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The Great Free Shipping Debate Continues

Merchants share common concerns about free shipping.

When the holiday shopping season arrives, thousands of online sellers and retailers will offer free shipping to entice buyers to shop from them and not someone else. It’s not surprising.

In a recent article, Luke Knowles gave us plenty of good reasons why sellers should offer free shipping. Those reasons include more sales, fewer abandoned shopping carts, staying competitive and gaining more repeat buyers. When you take that information, and consider that a 2011 comScore survey found that 61 percent of shoppers are somewhat likely to cancel their orders if merchants don’t offer free shipping, it could make you think free shipping is the way to go during the holidays.

However, a good number of sellers don’t agree with this reasoning. Some have tried free shipping and decided it’s just not for them, as we note in a recent guest blog we wrote for the Auctiva Blog. Others have told us that, plain and simple, the cost of providing free shipping is too much for a small online seller to absorb.

Having brought you one side of the issue with Knowles’ article, now we’ll look at some of the free shipping concerns sellers have shared with us, as we know many of you will soon consider if you should offer it this holiday season. We also share ways some online sellers make up for the cost of free shipping, should you decide to give it a shot.

Common free shipping concerns

“You may assume it’s always better for buyers to see ‘free shipping,’ but if the price goes up too high, you might turn off buyers”

1. Free shipping isn’t free

Rebecca Miller, an eBay seller of more than 13 years, says one of the big complaints among online sellers regarding free shipping is that it’s not free at all. Someone must pay for the postage, whether it be the seller, both the seller and the buyer (if part of the shipping cost is rolled into the item price and the seller covers the rest), or the buyer (if the entire shipping cost is rolled into the item price).

The latter two options alleviate some of the seller’s cost, but the last option—folding the entire shipping cost into the item price—can be tricky, Miller notes. Sellers have to do their research and see what others are charging for similar items if they decide to do this.

“On the surface, you may assume it’s always better for buyers to see ‘free shipping,’ but if the price goes up too high, you might turn off buyers,” she adds.

Sellers have to stay competitive, and for this reason, free shipping could cost them, one way or another.

2. Sellers already absorb shipping costs

One merchant says that sellers already absorb the cost of shipping supplies, so offering free shipping is another hit to the pocketbook.

“You have to buy tape and, unless you are lucky enough to have access to recycled materials like bubble wrap, popcorn and odd-size boxes, proper packing is expensive,” the seller notes in response to Is Free Shipping Worth the Cost?. “Picking up recycled packing materials requires time and gas. I could never figure out how a small seller could offer free shipping without losing money.”

Another merchant adds that the concept of free shipping is great, but when you add in listing and transaction fees, your profit margin quickly shrinks.

“We moved all our eBay listings to free shipping last year and almost went bankrupt”

“[It] can easily lead to the merchant losing money on every sale, especially when eBay and PayPal fees are considered,” that seller writes. “Unless you are blessed with huge margins, then one must be very cautious at offering free shipping.”

3. Free shipping is a drain on profits

Mike Sharp, who commented on our blog post, says he offers free shipping on his Web store—but not on eBay.

“We moved all our eBay listings to free shipping last year and almost went bankrupt,” he reports.

Janice Mayo, another eBay seller, says she offers free shipping on a few of her eBay listings, but only as a way to get people to her store because she knows she’ll take a hit on those listings. “I consider it as an advertising expense,” she continues.

Mayo notes that once she weighs in all the eBay fees sellers get “hit with,” it’s difficult to make a profit with free shipping, unless she ups the price of her products. For that reason, she only offers free shipping sometimes.

4. Higher rate of returns

One merchant worries that free shipping might encourage more buyers to return items, since they only pay the cost of the item. Instead, charging for shipping may help deter buyers from returning items, the seller suggests.

“We sell shoes, and it costs about $9 to ship to California,” the merchant notes. “If they return those shoes, sure they’re paying for the shipping back to us, but if we offer free shipping we eat that original cost!” And they lose the cost of the item.

For some, free shipping does boost sales

“Anything that makes it easier for the buyer also makes it easier for a buyer to purchase from me, rather than someone else”

Still, other sellers have told us they offer free shipping whenever possible. Kevin Timothy notes that his 2011 holiday sales reached a record high, “and I believe it had a lot to do with offering free shipping,” he says.

