confused about ebay labels and free shipping

[pokemoncookie]

Hi everyone,

As a new seller, I am puzzled by a few things regarding ebay labels and free shipping. 

I have asked a question about free shipping before but I am still confused about it. Here are my questions.

(1) If you offer free shipping, it won't waive your shipping charge. That said, you have to pay the full shipping fee when you take your item to a carrier. Let's say that you sold your item for $100 with free shipping. The shipping fee is $10.

(a) If you buy ebay labels, will they deduct that $10 from your sales funds?

(b) If you choose not to buy ebay labels, will they take the $10 from your sales funds?

(2a) Let's say that you have sold your item for $100 with free shipping. Ebay will take about 13% of your sale plus a 30 cent order fee. If you do the math, I think you have to pay ebay $13 (from your sale) + the 30 cents =  $13.30. Is that correct?

(2b) It's the same scenario but with a $10 shipping fee. So your sales funds would be $100+$10 = $110. Ebay will get 13% of your sales funds including the $10 shipping charge. If you do the math, I think you will end up paying ebay $14.30 (from your sale and shipping fee) + the 30 shipping order fee = $14.60. Is that correct?

Please reply to my questions. Thank you for your help and time.

[flipistics]

@pokemoncookie 

1. You pay the shipping cost to whoever you buy the label from. If you use eBay labels, eBay will charge you for the label (the charge usually happens a few days after, so it may or may not come out of your sales funds). If you buy it from Canada Post or somewhere else, they will charge you. You don't pay eBay for the label AND another courier.

2. Remember that eBay charges you fees on the entire transaction - the item + shipping cost (that you specify in the listing, if any) + sales tax (if any) + transaction fee + foreign fee (if any) + tax on the fees.  If you promote your items, then you pay that percentage as well (plus tax).

[recped]

"free shipping" is only free for the buyer, as the seller if you want someone to deliver your packages then YOU pay for it.

Gernerally speaking, on eBay "free shipping" is actually "shipping included", for example:

$100 item plus $10 shipping, fees are based on $110

or

$110 item with "free" shipping", fees are based on $110

The fees are exactly the same.

Now if you actually want to offer REAL "free shipping" your fees will be lower but your profits will be lower as well because somebody has to pay the shipping costs, if the buyer doesn't pay it then the seller does.

FYI

- The standard fee rate is 13.25% (some categories higher, some lower if you have a Store Subscription).

- The Fixed Fee is now 40 cents, it's only 30 cents if the total transaction value is less than $10.

[mrdutch1001]

If sellers cannot "afford" the cost of doing business on eBay(and that includes ALL transaction fees,and ALL eBay fees, and ALL shipping fees, no matter what the source and/or shipping method); they have no business selling items on eBay...

[reallynicestamps]

1.) You can buy labels through eBay and the money will come from the customer's payment. This is true even if as a new seller that payment is on Hold.
1b.) No. You could buy a label at the PO counter, use your own UPS account, or use discounted mint postage stamps purchased on eBay (but I couldn't possibly say where *cough"). EBay has no way of knowing about those. You would have to use your own money and manually add the tracking number to your Orders page.

2.) No. EBay takes its fee (call it 13% but it may vary from 3% to 15%) on the customer's ENTIRE payment. This includes the selling price plus the shipping fee plus any sales tax. And on top of that there is a 30c service fee.

In your example, the cost of shipping is included in the selling price. If you shipped to Alberta there would also be a 5% sale tax for a total payment by the customer of $105.00 and , at 13% your fees would be $13.95, including the service fee.

2b.)Again you forgot the sales tax. The Albertan customer's payment would be $115.50 and your fees would be $15.32.

[ilikehockeyjerseys · Accepted solution]

(1) Offering free shipping does not waive your shipping charge that a seller must pay to obtain a label. Free shipping is a marketing tool. You should budget for the cost of shipping with the Buy It Now price for your item. That means if you would normally sell an item for $80 and it costs $19.99 to ship, you could consider charging $99.99 w/ Free Shipping. 

(a) If you buy the label through eBay, the cost of the label is deducted directly from your eBay funds. This is a benefit of buying on eBay. 

(b) The cost of the label is only deducted from your funds when you decide to print it on eBay. If you go to a carrier in person, or use an outside platform, they will not charge you for a label. You will pay for the label through your chosen platform. eBay only charges you if that is the platform you print the label on.

(2a/2b) eBay charges fees on the entirety of the sale price. This includes tax, and shipping. Meaning, if you sell an item for $100 w/ free shipping and it costs the buyer $113 after tax, the 13 percent is 113*.13 not 100*.13. Or, if you sell something for $80 w/ $20 shipping and $13 tax (again $113 total), it is once again 13 percent of 113, not 13 percent of $80. For calculating quickly, I find that 20 percent x the BIN price is usually a good estimate, maybe a few points less if shipping is bundled into the BIN price.

The take away is that your own costs don't change regardless of whether you choose to offer free shipping. 

-Your fee structure is the same.

-Your shipping cost is the same. 

Offering free shipping is entirely a marketing choice. There are two benefits to offering free shipping.

-eBay places your item higher in the default 'Best Match' search algorithm. 

-There is a lower chance of sticker shock, since most buyers don't understand what shipping actually costs. Meaning, a buyer is less likely to click back on your item because shipping seems excessive, or back on the shopping cart because adding both shipping and tax brings the item in our previous example of $100 w/ free shipping vs $80+$20 shipping up from $80 all the way to $113.

Situations where I would opt against free shipping.

-You offer buyer's remorse returns, and you expect a high rate of buyer's remorse returns. 

-You sell a wide variety of the same type of item, and you believe buyers could be convinced by the prospect of saving money with combined shipping to buy more than one item in the same order.

*Using our previous example, there is no incentive for me to buy 3 items today at $100 w/ free shipping, because the cost is the same as me waiting and buying them one at a time later if I am still interested. 

**But at $80+$20 shipping, with free combined shipping, if you can successfully market to me through your listing that I can save with free combined shipping, the prospect of saving $40 might convince me to buy all 3 items at the same time. 

[pokemoncookie]

Hi ilikehockeyjerseys, 

I can't thank you enough for the time and energy you put in writing such a clear and comprehensive explanation. Your own example further clarifies your detailed responses to my questions. 

I'm truly grateful to yo. Many thanks.

[pokemoncookie]

I really appreciate your spending the time to answer my questions clearly. I wish you all the best.

[pokemoncookie]

Everything you said makes a lot of sense. Thank you.

[ypdc_dennis]

The only time shipping is free from Canada Post is when they have a promo.

Current promo:

One parcel label purchased directly on the Canada Post website for each Tuesday in October.

Need a free Canada Post Solutions for Small Business membership.

https://www.canadapost-postescanada.ca/cpc/en/small-business/shipping-solutions/free-shipping-tuesda...