Free Shipping vs Paid Shipping:  The Great eBay Debate

I’m a member of several Facebook groups and it seems like almost every day, the question arises about the best method for shipping.  And every day, there are 10 different answers given.  I think it’s only fitting to understand both sides of the debate and hopefully it will help you figure out which is best for the item you are selling.

Why offer free shipping?

There are a few reasons to offer free shipping so let’s break them down:

  1. If you offer 0 or 1 day handling time, you will get the fast and free shipping badge. This can be important in popular categories where there are 100 people selling the same item.  If you have the fast and free badge, you will rank higher in eBay searches.  If you are selling an iPhone 7, you want to be at the top of the list because there are 2400 results as of this morning.  If you are sorting by best match, within the first 50 results, there are 16.  Of those 16, only 5 were top rated sellers.  So if you are a new seller or currently have lower TSR, Fast and Free may be your best option.
  2. Customers, who look to maximize their eBay bucks, will look for free shipping. If they buy the item + shipping, the shipping charges aren’t calculated towards eBay bucks.  On $5 items, it’s probably not a big deal, but if you are buying an item that has $50 or more in shipping charges, it starts to add up.
  3. Customers that don’t use Best Match to sort will likely go to cheapest price + shipping. In that case, you may be at the top of the list depending on the customers location compared to the seller’s location for those that use calculated shipping.  This can be good or bad.  If you live in New York but have to ship to California, you will be eating a huge shipping bill.  A lot of sellers who use the free shipping method will typically amortize the shipping charges among all of their customers and will come out ahead in the end most of the time.  For example, you sell the same item to 10 different people; chances are very good that not all of your customers are the farthest distance from you.
  4. Cuts down on shipping cost complaints and customer inquiries about combining shipping. The worst assumption customers make is assuming that combing shipping is always cheaper.  Well, it’s not always cheaper.  I have several items that are 10 oz.  If I combine 2 of them, it’s now not under a pound and I will have to ship Priority Mail instead of First Class.  Here’s the best part, it’s now for Flat Rate so my price just went from $3.20 shipping to $9.60 for 2.  Yes, I know, I can still ship them separate for $6.40 but the point is, it’s not cheaper to combine them.
  5. It helps protect your DSR (Detailed Seller Rating). Yes, they still matter.  Customers can be quick to judge that shipping charges aren’t 5 stars.  If you want to keep your Top Rated Seller status, or try to get there, you need to help your ratings with every opportunity.  If it’s free shipping, it’s automatically 5 stars for Shipping and Handling Charges.

Charging for shipping

There are several ways to charge for shipping.  I personally like the calculated shipping and feel it’s the fairest option for the customer.

Here’s a breakdown on why charging shipping can be a good practice:

  1. You reduce your risk of overpaying for shipping. If you aren’t selling enough or don’t ship enough free shipping items, it’s hard to create a balance in shipping cost.
  2. If a customer shops by sorting items closest to them, their cost will most likely be much cheaper. The same goes if a closer customer sorts by cheapest cost plus shipping.
  3. If you get a return because the customer changed their mind or had buyer remorse, you aren’t out the original shipping cost. I recently took a return on an item I sold for $50 plus shipping and the shipping cost was $25 to them.  If I had sold it for $75, I would have had to return all $75 (minus restocking fee), but instead, I only refunded the original $50 less the restocking fee.
  4. If you do calculated shipping, eBay charges the customer the retail shipping rate, so you can make a little extra money on shipping. I also always add a little extra weight to account for handling charges and the event that packaging the item securely may take a little more than planned.

As a general rule for myself, I offer free shipping on all items that I can ship first class (under 1lb packaged), or any item that I can ship flat rate.  I just make sure that I price the item accordingly.  Anything outside of that, I use calculated shipping and give customers the option of shipping service they want to use.  If you do calculated shipping, don’t forget to add the dimensions of the shipping box.  USPS is getting more strict about package weight and dimensions and are no invoicing the seller for the additional charges.

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