Updating this post to add eBay FAQ and opt out link from Seller Center: https://www.ebay.com/sellercenter/shipping/calculated-shipping-rates
@iredder wrote:
Question: A hypothetical case - at present, buyer pays $5 for postage but discounted postage is $3. Ebay takes their cut on the $5 and I pay $3 so I am still in the black. However, if the buyer is offered the $3 discounted rate AND ebay still takes their cut, I will be in the red if I purchase the label for $3. Do I have this correct?
Yes, you have that correct @iredder .
When a seller passes on the carrier discount and charges eBay rates, they will always be in the red unless they either add a handling fee or increase their item costs.
When you sell items that are all under a pound that might be manageable, but once you start selling heavier items it's near impossible to manage due to the cost difference between zones. Just like offering flat costs or free shipping, you will always be overcharging or undercharging some buyers if you offer carrier discounts plus a handling fee.
It also means every time there are rate changes you will have to figure out all of the unpublished eBay rates using their calculator after changes go into effect, then manually calculate the eBay fees on various rates/weights, then make manual adjustments to your handling fee. Unlike charging retail rates where the cushion is already built in.
One pitfall is sellers choosing to use a handling fee that frequently sell multiple items: that handling fee applies only to the first item when buyers buy several of the same item. If the handling fee covers the eBay fee on shipping for one item, seller loses when buyer purchases multiple items and ship cost goes up. Same applies if seller increases item cost instead of using a handling fee. There is no way for sellers of multiple items to efficiently and accurately account for eBay fees on shipping when passing carrier discounts to buyers.
A big pitfall is cubic rates and multi-item purchases. If your listing is set up with a 7x7x7 box, 2 lb and the buyer purchases 2 items, the system may charge them the cubic rate for a 7x7x7 box even though you've had to increase box size to 12x7x7. In that case the buyer isn't paying enough to cover the shipping label, let alone fees on ship cost. Since there are no cubic retail rates, you will avoid that pitfall by charging retail rates.
Update: eBay posted in this discussion earlier today they will be eliminating buyer-facing cubic rates on transactions with combined shipping, but not for transactions with single items. This means sellers passing on carrier discounts have little to no room for error on package dimensions in their listing when passing on carrier discounts. Read this thread for further discussion.
I've been saying for a while now with the gap between eBay rates and retail rates constantly getting bigger, eBay should:
1. Not pass on any cubic rates to buyers since their system has no way to account for box size changes on multi-item purchases. Also because many of the lower volume sellers I expect eBay is targeting use estimated box sizes, and the actual boxes they use to ship may be a bit larger.
2. Allow sellers to pass on carrier discounts at a seller-chosen percent above eBay rates so we can cover fees. Easy enough to build in a cap to cover the different category fees (20% should do it).
eBay wants us to pass on this discount to increase sales, yet they still charge fees on ship cost. They need to meet us halfway by implementing both points 1 and 2 above. eBay has, unfortunately, demonstrated time and again they want sellers to lower shipping, lower prices, and absorb all those losses. Forced Best Offer, encouraging sellers to use "recommended" ad rates, "easy pricing" that automatically lowers your pricing, sneaking in automatic offers to buyers being a default setting when you send that first seller initiated offer, and so much more. Now it's a huge push to get sellers to offer carrier discounts where every seller that complies will be in the red unless they're smart enough to either opt out or manage their prices differently.
Sellers that go along with the discounted rates and decide to increase their item costs to cover eBay fees: please do not forget you have that expense baked in when you deal with buyer offers!
GLORIOUS!Confused about the switch to eBay discounted shipping? Read
this discussion to make an informed decision about opt in / opt out.
