Rob & Melissa Stephenson from Flea Market Flipper talk about how shipping costs are killing your eBay business.
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Reseller Hangout Podcast - How Shipping Costs Are Killing Your eBay Business
Rob: What's up, pro flippers? On today's episode, we are talking about why shipping costs could be killing your eBay business right now.
Rob: All right, so we get questions all the time about how are you guys selling these items with shipping costs being what they are, where they're at, higher shipping costs, how are you guys still making a living at what you're doing?
Melissa: And people tend to get nervous about shipping. Shipping is one of those topics that, kind of scares people because it does cost, it can cost a lot to ship items and depending on size, weight, and there's a lot of different variables that go into it, obviously. And we still do free shipping on a lot of our stuff.
Rob: We do.
Melissa: So, but, and we're not in the business to lose money. So, our goal is to obviously have higher profit margins. So we're gonna dive into some things that could be costing you more money in shipping.
Rob: That's it. Five tips that you guys can actually look at your business, figure out if you are doing these things, if they will help you grow your business, and not lose money on shipping.
So, all right, let's dive in.
Melissa: So number one, it seems kind of obvious, but you don't charge enough or you don't build enough, enough money into the price if you offer free shipping. So, so that's what we do is free shipping. We just build it into the price. But if you're not charging enough for it, then that can bite you in the butt, obviously.
Rob: Absolutely. It's one of those things that if your profit's not there, and you are not asking enough because you don't know exactly what shipping's gonna cost and you're doing free shipping, that kind of stuff will bite you in the butt and you will end up paying more, which cuts into your profits and makes your work a lot less profitable.
So you definitely want to know what you're doing. If you're offering free shipping, make sure that you're charging enough and you're adding on handling time. I'm sorry, handling costs, that's covering your packaging materials, your box, your packaging peanuts, your bubbles, any of that stuff, plus the time that you're spending packaging an item, item up.
Make sure all that is included when you are shipping an item out, that you're calculating all that in there the right way.
Melissa: And also know that you will be paying eBay fees on the shipping cost as well. So, because, back in the day, people thought they were gonna be all sly and try to just charge for shipping, cuz eBay only charged the percentage of the actual item and not shipping.
Cuz that makes sense. Like you shouldn't really have to pay a fee on shipping until they were selling their item for a dollar and charging $150 for shipping. For shipping.
When that was the cost of the item because they're, you know, people try to work the system. Yep. So then eBay had to come out and say, okay, well we're have to charge our fees on both the shipping and the item. So just know that you will be paying that for shipping too.
Rob: Yep. Be aware.
Melissa: And you can use eBay shipping calculator to figure out approximate what it will cost. We'll put that link in the show notes below too. And you can also use calculated shipping if you're unsure of how much to build into the price.
And that's what we recommend when you're starting out is adding, doing calculated shipping. Cuz then you're gonna put the dimensions of the items, you will have to box it up first. Yeah. It's not just the dimensions of the item. So you have to have a lot for packaging. So if you package it up in a little box, you just don't have to seal it or whatever.
Make sure you note what that item is and then you can do calculated shipping.
Rob: So yeah, it is a little bit more work up front, like Melissa said, getting it before you get it listed, finding out what size box it'll be in, packaging it safely so it's wrapped in bubbles. It's not gonna, you know that it will safely travel in that box.
Little bit more work up front, but it's safer in the long run if you don't know what you're doing with shipping, to have eBay calculate how much it's gonna cost, you can also add in that handling time, I mean, sorry, handling cost, handling cost for that to where you can pay for your time, pay for the materials and stuff like that.
So you definitely have that option for calculated shipping.
Melissa: All right, number two.
So the second reason is because you're not using eBay to create the label or pirate ship, we'll say those are the two cheapest ways to ship. If you create your label through eBay, they give you a good discount usually.
Rob: Huge. Yeah, huge discount. So more on this, bigger items. But you, you would think it would make sense and people would know this, but a lot of people are not. They'll go down, they'll sell an item, they'll go down to the local packaging store and just package the item up, take the address with them, and package up and do it.
Melissa: It costs so much more money.
Rob: Man, we've saved up to 60, 70, 80% off of shipping labels. Sometimes they're really pushing to go second day air. So on smaller items that you have, if you do second day air, it's sometimes cheaper than shipping ground when you're creating the label through eBay. They get a huge, huge discount, which is weird, but it is.
