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Take Control of Your Shipping Costs

Here's how you can keep your costs in check while attracting buyers with lower rates.

Long, long ago (around 1999) in a galaxy far, far away (actually, it was on the planet “eBay” in the Silicon System), it was perfectly acceptable for sellers to pass along shipping costs to eager online buyers.

Today, the billing of shipping costs has become a bit more contentious. Buyers are looking for free shipping, while sellers are struggling to keep from depleting their profits.

There are ways, however, for both sides to be happy. Here are some ideas, from the seller’s perspective, to control shipping costs while also assuring they can attract buyers without having to forsake revenue in the process.

In the good old days, buyers paid shipping without protest

In the early days of eBay, the matter of shipping cost responsibility wasn’t a matter of discussion at all; buyers paid. In fact, it was the de facto method that quickly took hold within the grassroots auction community, usually stipulated in most auction listings by a familiar statement: “Buyer will please prepay, plus shipping.”

That was then. This is now.

Sellers need to actively review their chosen carriers’ costs and determine if they’re reasonable—no matter who’s paying the bill

In the new millennium, it has become a much tougher proposition to insist a buyer pay all shipping costs. Some sellers would offer free shipping as a special incentive on occasion, but still, the general rule was buyers would pay shipping costs.

Today, when money is tight and bargain hunters are skeptical about any added costs of a purchase, online sellers have been tasked with seeking new ways to navigate the minefield of recovering shipping costs.

Seller, analyze your shipping costs

Regardless of if you’ll ask buyers to pay shipping costs or you’ll aim to cover them yourself, you want to have a firm grip on how much shipping is costing you with each package you ship. Sellers need to actively review their chosen carriers’ costs and determine if they’re reasonable—no matter who’s paying the bill.

Consider who’s shipping your packages and what level of service they provide that would be best to gain you lower costs:

  • If you ship packages only occasionally (perhaps you’re not a high-volume seller), then a fully dressed account with a carrier might be overkill for you, costing you more per shipment, dependent upon your rate structure, than if you were shipping hundreds of packages each week. Usually, the more you ship, the lower your rates will be.
  • Conversely, if you ship in high volume but haven’t yet established a carrier account, there could be savings awaiting you for creating such an account. Many carriers offer merchant discounts to standard at-the-counter costs, rewarding their high-volume clients for higher levels of business.
  • Whichever method you’ll choose, based on your volume, compare the rate structure costs among the major carriers (FedEx, UPS and USPS) and compare the service levels. Watch out for special services, which you might not actually use and will cost you in your ongoing account fees, nevertheless.

Choose the best right shipping materials

In the earliest days of online selling, many sellers took pride in packaging their goods in top-quality, super-durable packaging. Those were the days when average-sized and average-weight packages shipped for about $5. Now that rates have escalated more than double, sellers need to avoid the “best” packaging materials and, instead, choose the right materials.

Rather than buy a package of 20 shipping envelopes, opt for the carton of 100, and you’ll likely save 50 percent

What this means is, if an item can be transported safely and inexpensively in a bubble-lined envelope, it’s likely a cheaper solution than a heavier and bulkier box. With shipping costs on the rise, packaging companies have been hard at working developing lighter-weight yet duly durable package solutions to combat the rate increases.

This might be a good time to reassess your packing goods and determining if you can use a different solution that will transport goods safely and at lower cost.

Purchase shipping materials in bulk and save!

While it might seem obvious to most of us, some sellers have yet to discover the remarkable savings when buying shipping materials in large quantities, as opposed to onesy-twosey purchases. Seek out companies that specialize in shipping goods—there are many with online stores right at your fingertips.

Rather than buy a package of 20 shipping envelopes, opt for the carton of 100, and you’ll likely save 50 percent. Also, avoid purchasing shipping goods from retail locations (office supply stores, mailing center stores) where such goods are significantly marked up. One warning, though: Be cautious of the online sources that offer great bulk-item prices then surprise you with amazingly high shipping costs. Your best bet is to find a supplier that’s local to you where you can pick up yourself (even if you need to special order items).

So, will your buyers pay?

This brings us back to the original dilemma: Will you pass along shipping costs to your buyers, and will they pay? Generally, if you’ve contained your costs through choosing a best-value service and using best-purpose and best-price materials, you’ve already reduced costs. From here, you’re in a position to offer “reasonable shipping rates” that will appear as a bargain to shoppers.

If you feel you must offer free shipping to properly attract buyers, you’ll need to fold those reduced shipping costs into the price of your items or absorb the cost directly in your cost-of-goods-sold algorithm.

