@pierrelebel wrote:
So, if the marketplace tells me $85 is the right price (about $74 after fees), I need to lower my cost of the item to $37 or less to make the 50% margin I am looking for.
And that is the problem for many sellers. Their costs are too high to properly compete with other sellers who may have lower costs of goods (they buy better) and - in most instances - benefit from lower shipping costs.
I think we are pitching exactly the same reasoning Pierre, just from different angles.
My opinion simply is that sellers who look at their acceptable gross margins and then tack on some of the shipping cost to the item price so they can offer 'lower' shipping, will, in attempting to preserve their profit margins at all costs by that means alone, begin to fall behind as their competitors outstrip them with lower pricing and free shipping.
This, I believe, applies especially to Canadian sellers, whose cost of acquisition and shipping are almost always going to remain higher than their U.S. counterparts (unless, as I said, a lower $Cdn comes to our rescue).
Canadian sellers may have to look at approaching this problem from both ends of the spectrum, and this is where your argument and mine converge:
(1) Lower costs of purchasing inventory to sell;
(2) Avoid the temptation of quietly passing on higher shipping costs to buyers via item price increases, and start offering free shipping where possible.
In other words, we need to squeeze ourselves at both ends if we want to stay competitive with our US counterparts. My view is that Cdn sellers who don't get on the bandwagon of lower flat rate shipping and/or free shipping will soon find themselves at the back of the parade.
To sellers who may doubt the logic of this approach, consider this: what will happen to your sales when a critical mass is reached on eBay and the majority of US (and Cdn) sellers are offering completely free shipping? I have no doubt this will occur. All you have to do is recall the days when everyone charged at least full shipping, and every buyer expected to pay shipping, very few questions asked - how the situation has changed! In the new eBay environment of free shipping by most sellers, anyone still charging for shipping, and particularly anyone charging actual shipping cost, will be passed over more and more by buyers (unless they are selling something everyone wants and no one else has).
Soon someone will think up a new marketing wrinkle, free shipping will have become the "standard", and the cycle will begin again.
The moral of this story is one word: evolution.