And if you don't, yeah, if you don't understand how this works, eBay is a huge company. They have one account with FedEx, with UPS, USPS. Those different carriers give eBay a huge discount because of how much business eBay brings them. So you're banking off of or you're, profiting, not profiting, you're, what's the right word? You're, you're getting the advantages of using eBay's account versus your own account is what you're doing. So eBay has a huge, huge, account with all these carriers. That's why they're able to offer you the huge discount. So, like I said, sometimes it's an average of 20, 30, 40%.
And sometimes it'll go up to 60, 70, 80% off of the actual sticker price of the, the shipping. So if you are not using eBay shipping to create the labels, you are missing out. I mean, you're paying way, way too much for shipping. So.
Melissa: And recently, more recently, Pirate Ship has come out and they have been very competitive with their prices.
And some of the stuff for USPS, is cheaper than going through eBay. And I believe they do FedEx as well. I'm not sure. I have to double check that.
Rob: Pirate Ship is only UPS and. Oh, UPS and, and USPS. Not FedEx.
Melissa: Not FedEx. The only issue, like sometimes it's cheaper to do it through there, which is fine, you can totally use them, they're great.
The only issue that we've had is a couple of members have had, if they had to do a shipping damage claim, they were a lot more hoops to jump through than a normal, I mean, a shipping claim is never a fun thing to do. You still have to jump through hoops with, with whatever carrier you're using, but they make it like there's an extra step into it, so it's just makes, it was just a little bit more difficult.
I think they still were fine, but, but it's just like an extra step. Yeah. And you also have to add the tracking number into your eBay account. So you can't forget to, to do that.
Rob: Yep. Huge point, like Melissa said, when you create the label through eBay, it auto automatically populates the item with the tracking number.
When you're creating it in Pirate Ship, you have to actually pull the address of the, the buyer outside of eBay, put it into Pirate Ship, create the label, and then you have to come back to eBay and put in the tracking number so eBay can see that you shipped that item and they have the buyer also has access to that tracking to see when it's gonna show up.
So, one extra step you have to use with Pirate Ship, but sometimes it's worth it, because you can get the cheaper labels with Pirate Ship as well. So definitely be checking on eBay and see if it's cheaper to ship with eBay through their account or ship on Pirate, Pirate Ship and use their account as well.
Melissa: So, All right, number three. So your item is larger than the 130 inch threshold. So we'll have to explain this one a minute. Yeah. So, you know, we do a lot of larger items, so there's a limit. There's a point at where it makes sense to ship a larger item, and then there's a point where it is insane, expensive and we have to do it freight or, and so you have to figure out what that line is.
And it's at 130 inches is the max threshold. So you can explain it a little bit more.
Rob: Absolutely. So, and this really rings huge because I was on, a call last night with one of our students, who is shipping out a Nordic Track, Pro Plus, which is a larger Nordic track unit. And she gave me the measurements before she actually was creating the box.
And we did the measurements, we did the calculation, and it would totally go through FedEx or ups, and it would be at the lower threshold under that 130 inches threshold. It would go underneath that so it wouldn't have the overage fee because, the, and we'll expand a little bit more in just a second, but the carriers, FedEx and UPS have that threshold of 130 inches. That it's length plus girth of the unit. It cannot exceed 130 inches. We'll give you the calculation in just a second. Can't exceed that. If it does exceed it, there's a huge, they tack on a huge fee for like a heavier oversize or whatever it is, charge.
And it can go up to 165 total, 165 inches total. Yeah, total in length plus girth. So, that's what it can go to. But they do tack that on between, that's not worth it ever exactly between 130 and 165. That window right there, they tack on a huge fee. And it actually is more expensive than a freight shipping with the way that we free ship. It's more expensive than doing it on a, on a pallet when you get to that level. This student that we had, I was on a, I was Voxering her last night and we were going through the process. She gave me the measurements min before it should have fit in the right size box to stay underneath that.
Well, when she packaged it, the box got quite a bit bigger and it went over that threshold and they tacked on that fee, which took a lot of her profit out of it. So one of these,
Melissa: do you know the difference of the prices? Do you remember?
Rob: I don't, because she didn't do it. She only calculated it after she did the box and it went to that next level.
So it was $200 for the, the shipping and it should have been around $70, $65 to $70. So it's a, you can see it's a huge difference. So, that is something you need to be aware of. If you're shipping some bigger items, you have to know that you want it underneath that threshold of 130 inches. So to calculate that, there's three numbers.
