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Bedford Ramblings
Steve Mills

eBay. The movie revisited!

Posted Sunday, October 27, 2013, at 11:16 AM
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  • So let's get back to how free shipping can be a money maker. First, free shipping is not free so I will need to calculate what amount I need to add to the selling price to cover the "free" part. For this example I will say that shipping to the west coast of Washington State costs $9. Shipping to the Mid-South area is about $6.

    If most of my sales were out West, I would add $9 to the resale price but they average something in between. I want to be fair to my local customers so I am going to add a shipping fee of $7.50 to the price. Sometimes I win, sometimes I lose but my average is a break even.

    OK, but now they ordered 2 of the same thing. I can ship two for the same price so I am going to get paid twice for "free shipping". To be fair again, I am going to extend a $4 discount when they buy two. I get a happier customer, encourage more sales and actually, I average an extra $3.50 in profit.

    How? They paid the $7.50 "free" part twice resulting in $15 extra. I gave them a $4 discount meaning the $15 is reduced to $11 but I only pay on the average $7.50 because two go at the same price. Result is an extra $3.50 in my cash register.

    Is that fair? Making extra money on the "free shipping"? Well, it is not as lucrative as it may first appear but yes, I think it is legitimate. They saw the overall cost of getting their product and agreed.

    Here is a different example: If I bought your house for $150,000 but you would have sold it for $135,000, do you owe me a refund? I don't think so.....

    Now what happens if they want to return it? They are paying the shipping back so no problem but oops, who is paying the shipping for the first part? Remember, it was "free shipping" so they want a full refund.

    Well, you could try to argue that point but that often gets dicey. If it is coming back from no fault of your own, you can put a restocking fee in the listing (ahead of time) to defray the cost of return shipping.

    25% in my case would pay for half of the return cost. 50% would cover it all but that sounds pretty steep and remember, you have been making some money on the extra sales anyway.

    If you have numerous returns, as you might in clothing, you probably need to refine that example, so knowing those darn details can be important. If you are like us, and have had only one return in over 5,000 sales, no sweat, we would have made some extra money for our "self-insurance" program or to buy a cup of coffee.

    Either way, we have not LOST money, we have increased our search results in eBay Cassini resulting in more sales, and locked in a 5.0 rating in our shipping DSRs which could make the difference (as in our case) on whether or not we get the Top Rated Seller (TRS) discount on our eBay fees, which is money saved. $$

    For me, it is worth revisiting. Next post I will revisit my opinions on Global Shipping and the third part will be about Managed Returns. Yuck! Or maybe not!

    -- Posted by stevemills on Sun, Oct 27, 2013, at 11:21 AM
  • You did, Steve. As you know, I can't resist responding to eBay stories ...

    "Man, we've got something special [at eBay]. Don't screw it up."--Maynard Webb (2003) ...

    And then, along came John Joseph Donahoe ...

    "A monkey could drive this train"--Meg Whitman (2003) ...

    So, why then did she hire a gorilla ...

    "We've had the disruption, now we're having to disrupt the disruption."--John Donahoe (2007) ...

    And, six years later, what is there to show for all the Ho's disruption? ...

    "We had to create a vision of the future so people could let go of a very successful past."--John Donahoe (2007) ...

    Well, he certainly has achieved that goal, to "let go of a very successful past", that is ...

    "We talk and listen to customers, but for this kind of innovation, customers don't always know what they want."--John Donahoe (2007) ...

    So, there you are, Johnny Ho knows best what you want ...

    "... is there going to be some noise along the way? There is."--John Donahoe (2008) ...

    How's all that "noise" now, Johnny Ho, still ringing in your ears? ...

    "We are driving more changes than ever. There are no silver bullets, we're testing in different geos, when we find things that work, we'll do more of them and less of the ones that don't."--John Donahoe (2008) ...

    We have no idea of what we are doing but we are doing it anyway ...

    "Our ambition is to be the strategic partner of choice for every leading retailer, brand and manufacturer across the world ..."--eBay Employment Ad (2013) ...

    Johnny Ho is delusional, of course; then, we are all entitled to dream ...

    "eBay expects sellers to consistently provide service that results in a high level of buyer satisfaction. This includes setting and meeting buyer expectations by providing excellent customer service from beginning to end."--eBay Seller Performance Standards ...

    Yet, by every measure, eBay consistently fails miserably the standards it sets for others ...

    Whatever; the ugly reality of eBay Inc.:

    eBay's crooked auctions marketplace ... http://bit.ly/11F2eas

    The clunky, unscrupulous "PreyPal" ... http://bit.ly/UVXx53

    The ongoing joke of it all ... http://bit.ly/YvxFEg

    Fun quotes from the eBay executive suite ... http://bit.ly/12xvzyA

    -- Posted by PhilipCohen on Mon, Oct 28, 2013, at 7:00 AM
  • I can't help but smile when you come in Phillip. Not that we agree about eBay (most of the time) but I enjoy your posts none-the-less.

    You are quite well known around the internet, I notice other bloggers and other posts will often refer to you. DO ya thin John D. knows your name as well? If he doesn't, he really needs to start paying more attention to the "folks" out here.

    I particularly liked your selection of quotes. As I hinted, before this last weekend I would have probably piled on to them. eBay has really rung my bell over the years, but this weekend I finally understood why and come to peace with the situation.

    Not that I won't have a relapse now and then but...

    My peace came from the acceptance that eBay is no longer "our" play-yard, but instead it is eBay's play-yard. Those of us who grew up with eBay and feel like we helped build it, take a personal have an emotional investment.

    As the shift changed over to eBay as a corporate, stock-holder responsive company, the eBay community took a back seat. For those of us who really felt connected to that community, it hurt.

    But, reality is that the warm fuzzy is not there now. There will be some efforts to rebuild it, but never in the same way we originated, so this weekend I took a deep breath and moved on.

    eBay will still be an important selling venue and certain people with eBay will still have special meaning to me, but it is now, "nothing personal, just business".

    If warm and fuzzy is important and sales are not as important, I would check out Bonanza. That is not a slap to Bonanza. It is very well known that it does not enjoy the same traffic, but it has a community and a warm feeling about it when you contact them.

    After this weekend I also plant to expand my presence on that venue as well. It will give me my warm & fuzzy fix and after meeting a key person in customer service, I am re-enthused about them as well.

    -- Posted by stevemills on Mon, Oct 28, 2013, at 8:48 PM
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