Most Ebay Bidders Prefer Paying More for Free Shipping

A new study shows that most Ebay shoppers would rather pay less and pay for shipping than pay more and have free shipping.

80 auctions of new CD’s and Xbox games were held. Opening bid prices and shipping costs were manipulated on identical titles.

The researchers found that lowering the opening bid while raising shipping costs attracted more bidders faster and generated higher profits than the reverse.

Here’s a pdf of the research results.

Let the buyer beware, of himself?

[via Marginal Revolution]

Comments

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  1. aixwiz says:

    The sad thing about this is that it’s true. I run a business on eBay and most people want to buy something expensive (like a LCD TV) for $0.01. Most consumers want to believe that they are getting an incredible bargain that they can brag about to their friends, but they never mention that they paid $999.99 for shipping.

    It strikes me as shady and dishonest for a seller to have to sell something for almost nothing and overprice the shipping charges just so they can make a profit. If you try to sell something at a fair value and accurate shipping charges, people won’t bid on your item.

    I plan on continuing being honest about the price I want for something and letting my customers know exactly how much it will cost to ship rather than trying to trick them into thinking they’re getting a real steal.

  2. The Comedian says:

    There is a secondary benefit for sellers that choose to move revenue to the shipping side of the equation: Shipping charges are not used to compute the ebay final value fee.

  3. People Paula says:

    I’m one of these buyers, and I can tell you that “free shipping” screams rip-off. Why would they ship for free? Why do they want me to buy this thing that badly? I suppose it just smells of desperation, whereas a shipping charge somehow seems more legit.

  4. GenXCub says:

    I have a semi-eBay business (I have almost 900 rating for selling hard-to-find action figures), and it’s my belief that a lot of people don’t notice shipping prices, at least in the areas I sell. There are tons of unscrupulous sellers who will charge $15 S&H for a single action figure. I just say “whatever priority mail is going for these days.”

    So I think this “study” is limited to the areas where they studied. CD’s and Games (as well as other toys and action figures) have their own microcosm of eBay characteristics. I think looking in places like Clothing or Antiques would have a different response. Not that this study isn’t accurate… it hits the nail on the head, but I don’t believe it represents eBay as a whole.

  5. CMPalmer says:

    That’s just because anyone with an ounce of intelligence adds the shipping cost to the price of the item. Paying $15 to ship a small item via snail mail or UPS ground is rididculous.

  6. L_Emmerdeur says:

    Most ebay sellers have caught on to this for a while now. I wanted to buy my gf a BT headset, the Plantronics Voyager 510 (best BT headset ever). When I searched on Ebay, there were a lot of auctions, all between $10 and $20 below market. Of course, the S&H on these (which should be more than $5 for ground shipping) was between $20 and $30, making them more expensive than decent online prices. Such auctions make me question the reliability and the integrity of the seller. Couple that with Ebay’s well known practice of colluding with high-volume sellers to keep their feedback clean, this just reeks of “Going Out Of Business”-type electronic store shenanigans.

    Not surprisingly, a lot of these Ebay volume sellers are those types of electronics stores.

    If he is willing to trick me into buying his product, what else is he willing to do to part me from my money? Sell me a refurb as new is my first suspicion.

  7. L_Emmerdeur says:

    *shouldn’t, not should

  8. Paul D says:

    The Comedian has touched on what is perhaps the most important factor in the decision to sell low and charge for shipping.

    Minimize your overhead (Ebay fees) by selling at a bit of a loss (low bid) and make up the profit elsewhere (shipping).

    I personally abhor the practice and, when possible, avoid sellers who operate this way.

    That said, I just bought two accessories for my cell phone on Ebay, a car charger and an extra home charger. I paid $1.49 and $0.99 respectively, but my grand total with shipping was roughly $15. I’m fairly satisfied however, because that’s less than 1/3 what these items would have cost retail.

    When I do sell things, I always charge exact shipping cost. It takes an extra step to get the buyer’s info and get a shipping quote, but I think my bidders appreciate not getting ripped off, especially for large or heavy items (guitars & amps). I usually just “ballpark it” in the item description and specify that I will contact the bidder after the auction to prepare an exact quote.

  9. aixwiz says:

    Paul & The Comedian:
    I do understand the points that you both are making. However, in order for people to sell things on eBay, eBay has to make money in order to stay in business. I don’t like the fees they charge, either, especially when they keep going up and they double-dip with PayPal.
    Unfortunately, if eBay continues with their practices regarding fees and the preferential treatment they give large volume sellers, I will be going elsewhere. Google Base is actually looking like a viable alternative.

  10. Johnny says:

    Doesn’t the headline say the opposite of what the study found?