Friday, May 23, 2008

eBay Pays Sellers to Ship Free! Where's the Beef?

Here is the announcement from yesterday: "Offering free shipping is a great way to make your items stand out from your competition. Buyers love it, and it can help improve your Detailed Seller Ratings scores. If you haven't already tried it, now is a great time to start. From tomorrow, May 23rd through June 1st, you'll get 15% off your Final Value Fees when you offer Free Shipping on eBay.com and for Parts & Accessories listings on eBay Motors! "

Here are the details:

Why should I offer Free Shipping? Try a key business growth strategy. Buyers are becoming used to Free Shipping offers in the general e-Commerce market. See if Free Shipping boosts your sales and learn which pricing makes it work for you. We'll give you a Final Value Fee discount for 10 days to help.

What is it? From May 23 through June 1, sellers who list item(s) in Auction-style or Fixed Price format with FREE Domestic Shipping and have either a Detailed Seller Ratings (DSR) of 4.5 or higher on all 4 DSRs or no DSR rating, will receive 15% off their total Final Value Fees per item listed. (Note: the DSR ratings in your new Seller Dashboard shows a 30-day rating and a 12-month rating. Please refer to the 12-month rating for eligibility of this promotion.)

When is it? Starting Friday, May 23, 2008 between 00:00:01 PT (12:00 AM plus one second on Friday, May 23, 2008) and ending on Sunday June 1, 2008 at 23:59:59 PT (11:59 PM plus 59 seconds).

What are the fees? Sellers who list in Auction-style or Fixed Price format on the U.S. http://www.ebay.com/ and Motors (Parts & Accessories only) http://www.motors.ebay.com/ sites, offer FREE Domestic Shipping and have either a Detailed Seller Ratings (DSR) of 4.5 or higher on all 4 DSRs or no DSR rating, will receive 15% off their total Final Value Fees per item listed as reflected in the fee table below.

Okay, now for my 12% -- let's look at the math.

Before the promo you sold an item for $10 plus $2.95 for S&H. Your FVF was $0.88 cents

Since you still have to pay the same amount to ship the item, most of you will just roll the old S&H price into the sale price. You still charge the customer the exact same Total Price as before "Free Shipping"

  • So now, you sell your item for $12.95 with Free Shipping. Your new FVF is $1.13 or $0.25 more than before the promo.
  • But, since you are taking part in the Free Shipping Promo you get a 15% discount off your FVF which is $0.17.
  • So how did you do? Your FVF actually increased by $0.08 cents if you take part in the Promo.

Where is the great deal here? You have to understand that eBay managers look at all of these numbers and they know that most sellers will just add the S&H to their sale price. So, they can give you 15% off your FVF and still make more money.

Do the Math!

12 comments:

Rich said...

[Expected soon from eBay---you heard it here first]:

"While you are stimulating sales with FREE SHIPPING! [Buyers Love It!], why not consider just offering your merchandise for FREE also? [BUYERS LOVE THAT TOO!].

"Now, [until we figure out how to monetize it]:NO INSERTION OR Final Value Fees ON ITEMS THAT ARE FREE WITH FREE SHIPPING!

[Paypal fees still apply...]"

Anonymous said...

Price Ship FreeShip FVF FVFw/FS 15%Off newFVF HiddenFee
$25.00 $5.95 $30.95 $2.19 $2.40 $0.04 $2.36 $0.17
$50.00 $5.95 $55.95 $3.07 $3.27 $0.05 $3.22 $0.16
$100.00 $7.95 $107.95 $4.82 $5.09 $0.08 $5.02 $0.20
$150.00 $7.95 $157.95 $6.57 $6.84 $0.10 $6.74 $0.18
$200.00 $9.95 $209.95 $8.32 $8.66 $0.13 $8.53 $0.22
$250.00 $9.95 $259.95 $10.07 $10.41 $0.16 $10.26 $0.19
$300.00 $9.95 $309.95 $11.82 $12.16 $0.18 $11.98 $0.17
$350.00 $9.95 $359.95 $13.57 $13.91 $0.21 $13.70 $0.14
$400.00 $9.95 $409.95 $15.32 $15.66 $0.23 $15.43 $0.11
$500.00 $9.95 $509.95 $18.82 $19.16 $0.29 $18.88 $0.06

Once again, sales that are not sales because of hidden fees.

Thanks eBay, with help like this from you we'll all be gone soon.

Cliff said...

I agree with you on this one, Randy, saw right through it, as I'm sure many do.

eBay (potentailly) gains
Seller (potentially) loses
Buyer (likely) receives artificial gain

I'd be all over it if you could get the benefits on combined purchases over $X. You can set up for a deal like that, but I'm sure you don't sniff the discount without offering the deal on individual items.

For sellers offering light-weight items with a negligible mark-up on s/h, it's a good offer.

But if you have to raise your prices to get the deal it's probably not worth your time.

Randy Smythe said...

Its really the same math they use on the 15% FVF discount for high DSRs

If you improve your DSRs you get back to where you were before the fee changes.

They know that 80% of the sellers out there don't have a clue.

This is "Billy Math" all over again.

Anonymous said...

I'm not a math wiz by any means, so maybe someone can answer this question.

Even thought you pay slightly more in FVF this way, what if you increased your sales by 10%, or 20% by offering the free shipping. Wouldn't that more than make up for the slight increase in FVF?

Any good math guys out there?

Randy Smythe said...

Anonymous,

That is a big "if".

In theory that would make sense, but what move has eBay made in the last 2 years that increased your sales by 10% to 20%

This move will not increase your sales by 10% to 20% without some discounting which takes more money away from you.

Anonymous said...

Randy ... you're totally right.

Also, you have to considered that if you're listing in the Store Inventory Format, the DSRs doesn't make any difference since they still sort the items in an ascending order with the item price.

So for the media sellers, you better still charge shipping unless your listings will appear at the end.

eBay is expecting you to think you will experienced a soar of 10-20% in sales.

Tony P. said...

There's an old joke that comes to mind every time I see Billy Math announcments of 'seller savings'.



These 2 brothers sold watermelons from the back of their truck. They drove to Georgia, paid $1 each and drove back to NC, where they promptly sold 'em for 75-cents each.

When they told their Pappy they wuz loosing money, he told 'em to get a bigger truck.





Sometimes, that 10-20% additional business you might do, is just your bigger truck.

(yep, i'm from the south)

Anonymous said...

I only have one thing to say - since ebay is now dead for me...yes, I'm weaned off! Can somebody please tell me when the madness ends? I have a bad feeling that its only just getting started and most sellers will go down with the ship before they realize its time to leave :-(

David said...

Here is another thing to consider that is worth pointing out

If you normally list an item for $8 and you charge $3 to ship and now are charging $11 with "free shipping", you actually pay more insertion fees as well. Another scenario where eBay wins and the sellers looses.

The biggest reason to never offer free shipping is that it discourages people from buying multiple items. If you sell a lot of items your best bet is to charge a high shipping fee for the first item, and then free or low shipping for each additional item;

Anonymous said...

Hoo-wee... when they called 'em "insertion" fees they weren't kidding-- it's getting so you gotta duct tape your butt cheeks together, every time you fire up the SYI.

Anonymous said...

Amen, brother!