Forums: Discussions for entrepreneurs and small business.

In our Saturday New-Press this weekend there was an article entitled “eBay begins targeting exorbitant shipping fees”.   I found a similar article at the link below:

http://news.yahoo.com/s/ap/20071213/ap_on_hi_te/ebay_focus

This bothers me and I wondered what the thoughts were of the other members of SuN on this issue.  Shipping and handling fees can very widely from business to business.  Lets face it some foolish people use them for a revenue centers, but any experienced business person knows that this is a death wish in the long run.  The real issue I have is whether it better to be able to come up with your own policy on shipping fees or should big business like eBay tell us what we have to charge?  Doesn’t our free enterprise system naturally weed out the problem businesses in the long run?  Do we really want more controls like this?

 

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Bert at Harvey Software, Inc.
Multi-Carrier Shipping Software and Supply Chain Solutions for Internet Retailers

Also a provider of free shipping information and resources at Harvey Software`s Parcel Shipping Blog along with free tracking solutions at TrackingPage.com...

We totally agree with you that it is better to let the free market determine what is acceptable shipping costs. However, eBay doesn`t always work like the free market.

One of the big reasons eBay sellers will charge very little for the product and jack up the shipping fees is not necessarily as a revenue center, though it does appear this way. It is more of a way to get around paying higher eBay fees. eBay charges a final value fee based on the final selling price, less the shipping costs.

Therefore, if you sell an item for $5 and charge $25 for shipping, you are only being charged a final value fee based on $5, but you are getting $30 total for the transaction. If you sell the same item for $25 and charge only $5 for shipping, you are paying a much higher final value fee, and still getting only $30 total for the transaction.

The problem lies in the typical eBay buyer who is searching for a bargain. It seems as if a lot of these bargain shoppers are sucked into focusing on only the sales price and don`t pay attention to the shipping charges until it is too late.

All honest eBay sellers loose in the end because it is incredibly hard to compete with these cheats and it also gives eBay a bad name due to the inflated shipping costs.

This is just our view on this very hot topic. As eBay PowerSellers, we do have a unique view on how inflated shipping costs affect the eBay market.

Lizard Wisdom, I knew there had to be more to it!  Any more, hidden agendas seem to be the new way for dealing with internal issues.  It sounds to me that eBay should not be picking on "shipping charges" when they need to call a duck a duck and come up with better policies that allows all to profit, (both customer, them and seller).  If the reasons you have given for this is true, I find it even more disturbing how they are dealing with it.  Unfortunately a general news paper stories like this carry well beyond eBay and can cause problems for any Internet or mail order retailer.

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Bert at Harvey Software, Inc.
Multi-Carrier Shipping Software and Supply Chain Solutions for Internet Retailers

Also a provider of free shipping information and resources at Harvey Software`s Parcel Shipping Blog along with free tracking solutions at TrackingPage.com...

The problem here really is the ever-present interaction between an ideal free-market and the private ownership of a capitalistic business. In other words, AOL, eBay, Craig`s List, and other examples are NOT a free market environment! They`re privately owned networks offering a venue to customers.

Another issue is the time it takes for free-market forces to really come into play. On a formal level, monopolies cannot last forever. But on a practical level, a monopoly can last long enough that generations of people are left to deal with it.

Then there`s the issue of who is the regulating authority in terms of enforcing rules? If eBay were truly a free-market environment, then the US government would pass laws to regulate the use of shipping charges. Obviously, that`s not the case because eBay is NOT a free-market environment.

It also would be blissful and joyous if everyone had a virtuous intent, and used rational moral principles to run their own business. That`s never been the case in all of human history, so pretty much any system requires some sort of rules, enforcement, and appeal process. (Depending on the existence or not of an appeal process; that also generates political systems.)

Bottom line: It isn`t whether or not eBay is impacting the entrepreneurial ideal. Rather, it`s that eBay offers the freedom to choose whether or not to use their system and venue. IF you choose to work with/on eBay, THEN you must abide by their rules and regulations.

On a larger scope, if the rules become too burdensome, they`ll lose their customer base and go out of business. That`s the free-market process, not the internal management of the particular company.

Very good points all Craig.  Unfortunately I feel any conduit for business over the Internet can impact entrepreneurial ideal, just like our government.  And you are right, eBay is not a true free market system.  The issue that concerns me here is the fact they are blaming “shipping charges” by eBay sellers as the problem, when this is a more complex issue.  Those that are not buyers on eBay also read these articles and start distrusting all Internet retailers’ charges.  Remember many feel buying on the Internet is the same regardless of the conduit.  With carrier charges going up again in January and everyone now changing their shipping charges to reflect these changes, I feel that statements like this will further slow down Internet business next year.  I feel this because customers will now feel further distrust in how much a company charges for shipping when the fact is they are just going up for everyone. 

 

It could also be I am showing my age and I am over reacting to all the information we are fed on the Internet these days.

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Bert at Harvey Software, Inc.
Multi-Carrier Shipping Software and Supply Chain Solutions for Internet Retailers

Also a provider of free shipping information and resources at Harvey Software`s Parcel Shipping Blog along with free tracking solutions at TrackingPage.com...

This actually is a very sophisticated problem, speaking more to cultural trends than "just" the way online shopping can advance or decline.

Without getting too complex, we have on the emerging side of society the idea of critical thinking, reason, and analysis. Part of that process is to separate out individual "things" and not lump them all together by external appearances.

The emerging process is coming out of a less developed mindset, part of earlier developing mental activities. In that earlier way of thinking, evidenced in younger children, people (and societies, groups, and cultures) take a single example and categorically assign its attributes to all similar things.

Not only do people assign similar to all, but the basis they use is simply that it looks "sort of like" the larger group. And that`s what you`re suggesting: that reading one article or observing one instance of high shipping costs would "translate" across the entire spectrum of ALL mail-order and e-commerce transactions.

The worry here shouldn`t be about what eBay does. It should be about the decreasing number of people who actually try to think or analyze their actions. We have more and more people who feel their way through life, and yes, for those people, a single instance of high shipping charges could potentially turn them off completely from ever again shopping online.

So it comes down to what you believe is the...majority...worldview of today`s online shoppers.

Unfortunately history many times points to a single statement or event that effect everything for years to follow.  Look at the stock market.  It swings up and down wildly on a single person’s opinion of the near future.  But yet in the long term it is like you say, it goes up.  It leaves many losers and creates many winners along the way.  I do agree that we may all be wasting a lot of time worrying about this though.  I think this may be one of the bad results of the information age...

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Bert at Harvey Software, Inc.
Multi-Carrier Shipping Software and Supply Chain Solutions for Internet Retailers

Also a provider of free shipping information and resources at Harvey Software`s Parcel Shipping Blog along with free tracking solutions at TrackingPage.com...