One of the most delicate points in e-trade is shipping costs.  Some retailers seem to think they can tack on assorted shipping and handling fees to make their profit, forgetting that the costs of shipping and handling are partially offset by the fact they do not need a brick-and-mortar store and do not face the types of expenses traditional retailers incur.

This must be balanced against the discount mentality of the auction marketplace - that is, very little is sold for suggested retail price, so certain out-of-pocket costs (like postage - particularly to foreign destinations) are fair game for recoupment.

An honest and fair shipping rate contains two components: actual costs, and actual needs.  Let me give a couple examples.

ACTUAL COSTS

If it costs $4 to mail a package, an honest, fair and actual cost for shipping would be $4.  Some sellers like to add on a bit more, and some are honest enough to say they are helping defray the costs of packing materials.  If they really are buying padded envelopes and  bubble wrap, this seems legitimate enough.  But often the product arrives in a box supplied (at no cost) by the post office, and insulated with old newspapers.  Buyers feel cheated when they pay extra and get bare minimum.

Buyers need to keep in mind, though, that sellers do not always know the exact weight of a package.  They leave items unboxed in case bidders ask questions or want additional photos.  Until the box is sealed and laballed for shipping, a seller can only use his or her best efforts to fairly estimate the actual shipping weight. 

I weigh the object and add about 4 or 5 ounces for shipping materials (boxes, bubble wrap, documentation, etc.).  Sometimes my estimate is off by a few ounces one way or another. 

ACTUAL NEEDS

This is a bigger problem, but many buyers and sellers seem genuinely oblivious to it.  Imagine you are mailing an 8-ounce package from coast to coast.  As a seller, you might want to use the free Priority Mail packaging supplied by the post office.  However, by marking the package "Priority Mail," you are automatically required to pay $4.60 to ship the item.  In fact, an 8-ounce package (and any item 13 ounces or lighter) can be sent through first class mail.  A first-class mail parcel (under the new rates effective May 14, 2007) costs $2.32 to mail - or about half the price.  An 8-ounce flat is even less, at $1.99. 

The post office's dirty little secret is that Priority Mail is first class mail; it's just normally heavier.  The expected delivery times are identical or within a day of each other, and in no case is delivery time guranteed.  So for twice the price, the buyer gets a "free" box, fancy red-white-and-blue Priority Mail stickers, and the same delivery time.

Shipped parcel post, the same 8-ounce package costs $4.50 and takes twice as long.

Shipped UPS ground, the same box costs $9.22.

Some sellers automatically use UPS.  Some automatically choose parcel post or Priority Mail.  These choices, though, have expensive consequences for buyers - and may lead to lower bid prices. 

CONCLUSION

Sellers and buyers need to be aware of the true cost of shipping, as well as the true need - that is, whether more expensive options are worth it.