You have your length, width, and, height of the item. You take the two smaller measurements and you double them. So let's say you're shipping something in a normal Nordic track. It would be in a box that was 15" 15" by roughly 52 inches. You have to double the smaller ones, which you double 15, it's 30 double, the other 15, it's 30.
You add those together so you have. 60, and then you add on the, the last, the length of it, which is 52, puts you at 112 inches that stays underneath that 130 threshold. As long as you do that, it is cheaper to ship FedEx or UPS as long as you can stay underneath that threshold. So it's girth plus the length as the calculation that you need.
Girth is double the two smaller numbers, whatever those smaller numbers are, you double those up and then add the last number to it. And that's how you figure out that to, to see if you're gonna be over that threshold and it's gonna cost you more money on shipping. So definitely be aware of that.
Melissa: Yeah. I know another item that we used to do a lot, I used to gravitate towards was strollers, and we could do really well selling strollers cuz these strollers sometimes go for hundreds of dollars, but they would be, they would be a fine line if they would go in a box or if they would go be over that overcharge.
I think we've still got the double bobs to go under, but we had to, it, it was, it's close, it was very, very close. So, but if it went over, it wasn't worth really shipping themselves.
Rob: It eats into your profit hugely. So you have to be aware of that when you're doing it, that you wanna stay underneath that threshold, for the larger item.
Melissa: So, all right, number four. If you try to game the system and you put in lower dimensions than the actual shipping, they will tack on those fees even more triple your, what you would normally pay.
Rob: So this is huge. Back when I started eBay, this is how I did it. I would ship something out, I'd get it into a box and get it an order track into the box, and then I'd start pulling off an inch off of the measurements and be like, wait a minute, I can save $30 here if it's only an inch smaller.
And I would do that and then I would think, okay, this is not a big deal. We would do it, ship the box out or estimate the the weight without knowing exactly what the. Man, I got so many bills and then I started to learn, hey, this doesn't work. You got so many rebills, and the rebills are more expensive than if you just would give them the, the accurate size of the box and the weight of the box in the first place.
They cost you a lot more with the rebuilds and they come back after you for that money, because they say the box is larger than you actually said it was, or it weighs more than you actually said it was. So be very careful. Don't fall into the trap of, even if you have, you're a half an inch over overestimate what it is, don't underestimate because we'll come back and charge you extra for it.
So be very, very careful, when you're filling out your dimensions on the, creating the label on eBay or Pirate Ship, making, make sure that you're doing them accurately and overestimating if it's a half an inch over, make sure up. Yeah. Overestimating all that. Even on the pound, if it's a half a pound over, go to that next pound just so you're not gonna get a, a rebill, a charge back after you ship the item out.
Melissa: Yeah. So then you're covered. And if you do find that it's too much and you think you can make it smaller, you can always, like, there's always options. You can cut down a box. Absolutely. Sometimes, so there's ways to get around it sometimes, but don't try to game the system a good key. It won't work.
Rob: Yeah. A good key that I do, even before I box something up, I will roughly estimate the box. I'll take my tape, measure out and measure it with, putting into a box and I'll go over to eBay and I'll do the calculator and see what it's gonna be to see if I, if, if it's a good fit for the money that I'm gonna have to pay for shipping, or if, if I know that I need to cut the box down any further, maybe it can take a part off of the unit that I'm shipping.
Just to know that I am getting it down is a low, as small as I possibly can. So I'm not overpaying on shipping. Definitely something I do before I ever box an item up. I go on and do those calculations first, just to double check.
Melissa: Because sometimes it'll be the same and you won't, you won't cut it down and then sometimes you could save 10 bucks or something.
So, and it's worth it.
Rob: So I do the same thing on pallets when I'm doing a pallet when I'm shipping something on a pallet. I double check all the stuff before I actually build the pallet, to know what I'm doing. If it is not gonna cost me or any extra money to put the full size pallet on there and item on the full size pallet, then I'm not gonna cut the pallet down.
But then I'll check, check the measurements. If I do cut the pallet down, is it gonna save me $50? If I do do that, and that's the, the choice that I make when I'm actually building the pallet. But I do all that legwork before I even start building the pallet. So I know, okay, this is, this is where I need to be to save the most amount of money on shipping that I can.
Melissa: Yep. All right. Now the most important.
Rob: Number five.
