Does free shipping really work?

Things never remain the same, especially not eBay, and as sellers we find we have to adjust to reflect eBay's changes. We mostly sell old postcards and antique photos, and sometime around the middle of this year we made the decision to offer free shipping on sales of "single" postcards - no matter how many of those singles a buyer may purchase at any one time.  For large lots of cards and our photos we did not change our policy. This was just one of a few adjustments we made in reaction to eBay's changes last March 30th.

We didn't jump into free shipping all at once.   We tried it out first on a couple of specific categories, I believe art postcards and RPPCs, with mixed results.  What we found though was it didn't seem to hurt anything, so we jumped in with both feet during the May/June timeframe. 

When I first stared eBay, I would not consider free shipping.  No way shape or form is shipping free - it is a major expense, in fact, and postage is just part of it.  Envelopes, tape, little plastic postcard sized sleeves, printer paper & ink etc all are an expense.  Our only business expense that is consistantly higher than our shipping costs are the direct fees associated with selling on eBay.

eBay encourages sellers to offer free shipping.  All things being equal, an item with free shipping with appear higher in search results than the same item without free shipping.  And there are other incentives, but these incentives would not cover our cost of shipping, should our sales not increase.

So the gamble is, if we offer free shipping, could we increase prices enough to cover at least part of the loss of the shipping & handling charge, and would our sales increase? 

Apparently the answer is yes, to both questions.  We were able to increase our price a bit and still remain competitive with other sellers.   On some cards we could increase more than enough to cover our old s&h cost, on others we could not - it just depends.  Our sales of "single" postcards have increased in the previous 4 months over the first 4 months of 2010 by about 22%.  That is significant. September is right on track, not quite as much as August, but significantly more than earlier this year.

I don't know if there are other factors involved.  Our photo sales over the same period have also increased & we made no shipping changes with them.  The increase is smaller however, about 12%.  And only time will tell if this trend will continue.

For now, I suppose we'll continue with what we're doing.  The increase in sales seems to have made up for not charging a shipping & handling fee.   We just have to keep and eye on eBay, make sure whe know what those crazy kids are up to next.