Despite the pressure on sellers to offer free shipping, many still charge their buyers—and there’s no ethical foul here. But if you want to balance the scales for yourself and your customers, take steps to control and contain your shipping costs, passing along those savings to your customers in whichever method you find works best to satisfy them while maintaining your profit goals.

About the author

Dennis L. Prince
Dennis L. Prince has been analyzing and advocating the e-commerce sector since 1996. He has published more than 12 books on the subject, including How to Sell Anything on eBay...and Make a Fortune, second edition (McGraw-Hill, 2006) and How to Make Money with MySpace (McGraw-Hill, 2008). His insight is actively sought within online, magazine, television and radio venues. Opinions expressed here may not be shared by The Online Seller and/or its principals.

  • It’s all a scam, anyway. “Free” shipping merely means that the seller has added estimated shipping costs into the price of the item.

    We listed an item both ways: one with a lower price and a buyer-paid flat rate shipping charge, and one with the flat rate shipping charge added to the price of the item for “free” shipping. Buyers bought the “free” shipping items twice as often – even though the final cost was identical.

    • jeffukhot@hotmail.com

      Yes but you pay more commission to Ebay in the free shipped article! And that’s why Ebay give better listings to free shipping

    • I did a test. 10 pounds of soy wax, before Ebay charged for shipping in end value. I charged $1 more for free shipping on the identical listing and sold hundreds. jessicamae77 “the candle lady”

    • r.u

      Hi. The problem is that ebay now give priority positioning for free P&P so your listing is higher, and the final fees when you include P&P are deducted for the whole amount, so it does actually cost the seller more.

    • Vince

      “Nothing in life is free”
      Famous Amos gave away his cookie to everyone walking on the block that his store was on. Were they free? NO
      He gave the people what they wanted and built his brand.
      When it comes to shipping cost Free works for the online customer they don’t care if you estimated this cost into the price, they prefer not any surprises ( Hidden Cost or absorbent shipping cost ) As a business owner selling online weather you sell fix price listing or Auction style you need to give your customers a level of comfort to keep them coming back.

    • Interesting..I’ve always assumed that buyers look at the lower starting bid cost first to determine whether they will buy something….Thanks for the info. I will try it too.

  • The folks who run eBay have forgotten who actually “pays” their bills and instead chooses to punish those that DO pay the bills yet ship at minimal cost! This entire business of a Shipping and Handling Charge DSR was based upon minimal buy it now charges and exhorbitant Shipping and Handling Charges. Why eBay cannot use their partnership with PayPal to determine the relativity of S/H charges that the seller PAYS when generating shipping labels vs what the buyer was charged is beyond me!

    • forsakenseller

      Uhhh, ebay doesn’t have a partnership with paypal: ebay OWNS paypal & has for several years.

  • Oh great. Now my comment needs to get “Moderated”!

  • EllaK

    I have tried “Free Shipping” and adding the cost of shipping to the item, but the only one that benefits from this is ebay as my fees practically doubled! I have changed them back to the item cost with shipping costs seperately and my ebay bill is less and found my sales have not been affected.

  • Common sense really. If you don’t know this you probably shouldn’t be in business.

  • Marcus

    i find your article incorrect – i charge shipping on all my items and i
    have never had anyone question me or insist on free shipping to buy an
    item – i actually think a customer likes it because they don’t feel that
    your being deceptive and adding it in to the price of the item – people
    are smart they know shipping isn’t free and that somewhere the cost is
    involved – so why hide it

  • Mario

    All this is fine, but only applicable to USA. Ebay seems to forget that different countries have diff. shipping costs, specially with tracking number. Ebay even takes a cut from third party service namely the Shipping charges

    It’s just to make ebay richer.
    It’s all a scam.

  • I love Ebay and have been doing it for along time, but recently we have not been able to find anything to sell, one item that we used to sell for alot more, we have had to reduce the price significantly to continue selling them. The other item, we stopped selling because we suddenly had several competitors with lower prices and we couldn’t compete. I have read several books on Ebay and nothing has helped. Do you have any ideas on what we can do now. My sister has a killer business with military items, so that is the only item we won’t do. No one seems to be able to give me ideas how do get out of this slump. I would really like to loose my day job and do Ebay.

  • The Watch Guy

    My second try at commenting….

    Member since 1998…

    I see eBay is encouraging buyer behavior rather than reacting to it. When asking about new policies I get an answer “STUDIES have shown that these changes will increase your sales”. How can studies know the details of my business and specific market and why is eBay actively changing my business practices?