Melissa: The most important one is that there's too little profit margin in the item. So this is where, where we've gravitated to our business model of the higher profit, lower volume business model because there's, it's when you get to shipping and you are worried about spending one more dollar on shipping, like that gets really tiring.
Rob: It does.
And the other thing is, when you're doing it and you're doing it times a hundred, because you're selling tons and tons of items, that's really, really tiring.
So, that's why, yeah, like Melissa said, we gravitate towards high profit items. Now, high profit items don't necessarily mean huge they just have, you have to really be picky with what you're buying to know that the profit is there. You want to be making a ton of money. I mean, two items that we shipped out last week, I'll take those for example. One was the TurboChef oven. That TurboChef oven sold for $6,250. It cost me, it is either $125 or $140. Cause both the items we shipped last week. Yeah, that's what I paid in shipping $125 for one, $140 for the other. That's what it cost me. At a $6,250, that's what I had to pay for shipping.
I wasn't paying a thousand dollars for shipping. I paid $125 and $140 for these two items that we sold. So the TurboChef was the first one. Now, if I was selling that item for $300 and I was spending $120 on shipping that's gonna hurt. That's gonna hurt bad because it's pulling into your profit. You wanna make sure that you are finding those higher profit items that you're not losing out on shipping because the profit is there for you to be able to pay for shipping.
Yeah. So both of the items that I did, I did, I'm pretty sure. Oh, no, no, no. One of 'em I did, I charged. I think it was $500 for shipping for this stretcher, which cost me a hundred and like I said, $125 or $140. Then I just calculated my time for, creating the pallet, any of the wood that I bought for the pallet.
I put that all into the, that portion. But the TurboChef that I sold, we did free shipping on that and the cheapest amount of shipping that I can do, that's what I did.
Melissa: Yeah. And there, there's nothing, like some of the resellers we know are super hard workers and there is nothing wrong with, you know, really selling a whole bunch of volume that that works for a lot of people.
And it's, it's awesome. But if you're getting to the point where like you have to get kind of picky at some point, and even if your number is $20, I know we did that at one point, like our number was, it has to sell for or profit at least $20 to make it worth my time or maybe your number's $50. We just started doing like helping.
The last couple years, helping our kids sell stuff and teaching them the process and when we're, what if we package up the other day with them? It was that vacuum and I think it costs the kids $15 to ship Dyson vacuum, and we only, like, the item was only $30. I don't know, but it, like, then you're getting into dollars of profit and it's just like your time is worth more than just trying to make a dollar. So I don't know how to say that any better, but I, yeah. So know what your threshold is. Like, say, okay, you can't just be making 50 cents on a, on an item. It, you can't create a business on 50 cents per item. Your time is worth way more than that. So kind of pick a number for yourself, whether that's $10, $20, $50, and like that is your, your start. So, yeah. The only other time that I would say not to worry about that is when you're just starting out trying to build feedback. Like you're not really that worried about profit. You're trying to get your business going and you're building feedback so you can sell items for cheaper and not worry as much about the profit, but once you get some feedback going, you have to really.
See what your time is worth.
Rob: Yep. Such a great point. In the beginning you don't have to worry about it, but when you get to the point where you're trying to really make some money in this business, you have to go high profit. I mean, that's our model is definitely to be going higher profit to where you can make the, the, the amount on it versus, yeah, worried about losing 50 cents, worried about losing a dollar on shipping. You don't wanna worry about that as you're trying to build this business higher and higher.
Melissa: Yeah. Cause then you multiply that by how many hundreds and it's just, that's a lot of time and energy and absolutely, your time and energy is spent well doing other things too.
Rob: So, well, hopefully this episode has been helpful to you guys. Some of you guys might not know we do one-on-one coaching and we actually have a couple spots open up right now that we are taking applications for. If this is something that you wanna learn more about, go on to the next level with your business really scaling your business to that next level. Melissa will put a, a link below or
Melissa: yep, they'll be a link of the show notes, but it's, you can also go to fliphighprofit.com and fill out the application and we can see if, we're, we're a good fit, you're a good fit and we can go from there.
Rob: Fliphighprofit.com. That's where you wanna go to check out the application, fill it out. Yeah. And then we can set up a phone call with you guys, or Zoom call and see if it's a good fit and go from there. So, you guys are rock. Thank you so much for listening to this. We love doing these episodes for you. And we will see you guys on the next episode.