You're the highest bidder at .99 on an item you really want.  What a great buy!  Have you considered the shipping and handling charges?  Beware, your winning bid could cost you more than you think...turning out to not be such a great buy after all!

Excessive shipping and handling charges affects everyone - buyers, sellers, manufacturers, and wholesalers.  Here's how it works, what you need to watch for, and how you can help to curb this practice, more commonly known as 'circumvention of fees'..

First of all, on auction-style, fixed-priced, and eBay Store listings, eBay charges a listing fee when a new listing is uploaded to eBay, and a final value fee based upon the item's final selling price.  These fees are collected to help eBay fund their operating costs (and attempt to help keep sellers' costs to a minimum).  Listing fees and final value fees are not assessed on shipping and handling charges.

The 'Shell Game'

A seller may decide to list an item for as little as possible in order to get a sale, and keep their eBay fees to a minimum.  As one example, a seller decides to list a lamp for .99 which is way below their wholesale cost.  So, how do they make up the deficit?  By adding their needed (or desired) profit to the shipping and handling charges.  In doing so, they sell their item, make a profit, and pay minimal eBay fees.

As a buyer, you may be asking why you should be concerned if you're willing to pay the total price of your purchase.  The truth is that you may have been able to get a better deal after all.  

When a seller decides to utilize this practice to circumvent (or avoid) eBay fees, he/she lists their items so low that other sellers, who comply with eBay policies, usually can not compete.  When other sellers can not compete, they don't list their items, thus narrowing the market and availability. 

Buyers will pay the higher total price just because there are no others offered, or the other listing prices seem too high (the 'law of supply and demand' effect to an extent).  In the end though, you still may have paid too much for your item.

As a recent example, I came across an item this morning where the starting price was .99, with shipping and handling of $28.49 (ouch!).  As a seller, I can purchase this item wholesale for $8.90 with shipping and handling of $7.50 (often the same costs for the other seller). My starting price would most likely be $13.49 (still below retail), with shipping and handling of $7.50. 

My eBay listing and final value fees at the selling price of $13.49 would be $1.31...the seller's fees, .26.  My net profit would be $4.69. The seller's profit, $13.18.  The reason why I point this info out will become evident later on.

The Truth of the Matter Is.....

The common psychology of auction-buying is to get the best deal.  When buyers search for and find the item they are looking for, they tend to look at the asking price without even considering the shipping and handling charges.  Why are they so shocked at the end of the auction when they find out their shipping is $28.49, when the item will fit in a USPS Flat-Rate Priority Mail box for $8.10?  That .99 deal isn't looking so hot after all!

In many of the listings where the seller is attempting to circumvent fees, you'll often find that the shipping costs (as listed under the current price toward the top of the listing) are shown as 'see item description'.  Buyers have a tendency to overlook this section when there is no dollar amount stated. 

When the shipping cost info is incorporated in the item description, it usually appears toward the bottom of the listing - many buyers innocently overlook this part of the listing.  So in the end, you paid more for that .99 item than you most likely would have by buying from a compliant seller.

Now, back to the different profit amounts between compliant and non-compliant sellers.  When a seller circumvents eBay selling fees, this is a reduction in income that eBay uses to off-set operating expenses.  When this income is lower than needed (some over-simplification here), then eBay raises selling fees....thus causing  sellers to raise their prices to off-set their selling expenses - passing on the increases through asking/selling prices to buyers.

Another effect is that when sellers decide not to try to compete with a .99 sale price, this means that the wholesalers' sales will most likely suffer as well.  Why should a seller buy 20 of an item wholesale to sell retail, when they can't make up the difference legitimately in the shipping and handling charges?

Let's all do our part to keep the playing field level with fair open-competition.  

At eBay Live! 2006, and in a July 2006 eBay announcement, eBay noted that they are taking a stronger stand on enforcement for egregious violations of the shipping and handling policies.  This will take time.

Buyers and sellers can assist eBay in this heightened enforcement effort by doing the following:

• Report an item where the shipping and handling seems excessive using the "Report this Seller" link at the bottom of the particular listing.

• Refuse to purchase from a seller that elects to use pricing techniques to avoid fees - review each listing completely for shipping and handling costs. 

• Reward sellers who use fair pricing techniques without over-charging buyers for shipping and handling.  Purchase from them as often as you can.

Quick Tip:  Also watch listings selling web sites and information products.  Some sellers charge web site/domain hosting fees that are hidden in the shipping and handling fees.  With many information products, if the item indicates 'digital delivery,' the delivery is usually made via email, or through a link, so there should be no shipping and handling charge!

The majority of eBay sellers do their very best to provide reasonably priced quality items, with actual shipping charges and handling (costs of packaging) fees for their buyers.  This is truly the spirit of eBay!

I have written this guide in an effort to provide a better understanding of the different pricing practices used by sellers, so that buyers may continue to purchase their wares at reasonable pricing while compliant sellers are rewarded for their honest business practices.

ldonewald99 of 'Favorite Thingz' has been an eBay member since December, 1999.  She is an Education Specialist trained by eBay offering sales training for new members, and as an eBay Trading Assistant helps other members in selling their items.

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