“During the year we tend to keep the ratio mixed, offering it mainly on high-dollar items,” he explains. “There is no set formula for us; it really depends on how bad we need the sale. Generally, though, I’m in in favor of offering it. It does help.”

Free shipping success tips

Commenters on our guest blog shared some of the ways they offset the cost of free shipping, and we thought we’d pass these along. One poster notes he offers free shipping and increases the price of his items to cover the cost.

“The buyer is still paying for the cost of shipping, but anything that makes it easier for the buyer—and offering free shipping does create a buyer-friendly transaction—also makes it easier for a buyer to purchase from me, rather than someone else,” he adds.

Sally Mittuch, the founder and managing director of Natural Spa Supplies, takes another approach: She offers free shipping on orders with a minimum value of 35 pounds.

“This means regular customers can plan their purchase to obtain free shipping, whereas new customers, who often fall beneath this threshold, pay the fixed shipping rate of 2.99 pounds, but become aware that they can obtain free shipping in the future if they like the goods and want to buy in larger quantities next time, or even share orders with friends and family,” she reports.

She says that, overall, her business gains from giving buyers the option to get free shipping.

Have you tried offering free shipping? What results did you see? Will you offer it during the holidays?

About the author

Olga Munoz
Olga Munoz is editor of TheOnlineSeller.com. In addition to writing news and feature articles about e-commerce, selling trends, online marketing and other topics of interest to online sellers, Olga manages the site's social media efforts. A journalism graduate of Chico State, Olga says her favorite part of being a journalist is learning interesting facts that help put stories into perspective, attending industry events and meeting interesting people "that leave you smiling, even in tough situations." Opinions expressed here may not be shared by The Online Seller and/or its principals.

  • Dan

    If offering free shipping, on ebay, means rolling some or all of the cost into the selling price, ebay makes more money on the final selling fee that they charge you. That’s the reason that ebay pushes the free shipping idea; they make more money that way. And that extra money comes out of the sellers pocket.

    • Ebay takes fee from the whole transaction including shipping. So the fees are the same whether you offer free shipping or not.

  • Another problem with free shipping is that if you include the cost of shipping in the cost of the item you are then paying a final value fee to ebay on not only the price of the item but on the shipping cost as well! So ebay gets more in fees and the seller loses!

    • Eileen

      First off, here’s the facts! Ebay’s final value fee is 9% for most items I sell. Ebay’s fee for my shipping is also 9%. If I pad the price to include the shipping and offer “free shipping” the fee is the same as when I sell at my usual lower price with shipping charges.
      I do not see any difference in sales on Ebay when I offer free shipping. When I search for an item I set it to sort by ‘Lowest price plus shipping” and go by that. I think most customers do that if they are really looking for the best deal.

    • Duckinabearsuit

      eBay already charges the same 9% on shipping cost as well as the cost of the final sale. Free shipping makes no difference in the end.
      This is fairly new, they had to make this adjustment due to sellers hiking up the shipping way above the actual cost and lowering the item price, thus saving money on the 9% of the final sale price.

    • Lorna

      It doesn’t matter if you offer free shipping or charge for shipping. ebay takes fees on the total price you receive including shipping.

  • mary w

    I just recently tried offering free shipping and it has been a huge boost to my business. I sell light weight items(most less than 3 oz) so by simply increasing the price of each item by $1, I ALMOST have it covered…BUT I took a gamble and assumed most customers will buy more than one item when free shipping is offered and that is where I have come out ahead. Plus I have a rather large base of buyers from over seas where the free shipping does not apply, I do offer discounted shipping for them though.
    I plan to keep the free shipping offer on through the Holidays.

    • Duckinabearsuit

      Why not just add in to the total cost the entire actual price of shipping instead of only $1 higher? Free shipping does not have to be a trade of more business by taking a loss of profits.

  • ebay likes free shipping because sellers raise their prices to cover the shipping & ebay gets more to figure their final value fees on!

    • Not really. E-bay charges paypal AND e-bay fees on the shipping costs now. If you offer 3 items at $4 shipping each, 1 buyer wins them all, and you charge them $6 shipping, you still pay e-bay fees on the $12 shipping, and paypal fees on the $6.

