Nothing is Free: Should I use Free Shipping when selling on Ebay?

On Ebay, when you are going to sell something, Ebay really pushes the “use free shipping to attract more bidders” motto. I know that I waffle back and forth every single time I go to sell an item in an auction style listing because I can't figure out whether I want to do this or not. There are pros and cons to every part of it and a lot of factors you have no control over.

So I decided to do an article for my own benefit, as well as anyone else who decides to draw conclusions from this. This blog article is about the pros and cons of using free shipping in auction style listings along with some direct analysis from Ebay.

Pros

• Free Shipping Logo: When you list something with free shipping, it puts a little logo on the side of your item that says “Free Shipping”. This definitely stands out more than not having one there and does attract the eyes a lot. While I think this is a plus, I don't think it is anything huge. I would venture to say most buyers will care more about the price and the actual item contents more than whether there is free shipping or not, at least with Lego sets. But I think there is definitely something to be said for having an extra little bit of color on the listing so that it doesn't slide in with all the monotony when someone is searching for a set.
• Buyer can compute the price easily: This seems really stupid to think about, but can definitely make a difference when someone is bidding, especially in those late auction situations where they are trying to snipe, or outbid the person who just sniped them. If you offer calculated shipping, then your shipping may be something like $15.27. If the auction price is currently $98.39, then the people looking at your auction have to do some math. Now, this is isn't terribly difficult math, but in this day and age with calculators, a lot of people can't compute that in their head, especially in the stress of an auction about to end. Free shipping is by far the easiest solution to this because the price is the exact price of the auction itself. It's like wanting to know the time and looking at a digital clock instead of one with hands.
• Attract Bidders that might not be attracted at the real shipping price: This can sometimes be a double edged sword, but if someone doesn't like how much your shipping cost is to them, they may not even consider your item. If they don't bid, that's less bids in general. Sure, they could buy it and then you are out the fortune to ship it to them. At the same time, they could invoke a bidding war with someone who lives next to you. That person easily outbids them and you walk across the street and profit big time. Even further, I think even if the final price is right, people don't trust auctions that show $50 for the shipping price, even if it is correct and calculated to their location.
• Think about what matters to you when you shop on Ebay: I generally do like auctions with free shipping a little bit more, especially if they are by sellers that live quite a ways away or especially an international item I can't get as cheap here.
• Won't be filtered in Ebay Searches: Ebay has search options so that buyers can only search for items with free shipping. I don't ever do this, but there are definitely some who do meaning that if you aren't offering free shipping, those people are filtering your items out. Since there isn't an option in Ebay to search for “not-free shipping”, this only hurts those who don't offer it.
• Ebay Ratings: If you sell on Ebay, you know Ebay has a 5 star rating system for several things including “Item Description”, “Shipping Time”, “Shipping Price”, “Communication”. Obviously, just like feedback, these affect people's decisions to buy your items. But Ebay also keeps track of these. If you go below a certain level in any category, Ebay will lower your listings when people search by “Best Match”. Currently, if you list your item with free shipping, Ebay automatically gives you 5 stars in the shipping price category. You may not think this is a big deal, but let's say someone buys your item and calculated shipping is $50. They go to rate you and feel that was too much. 1 star rating is given and you suffer for it.

Cons

• It's hard to computer your bottom line until you sell it: If you use free shipping in an auction, until someone wins the auction you have no idea where you are shipping it. This can be especially bad with big sets. If you live on the east coast and the top bidder is on the west coast, you may be paying out of your mind shipping prices for the item. This could cut big time into your profits.
• Ebay gives items higher priority if they have free shipping: Ebay really pushes free shipping and items with it get higher priority in “Best Match” searches, which is the default sorting technique when you search for items. Your item will most likely never be at the top if you don't have free shipping.
• Less Bids: You will definitely have less people see your listing because there will be some immediately put off by your shipping price, especially if it is calculated and they live far from you. Fixed price can sometimes not be too bad, but your item can still be filtered out if people search for items without free shipping. This means less bids and less possible bidding wars.

