Posted by Shipping rates have been on the rise, and it’s taking a bite out of seller profits. You have to be very careful about how you handle shipping. If you frequently list items with free shipping, you may want to take a look at your older listings to make sure your shipping cost doesn’t eat all of your profits. With rate increases and seasonal surcharges, you may be surprised when it comes time to purchase a shipping label. The safest thing to do is select “Don’t offer discounted rates to buyers” in your shipping discount settings. Otherwise, your buyers will get the shipping discount passed to them. I look at the discount as a handling fee. In many cases, the discount can be the difference between a small profit and no profit.
One recent example is an auction item I won on Ebay. I was the only person who bid on the item, so I got it for the seller’s starting price, which was $9.99. The listed shipping cost was $9.94. My final cost with tax was $21.60. I’m not sure why no one else bid on the item, that had me a little concerned. The seller had 100% feedback and 195 items sold on Ebay. In comparison, I have 100% feedback and 403 items sold. I try to avoid sellers that are located in Florida or California, but this time I made an exception. The next day the seller messaged me that they were out of town and wouldn’t be back for 10 days. They offered a refund or I could wait for them to ship the item when they got home. I said I would wait but was worried that they were expecting me to ask for a refund so they could relist the item at a higher price.
10 days later the deadline for their return home came. I did not hear a chirp but thought maybe they needed a few days to get settled in. On the 14th day I finally got a message from the seller with a tracking number. I was surprised that they didn’t use Ebay to purchase the shipping label. I entered the tracking number into USPS.com and sure enough, the package showed up in the system with a 6-day delivery estimate. 4 days later, I decided to check on the package and the status said that it was left at my front door. The shipping label showed the postage fee was $18.95, full retail. I entered the package info into the Ebay shipping calculator, and it showed that they could have gotten a 68% discount. Shipping discounts change frequently, so it might have been less on the day they shipped the item. Regardless, the seller took a loss on this one. If you add the final bid and the actual shipping fee, the cost was $28.94. Ebay seller fees are based on item price + shipping. I estimate the selling fee was $6.28. That would make their loss around $5.30. Be careful out there!