    • Duckinabearsuit

      Yes eBay charges the same 9% final value fee on the shipping cost as well. No difference in their profits by offering free shipping.

  • Dani

    We have tried Free Shipping but it did not make us any more sales but we sure lost a lot of money!! We don’t have a big profit margin to play with. Even offering shipping at 6.95 killed our bottom line. We have gone back to 9.95 which seemed to be the average cost for ground shipping for us. As a consumer, if I can get free shipping that is great but if the shipping cost is reasonable I am happy to pay it.

  • With eBay’s new policies and fee schedule, we pay final value fees on shipping whether it is included in the price or set as a separate cost. Free Shipping on our items weighing 1 lb. or less has been beneficial to our sales, although, when sending heavier items, over 1 lb., the shipping cost varies so much across the nation that we feel it necessary to show each customer actual shipping dependent upon their location.

    • Duckinabearsuit

      I completely agree, if I cannot estimate the cost of shipping accurately or know it will fit in a flat rate envelope I choose the Calculated Shipping by location option. Otherwise I always offer free shipping.

  • Andrea

    I will not offer free shipping!! (1) If the item is posted for $9.99, in hopes it will go lots higher and it doesn’t, with Free Shipping! Shipping cost you $6, guess what! You only made $4, which pay’s eBay and Pay Pal…(2) I never find anyone willing to pay the return postage, even though it is stated in description and they just decide it was not really what they wanted. The Seller either pay’s return postage AND for item or they will give you a Negative Feedback and the SELLER can do nothing about it!! EBAY! Help the Seller!! Give the Seller the Power to give Negative Feedback!!

    • Duckinabearsuit

      Couldn’t you solve this issue by adding the said $6 shipping into the original $9.99 as the start price just to be safe? Then you can offer the Buyer-attractive “Free Shipping” to your listing and still profit your original starting price.

  • me

    The REAL issue is – the whole shipping concept confuses some – along with ship leadtime… So Ebays solution – offer free ship & 1 day leadtime… I think it’s the wrong thing for the market as a whole. Especially the solo business.. Does ebay expect employees to NEVER get sick, have a personal issue…computer or tech issue, electric outage…. Really our goal as sellers SHOULD be to sell more than 1 item, if we roll the cost of shipping into our prices when will we get those sales??

  • Steve

    There is a common thread here that advice sites like this one NEVER mention and that is Ebay’s increased fee revenue on Freepost listings! Why is it never mentionned in these articles? Good question….makes you wonder whose side you are on!

  • Eileen

    I sell on 4 sites and sales have all been great over the past year. Almost too good as I was running myself ragged trying to keep up. I decided to spend 2 months looking at the profits from all 4 sites. Hands down my profits from Ebay were the worst! Being “fee’d” for those shipping charges PLUS we are already “fee’d” for our shipping charges by Paypal since they also fee us on the total amount of the purchase.
    I decided to really cut back on my Ebay listings and promote my listings on my other sites and now I my profits are much higher.

  • Duckinabearsuit

    Free Shiping is a great option in my opinion. Especially since eBay charges the same percentage of final value fee on shipping as well as the sale price. Sellers simply need to lump the entire regular cost of shipping into the price of the item so they don’t lose money. “Free Shipping” is a good selling point, buyers think they’re getting a good deal, and it saves buyers from having to calculate the cost together.

  • ebay power seller

    I see some of you are saying wrong information, even in the article too. To Eric’s comment he posted, ebay DOES charge final value fees on your “ship charge” – that change was made more than a year ago. If you have a top rated seller discount, ebay won’t give you the 20% off on your final fee from the shipping charge portion of the sale, so if you charge shipping separate, your final value fees end up being higher if you are a top rated seller with a discount. The person in the article talking about problems of free shipping on his shoes that cost $9 to ship….his argument against free shipping is if he gets a return then he has to give the customer back all his money because the listing was free shipping…..well guess what? Even if you have shipping charged separately, all the buyer has to do is file a case for a return and ebay gives them 100% refund if the shipping was itemized separately in the transaction or not! To date, in my 11,000 sales and networking with other sellers, I have yet to see a buyer lose on a claim when making a return.

