdowns every once in a while.

These strategies might permit you to offer lower shipping to the U.S. (and perhaps to some extent internationally). The whole idea is to spread the "shipping pain" around so that not all your items are costing you extra money all the time.

You could experiment with these and/or 'pj's suggestions for a couple of months to see what produces better results.

I agree that using tracked shipping on lower priced items is throwing money away. I know you're keen on keeping your US TRS Plus (for the badge), but how many extra U.S. sales do you feel you get as a result? Is the badge worth the cost (in terms of actual increased U.S. sales)? I personally don't think so.

Would you not gain a bigger advantage by competing directly through offering free shipping to the U.S.? If you used Small Packet on everything but the more valuable items and/or offer free shipping to the U.S., you could probably afford to give your U.S. competitors a run for their money. I don't know what your usual item weights are, but they seem like rather small products, which would mean you might be in the lowest Small Packet range.

I have to say that in all the years I've sold on eBay, I've never had a Small Packet parcel go missing, and I've never had a complaint or case for slow delivery. The one exception was during Hurricane Sandy, with a parcel going to New Jersey, smack in the middle of the storm. But it did ultimately get there!

I know it's always a trade-off between fear of defects or paying for tracking. However, my feeling is that as Canada Post rates rise, unless they (or eBay) find a way to offer reasonably-priced tracked shipping to the U.S. for Canadian sellers, using tracking to the U.S. exclusively is a dubious arrangement. Add up the money you actually spend on tracking over a year and consider whether you could keep that extra money to use for other purposes (including increasing sales by offering free, non-tracked shipping to the U.S.).

I know you weren't actually asking for suggestions, but perhaps the above is worth considering.