    Encouraging the hyper-expectations of buyers such that the norm is expecting the item shipped within an hour of purchase and the mandatory 14-day return policy are killing my personal life and my business. eBay is actively tanking my side-business.

    The removal of the discount of my fees adds to the bottom line of eBay’s revenue. That money is coming straight from my pocket to their revenue numbers. What was the acceptable criteria that indicates a seller providing fantastic customer service is now not good enough.

    These new rules are a mask for simply removing my discount and adding it right to their company’s quarterly figures. eBay is FIRST a business with investors, and THEN a service for sellers.

  • Steve

    That was the biggest waste time. I will never get back the 3 minutes it took to read that article. Is this guy for real? I thought he was going to tell me something I didn’t know or hadn’t thought of before.

  • Not a scam on older or used items, I can check the cost and determine it ahead of time. So I might eat $5 or $10 to sell the item faster. I have split the cost and still make good profit, splitting the cost can make the buyer happy, they only pay $2.49 on the item and others are charging the full $5.00
    Also priority mail in the flat rate is only a good deal if weight is an issue, use a priority box and check the weight and many times its cheaper then flat rate. New items are a whole new ball game so we should all keep the cost low. And many time we can do this by using the right packages, size matters and they charge for extra space so reduced and wrap correctly and that can save a lot. In the end if your are fair and honest then you will come out ahead. I will pay the cost of insurance to protect my item and the cost of shipping, I don’t ship unless I insure.
    Have fun and make money, please don’t try and ever profit from shipping. I have sent refunds when the cost was lower the expected and that will get many return customers.
    Theelwells10
    Bob

  • rwaltco

    Unfortunately, I found very little of value in this article. Seemed like a rehash of something written earlier. Many of us as sellers don’t ship the same little item day after day so this “one-size” doesn’t fit all. Regarding the purchase of bulk shipping materials. There are MANY locations that are happy for you to come and pick up their extra boxes and packing material. If you have a re-cycle center near by, they’re happy to give all the peanuts and bubble-wrap you can load for FREE. Furniture and big-box TV and warehouse stores can be a treasure trove.

    I’ve never lost a sale because I charged for shipping. However, some times I’ll make shipping just a few dollars and add the rest into the buy-it -now price. I’ve sent 80lbs to Australia and crates to Malta and no one says’ I want free shipping. Free shipping was designed to pull buyers from major outlets such as JCP, Amazon, and the many retailers that have an on-line portal back to eBay. BTW, when you offer free shipping, who pays for the return? Not me.

  • trisha

    This is my solution: I sell shirts averaging $9.77. I created a shipping chart for domestic shipping based on usps rates BY WEIGHT. for instance, one shirt weighing 10 ounces ships first class for $2.70 max. I charge 3.00. I offer free shipping if the buyer’s purchases total $50 or more. Then, I use a regional rate box whenever possible for combined shipping. So when I sell 5 shirts, the total is @48.85 ( did not qualify for free shipping). I send the buyer an invoice showing the shipping cost as $10 (combined shipping discount rate BY WEIGHT chart). For customers where these shirts will fit in a $4.85 or $5.65 regional rate box, they receive an e-mail letting them know if they buy one more shirt, the shipping is free. For those whose shipping rate is higher than 5.65, I don’t mention it. It’s already stated clearly in the chart. This has been working like a charm.

  • disqus_dkcsc0G0Kp

    Quite frankly, I’m at a loss about what’s going on with everyone worrying about whether to give free shipping or not. If buyers go buy from a non-eBay seller they pay shipping, I wouldn’t expect anything different. Why should a buyer expect free shipping from an eBay seller. It costs to ship and the buyer pays, full stop!
    All this crazy talk about needing to offer buyers free shipping is nothing more than a basket full of rubbish initiated by eBay to line there own pockets. If free shipping on eBay is so darned important to them then let eBay offer discounted fees to free shippers, if it makes more money then they need to put their money where their mouth is and stand for part of the cost. Until then, my buyers know what shipping is going to cost them before they buy or bid, so the buyer foots the shipping costs.

  • Connie

    Free shipping is a pheromone to buyers and I understand that because I look for it myself, however, many of the items I list can’t compete price wise if I build the cost of shipping into the item. Compared to when I started selling in 1998 on average I make less money with all of the fee increases. Add to that the fee on shipping charges and sometimes I wonder why I bother.



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