    Ebay’s changes which sound rough on us sellers, to me it is obvious why they are doing it….to compete with other online shopping sources by forcing ebay sellers to be great at customer service ….and if you a seller not following suit, you will pay more in fees. I was already great at customer service so I do not like it because now I have more competition since ebay is forcing my competitors to be better sellers, something I was already doing before the changes. Overall for the preception of shopping on ebay from a buyers perspective, I think the changes will help bring the ebay website to the top of the online buying experiences.

    • Bill Hunter

      What you say is true. However, it’s also about those who live in glass houses… eBay really needs to practice what it is ramming down our throats, i.e. they really need to sort out their own customer services before they make us sort out ours. The customers out there are assuming that good customer relations runs in all directions but it doesn’t. Perhaps one day in the future it something eBay will regret.

  • Mac T

    Clearly, ‘free shipping’ is a gimmick, and, anyone should be aware that it’s no more ‘free’ than a ‘buy one, get one free’ deal. Since sellers are already punished by including shipping costs in their taxable reported sales figures by PP & eBay, it’s not as much of a deal breaker for me to offer this with some fixed price listings. It does seem to entice some suck/ er, buyers in; and, if not, I relist without it as a standard auction item. For a collectibles seller of individual items, the whole system has been rejiggered to steer eBay to their goal of catching Amazon by way of a retail sales approach that sidelines the original format we succeeded with.

  • Germi

    With multiple quantity listing, I have actually even made a profit on Free Shipping when buyers bought several items since the postage fees were worked into the price. The same happens when international buyers purchase an item which has Free Shipping in the US -which is added into my pricing-plus they have to buy the actual international postage. Since I base my cost on an average postage fee according to weight, the downside for Free Shipping is when the buyer lives the furthest away from me but that evens out with the sales with closer located customers. The actual postage charge depending on ZIP would be much fairer to the buyers but obviously people prefer to be under the illusion they got a ‘deal’.

  • Casmige

    I believe morally, that “Free Shipping” is a Lie & certainly lacking in integrity & truthfulness.

    It’s the Walmart Infection of trying to present the idea that a buyer can get “Something for FREE or for little to next to nothing” while also presenting the idea that one is getting quality comparable “Stuff”.

    There is No Such THING is “Free Shipping”. it costs Some-one some-thing therefore it is a bold-faced lie.

    IDK, last time I looked at Holy Writ??…it stated that LIARS would not inherit the Kingdom of Righteousness.

    “Free Shipping” is an absolute appeal towards fostering GREED and the baser aspects of the beastly animalistic aspects of people who should be up-right & without reproach in any & all aspects of their daily dealings.

    “Free Shipping” is an INSULT, an absolute assault & insult to intelligence.

    Such skulduggery should not be coddled nor palliated in the least of respects.

    it is “Unseemly”.

    It should be truthfully termed “Shipping INCLUDED”.

    That is the right & truthful manner to couch the matter in.

    When are “People” going to step up & say “Enough is enough” with regards to the subterfuge being foisted & perpetrated upon the nobility of Creation??.

    Oh, My Bad,…I forgot: Because DARWIN Reigns Supreme & a great thank-you from the 60’s we have “God is Dead”.

    Yeah, that’s it….

  • Ray

    Free shipping…sorry no such thing
    Shipping included…OK…but still gotta pay extra final value fee
    Controlled shipping fees such as on amazon is also unfair in that I have to pay higher postage than their rates, plus shipping material & taxes on that also.
    Selling items for 1 cent with high postage is not right and not fair to the providers. these are the ones who caused this to be in the first place.

  • Laurie Hayden

    I would like to see ebay do free shipping in the same way that amazon does. If someone spends a certain amount of money in my shop, I can ship it for free. In my shop, $25 worth of sales would motivate me to ship for free. I think ebay shops could decide what $ number makes free shipping possible.

    I would also LOVE to see ebay allowing the sellers to generate coupon codes. I would love to give my customers a price break for buying 3 to 5 items in my shop~! Hey Olga, could you write up a discussion about the benefits of coupons? I love that I can offer specific discounts, or free shipping, in my etsy shop. I sure wish I could do this on ebay~!

  • mic-hawk

    I used to charge a flat rate for shipping, then switched to free shipping for 2 years. Now I’m back to charging for shipping using ebay’s calculated shipping. Sales are the same and I’m not losing money on shipping anymore. I see absolutely no advantage to giving away shipping – in my experience real buyers will buy anyway.



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