So no discussion is fully complete without a little bit of real statistics and analysis. I decided to find a few sets I could search for on Ebay and average out prices to see if you really gained much price wise from free shipping. Unfortunately there isn't a built in tool to average listings so I had to do this by hand. Here were my criteria for the listings:

• Set must be new – I want a control as we wont have to worry as much about how the set was listed with a New auction. If it's new, it's sealed and all that really matters is box condition and whether its open.
• Set must not have any obvious problems with box condition – I tried to filter these out as outliers.
• Auctions only.
• Set must not come with anything extra or be missing anything.
• Set must have at least 50 listings that sold in the past 3 months.
• Set must have at least 5 free shipping auctions.
• Must be retired
• Must be different sizes than other chosen sets

This proved to be really hard. I thought of several really good sets to do this with, but found there were some where no one really offered free shipping. There were also several that didn't have enough listings in general. I finally found three sets that matched my criteria. Since I am taking a lot of data, this is a small sample size, but it should at least point us in the right direction.

My sets were:

• 10212 Imperial Shuttle
• 4195 Queen Anne's Revenge
• 9465 The Zombies

This gives us three different sized sets to compare with.

Here is what I found:

10212 Imperial Shuttle

Number of listings: 46 w/o and 10 with

Average auction price w/o free shipping = $342.38
Shipping Average = $19.33
Total Cost = $361.70

Average auction price with free shipping = $369.25

Percent difference with free shipping = 2.1%

4195 Queen Anne's Revenge

Number of listings: 34 w/o and 22 with

Average auction price w/o free shipping = $194.50
Shipping Average = $16.22
Total Cost = $210.72

Average auction price with free shipping = $198.36

Percent difference with free shipping = -6%

9465 The Zombies

Number of listings: 36 w/o and 7 with

Average auction price w/o free shipping = $124.60
Shipping Average = $11.85
Total Cost = $210.72

Average auction price with free shipping = $132.77

Percent difference with free shipping = 6.6%

So what does all this information tell us? Well, to me, I see a lot of variance between the data. First off, there were listings with free shipping at the bottom and at the top of all three items. Second, of these 3 and 10 others I researched, none of the top 3 sold prices were free shipping listings.

To me this makes it seem like it just doesn't make a big difference in terms of Lego sales. People who buy sets are more interested in the set itself and the price than whether its free shipping or not. In general, I think it means your actual listing and well you put it together, when you ended it, etc. make a lot more difference in the final price you get for the item. This means its really nothing to stress out about.

Looking at all this data, these would be my recommendations of when to do it and when to not:

When to use free shipping

• If it is an extremely light item, under a pound or so, I would do it. It does add something to the listing and it isn't going to cost you a whole lot extra even if the person lives on the other side of the country. This will attract more buyers and the more bidders and views your auction gets, the more this will make up for any items you sell that go across a long shipping distance.
• If you live in the middle of the states, I would lean more towards using it. Because I live in the far East, I fear those people in California buying my items listed with free shipping. If you live in the central parts, on average, everyone on Ebay from the US is closer to you. You can apply that logic to every other country as well.
• If you check before listing an auction and no one else has free shipping. If no one else has free shipping, your auction will definitely benefit because it will be different from all the others.

When not to use free shipping

• Don't use it on bigger items. It's not worth taking the chance of a $50 shipping fee for someone. In general on bigger and more expensive Lego sets, I think you get into the people that are more serious because they are spending more money. In this case, these people will add things together and will not really are as much about free shipping over the item itself.
• If it makes you anxious. If you don't want to worry about what that shipping charge could be, just don't deal with it. Set it to “calculate”.
• If you want to be able to calculate profits better ahead of time. If you don't have to average in shipping, you will have a better idea of your bottom line.

I hope that was good information for anyone reading. What conclusions do you all draw from this?

Note: All of the information here are my own opinions and are pulled from my experiences. You may or may not have success with these methods.