Jul
2
Partial Refunds - Another Method of Increasing Your S&H DSR
Filed Under Best Match, Sellers' Insights | Leave a Comment
In my last post, I discussed a tactic that I employed successfully to increase my eBay Detailed Seller Rating (DSR) for Shipping and Handling Fees to 4.7 - the threshold required for “increased exposure” under the Best Match search algorithm.
For many sellers, those who sell at a fixed-price or sell goods that are expensive to ship, offering a $0.99 shipping and handling fee just doesn’t make good business sense.
So, here’s another idea to help sellers in this situation draw attention to the fact that they offer “5-Star” service and value in the shipping and handling aspect of the sales transaction: provide small refunds to the buyer for “excess shipping fees paid.”
If you use PayPal, this technique is fairly simple. List your auction with whatever you normally charge for shipping and handling. As you ship the item, choose a shipping method that does not display the postage fee and then immediately send your bidder a partial refund via PayPal for $0.50 - $0.75. Include a note explaining that you overestimated the shipping and handling costs and that the customer was due a partial refund.
Is this technique manipulative or deceptive? Maybe - but it’s no more deceptive than eBay making the customer think that a 4-Star Shipping & Handling DSR rating is “Reasonable,” even though, according to eBay’s Pinks, sellers with a (”Reasonable”) 4.0 average S&H DSR, ”represent the bottom 1% of all sellers.” Until the system is fixed, sellers need to work within it in order to stay afloat.
The purpose here is to draw attention to the fact that you actually charge “Very Reasonable” shipping fees - and if it takes a small refund to make the bidder notice that fact, then so be it.
Odds are that your buyer will be delighted with your shipping and handling fees.
Issuing a partial refund to someone who made a payment via PayPal is relatively painless. PayPal will even return to your account whatever fees you’ve paid for that portion you refund, however small.
Here’s the instructions from PayPal’s website:
In addition to being able to refund your buyer anytime within 60 days of receiving a payment, you can also opt to send a partial refund.
Your original transaction fee will be credited to you. When issuing partial refunds, a portion of the original fees paid will be returned to you.
Here’s how it works:
- Log in to your PayPal account.
- Click the History sub-tab.
- Find the payment you would like to refund.
- Click Details to open the Transaction Details page.
- Click the Refund Payment link.
- Enter the refund amount and click Submit
Jun
30
Across eBay, the Shipping & Handling Fee Detailed Seller Rating has the lowest average of the four individual evaluation criteria. As I write this post, the average score is 4.5, which is bad news for sellers hoping to qualify for higher rankings in the Best Match search results. An average of 4.7 or higher in all four Detailed Seller Ratings will provide the seller’s listings with improved visibility.
Like a lot of other eBay sellers, I was having problems getting my Shipping & Handling Fee scores above that 4.7 threshold, so I decided to capitalize on the information I had included in several posts over the past year.
First, I knew I didn’t want to offer free shipping, because I knew from two published university studies that combining shipping and handling into the cost of the product actually lowers revenue on average for auction sellers. So I decided to offer significantly reduced shipping and handling charges.
I went with $0.99 shipping. I figured this amount would be obvious to the buyer that I was offering shipping and handling below my own costs and they would recognize the value in that.
Next, I educated the buyer that they were on the receiving end of discounted shipping and handling. I emphasized this fact in the auction listing’s description. I made sure the postage I paid (in excess of what the bidder paid) was visible on the shipping label. Finally, on the PayPal packing slip I printed and included with the package, I circled the amount of shipping and handling the bidder paid ($0.99) and hand wrote next to it, “Free Upgrade – please leave feedback.”
In reality, the reduced shipping fee’s encouraged increased bidding (more so than free shipping in my opinion), so (in most cases) the final bid price covered the cost of the mailing, therefore I wasn’t taking a loss on the shipping. This technique simply helps bidders recognize the fact that I charge a fair amount for shipping and handling.
The result, happy customers and a shipping and handling DSR average rating that’s finally above the 4.7 mark.
Granted, it’s a radical tactic. But it just might be worth attempting if you are serious about raising your DSR’s.
