Forced to Offer Free Shipping?

It may not be as bad as you think.

by Dennis L. Prince
- Jun 22, 2009

eBay has recently announced mandatory free shipping provisions be offered for certain categories of goods.

As of June 14 on eBay U.K., sellers who list items in Video Games, Mobile Phones, Consumer Electronics, Computing, Photography and Clothing will be required to offer free shipping as a first option to domestic buyers with usual fee-based delivery options to appear only afterward. If it floats at eBay U.K., might it be extended to other sites?

If you think this could kick you in the bottom line, take a breath, relax and consider these aspects and alternatives to the virtual landlord's latest action.

Low-hanging fruit: Free shipping on featherweight goods

First, if you deal in lightweight goods, free shipping should be no problem at all. If you're stateside and your items qualify for First Class USPS shipping (currently 13 ounces or less), shipping fees are relatively nominal. Media Mail service (intended for books, DVD, CDs and similar items) is similarly inexpensive, though delivery time is longer.

If you'll offer free shipping on such goods, ensure you're not weighing down light items with heavy packing supplies. If you sell flat goods (such as paper), stock up on lightweight rigid mailers to add protection without adding much weight. DVDs, CDs and similar items ship well in bubble-padded envelopes. And, if you sell soft goods (plush, lightweight clothing), consider Tyvek or plastic self-seal mailers; it's like shipping a pillow that will get squished and squeezed, but it will still arrive safely.

Grow your customer base with occasional free-shipping promotions

Look now at developing a price 'restructuring' plan that allows you to manage price pressures, such as mandatory free shipping

Naturally, free shipping is a great promotional tactic, and it's a good idea to offer free shipping on your popular items when the season suits it. This is a perfect tactic for the seller with goods that draw in repeat business, customers returning for more and more of the same after they've enjoyed their first purchase from you.

Use free shipping to draw in new customers, those you're confident you can service again. If they love your goods, they'll likely pay for reasonable shipping on subsequent purchases. Of course, they'll be looking for your free shipping offer and, if you make this a seasonal promotion, you'll set yourself up to enjoy a reliable spike in your business where increased sales volume will offset the impact of the free shipping.

Modify your pricing in a sensible way

This is probably the first option sellers think they have: jacking up price of their products to offset the cost of free shipping. If you consider the historical trends of consumer goods around the world, prices have gradually risen as costs of doing business have risen while currency values have slipped.

Look now at developing a price "restructuring" plan that allows you to manage price pressures, such as mandatory free shipping, adjusting your prices over a period of nine to 12 months. Of course, if your profit margins can bear it, offer free shipping while leaving your prices unchanged. Or consider leaving some prices unchanged (as in the lightweight items previously discussed), while gradually increasing prices of other costly-to-ship items.

If price increases concern you, consider bundling your goods in a way that selling two or more in a single sale will make free shipping more affordable and increase your overall sales numbers. Get creative in the way you'll market your goods and see how you can turn this situation around to serve your best interests.

Explain how 'free' isn't always best

Show the buyer how a reasonable shipping fee can work to his or her benefit

Though eBay encourages sellers to offer free shipping as a first domestic delivery option, the seller still controls the conditions of that free shipping. That is, items to be shipped free should be shipped in the most economical method available and insurance should be made mandatory for buyers electing that service (since economy-rate shipping sometimes causes damage and loss to goods).

Beef up your terms of service to clearly state that the buyer assumes responsibility for loss or damage to goods shipped free. Also, indicate how packing, shipping and arrival time of goods shipped free can vary. This isn't to suggest you'll be neglectful or irresponsible in shipping in this manner, only that you'll be reasonable within the scope of the service and its benefit to your business.

After you've laid this all out, show the buyer how a reasonable shipping fee can work to his or her benefit, delivering the goods safe, sound and in a speedy manner. Now it's up to the buyer to decide, isn't it?

Finally, consider building the store where only you decide

If you haven't already begun expanding your e-commerce footprint, start looking into how you can set up your own Web store. Platforms like Auctiva Commerce make it easier and more affordable than ever to customize a storefront, manage inventory and generate your own traffic to your site.

Entry into e-commerce has become about as simplified as operating a DVD player. Sellers of all types and commitment levels—including those new to e-commerce—are finding it increasingly easy to open an online store and run a viable, self-reliant business.

And, with the traffic at social networking sites, entrepreneurs can find their self-made stores "going viral" through word of mouth. You'd be surprised at how popular your store could become with just a little effort.

About the Author

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 Auctiva Corp. and/or its principals.

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