Can You Offer Free P&P?
Let’s start off with a hypothetical situation. Suppose you are looking for a widget on eBay, and you find two listings that look promising. One of them has got your widget listed as £4.99 plus £1.50 p&p and packaging. The other one has virtually the same item listed for £6.49 with FREE postage and packaging.
Which one would you buy?
Now clearly if you work out the amounts you’ll see both items cost exactly the same. But look at that word ‘free’. It’s tempting isn’t it? And while you may well have seen both items and taken the time to work out that they both cost the same, you can be sure that lots of other people won’t. Many people will see that powerful word FREE and go for that listing above all the others – and they will sometimes do so even if the item offering free p&p actually costs more. So could you do this with your own listings? Have you considered offering free postage on some – or perhaps even all – of your own items?
Of course DVDs now have to be sold with an offer of free postage for same country sales since eBay brought in a rule which made this the case. Their reasoning was that it would generate more sales because the sellers would be perceived as offering a product that was of very good value. It is also much harder to inflate the postage charge if there isn’t one there to begin with! And of course, sellers can no longer really offer a DVD for a Buy It Now price of less than a pound and make up the price with inflated postage – not in this category anyway.
The idea of doing this was to pay less in eBay charges, which again, could be one of the reasons why eBay have brought in this rule. It’s clear that if you aren’t selling DVDs, you have a choice as to whether you offer free postage or not. My partner and I decided to run a little experiment over Christmas by reducing our postage charges on some items to be the actual cost it took to mail them out. We used to add a nominal 50p to cover the cost of the packing materials we use Jiffy bags, rip proof mail sacks, bubble wrap and so on, but we decided to take that off the items that were simple to send out. You know the type of thing – off the shelf and straight into a bag! In other words, things that weren’t breakable or easily damaged.
Our sales went up as a result of this little test, which has set us thinking about whether we should just get rid of the postage charges altogether and up our main prices slightly. We haven’t done it yet, but I have a feeling it will happen very soon. We do sell one specific range of items on eBay that we did offer free postage on within the UK, and that did extremely well. It’s now a question of extending that and seeing what happens. But is it as easy as adding the price of postage to your main price, or should you swallow some of the costs yourself?
This really depends on the item. For example, if you are selling stickers and you know they will only cost you the price of a first class stamp to put in the post, then it’s not going to make too much difference to the price the customer pays. But if postage is £15 and the product is something heavy that has a sales tag of £30, then the actual sales price is going to increase by 50%. It probably all depends on what you are selling and also how much of a margin there is on the item itself. We have items that we get so cheap that we end up making 10 times the price we pay for them. Now obviously there is going to be a much bigger margin for playing around with swallowing the postage costs there than there would be if the margin was much smaller. In this respect, you may find you need to consider each and every item on an individual basis, rather than simply saying you will add the cost of postage to the item itself.
You might decide to just knock the postage off some items, and change your selling price for others. You should also bear in mind what other people are charging for that same item. If there is definitely a real selling price that seems to be the norm, you need to think about whether having a higher sales price and free postage would do the trick or not.
Quite often it is simply a matter of experimenting. But if you are going to do this I would recommend experimenting with a few items at a time. Changing your whole inventory is a lot of work if you have a lot of stock, and if it doesn’t work for you then you’ll have to change the whole lot back again! With that said though, many people find that giving free postage and packing a go does make a difference to their business. After all, whenever you see a website that offers free p&p (such as Play.com for example), do you go anywhere else to see if you can get things cheaper?
You are more likely to order just the one item since you don’t have to pay any extra to get it. So you could find that offering this service is the best thing you could do to revitalise your business. And in the current situation, with many people cutting back as much as they can, saving them money in this way might actually result in you making more money in the long run. If you go away with just one main message from this article, it’s to always think of the bigger picture, and not just the amount of postage you might be swallowing on each order.
[Avril: Be careful for products with high delivery costs, £10 or £20 for example, because adding postage to the starting price for your item might result in significantly higher listing and final selling fees. High starting prices might also mean high VAT on top which could upset some buyers].