Jun
27
Improve Your Shipping and Handling DSR by Selling the Right Things
Filed Under Sellers' Insights | Leave a Comment
Power Seller Jenny.z has an interesting twist on how to maintain a high eBay Shipping & Handling Charges Detailed Seller Rating (DSR). She maintains that selling items under $10.00 is a bad idea:
It sounds like a great idea – after all, everyone likes a bargain don’t they? But items that sell for under $10 have one big problem: Shipping. It’s quite likely that the shipping for the item will cost more than the item itself and this can be very off-putting to buyers. For example, if the item costs $4.50 and shipping costs $6, the total cost for the item is $10.50. If the buyer can purchase the item at their local store for $8, then this suddenly becomes a much better deal. For small items and accessories, the way to get around this problem is by grouping the items together, such as sets of 6 golf-balls or 5 tea towels.
Obviously, if what you are selling is lightweight and can be mailed inexpensively, this isn’t a factor sellers need be concerned with. However, as the writer points out, if the shipping and handling costs more than the item, alarm bells should be sounding in your head as you are posting your auction. I would suggest an even more modest ratio of shipping costs being no more than half of the item’s cost.
Just because the buyer should be aware of the shipping and handling fees and tacitly agrees to them when they place their bid, doesn’t mean they are happy with them. The shipping and handling charge DSR allows bidders a new outlet to express their dissatisfaction. The fact that this particular metric has the lowest aggregate average across eBay among the four DSR scores, indicates that many bidders are quick to mark sellers down on this criterion.
Why should you care? Because Best Match has changed things. Sellers that maintain a 4.7 average or above in the four DSR ratings will receive improved visibility in eBay’s search results. Improved visibility means more click-throughs and more sales.
In my next post, I discuss how I improved my shipping and handling fee DSR from my lowest DSR to my second highest.
Jun
25
Another Study Shows Bidders Don’t Like Free Shipping!
Filed Under Sellers' Insights | Leave a Comment
Last August, I posted about a study published by University of California and University of Hong Kong researchers who determined that eBay bidders were more prone to bid on auctions that had a separate shipping & handling charge, than auctions that had both charges rolled into the price of the product under the pretenses of “free shipping.” This held true even if the total cost of the “free shipping” auction was less than the combined cost of the auction with the charges broken out.
I wrote:
eBay bidders are more willing to pay $11.00 total for a CD when the price is broken out by product cost ($7.00) plus shipping and handling ($4.00) than $10.00 for a CD where the shipping and handling are free.
Now another study has reached the same conclusion. In their article “Consumer Behavior in Online Auctions: An Examination of Partitioned Prices on eBay” published in the Winter 2008 edition of Journal of Marketing Theory & Practice, John Clark and Sidne Ward examined this phenomena in the eBay collectibles market.
They found that even experienced bidders (categorized as such by feedback history) are prone to be inattentive to the auction’s total cost and focus on the cost of the item itself. Items that included the shipping and handling in the base cost of the item generated less revenue than those with “partitioned prices.”
Why does this happen? From my last post on the subject:
Bidders either disregard (or overlook) the shipping cost when determining the value of a commodity, or create “separate mental accounts” for what they are willing to pay for shipping & handling and for the cost of the item itself. This concept basically says that the bidder is willing to keep the two expenses separate in his or her mind, and as long as both charges are reasonably low, he or she is willing to pay - despite the fact that combined, the expense is greater than the single charge for the item with free shipping.
So how do we reconcile this with eBay’s push (through incentives and disincentives) to get sellers to include shipping costs into the price of the auction and offer “free shipping?”
- First, I think we can all agree that eBay’s assertion that they are encouraging a “free shipping” policy in order to “improve the buyer experience” is bunk. This is the second study that indicates that buyers have proven through their actions that they have a better experience when the price of the item and the shipping charges are separate.
- Therefore, we can conclude that this another tactic by eBay to increase their company’s revenue. Don’t get me wrong, there’s nothing inherently evil with a company in a capitalist society working towards increasing their bottom line. Under their current policy, the shipping and handling fee a buyer charges is not subject to a Final Value Fee - therefore, sellers who charge a low fee for the item and an inflated shipping and handing fee are doing so in an attempt to circumvent the Final Value Fee. I think it’s fair for eBay to have an eye on recouping some of that money slipping through that loophole.
So why not charge a (reduced) Final Value Fee for the entire transaction amount? Bidders will actually be afforded an “improved buying experience” based on the findings of these studies. Sellers could charge what they needed or wanted for shipping and handling with fear of disadvantaged rankings in the Best Match search results. eBay could close the loophole that allows some disingenuous sellers to avoid paying final value fees.
It’s time to stop tip-toeing around this issue and address it straight on. The evidence is in. The current shipping and handling policies, incentives and disincentives don’t work for sellers, bidders, or eBay. Let’s move forward.