Posts

Q&A Free Delivery Versus Reasonable Delivery Costs On Amazon

This is the third of a series of articles where I’m answering several questions that have come in via email in the past few days, that I feel that you’d gain value from hearing the answer too.

Free Delivery Versus Reasonable Delivery Costs

Today’s question is from Christine and is in relation to the having free shipping v’s reasonable shipping costs on Amazon.

The reason why it’s curious is because Amazon is quite different to eBay in the way it organises listing & prices and I’d like to delve into the Amazon Buy Box a little deeper and their prime subscriptions too.

Here’s the question:

Hi There Matthew,

I was just wondering what your thoughts were on Free Delivery versus reasonable delivery costs.

I started selling on Amazon about 1 year ago and have always gone for the reasonable delivery costs option so the actual product price appears a little lower than those who offer Free Delivery.

Even though Amazon calculates the cheapest offer based on a total of product and delivery charges my thoughts are that if a buyer sees a cheaper product cost plus reasonable delivery cost then the perception is that the product is more reasonably priced overall.

However I am considering changing to Free UK delivery for ease of calculating delivery costs etc

Kind Regards
Christine

Price Perception

I feel Christine is right, the perception that a customer would have that the price is good and the shipping is sensible then it would appear as a better proposition overall.

However, we must account for that we would assume this to be logical, but as buyers we’re not logical at all, we’re emotional, plus we are considering the Amazon marketplace here and while this may be true for other marketplaces or on our own websites, for Amazon I don’t think this is true and I’ll explain why.

By the way, if you think I’m wrong, you can let me know in the comments box at the bottom.

The Amazon Buy Boxes

To see where I’m going with this reply, we need to take a look at the buy boxes on Amazon and how the change.

Amazon Only / Amazon Prime

Amazon buy Box No SellersIf we take a look at the normal Amazon buy box on for an item that is being sold by Amazon directly, then we can see it’s very clean.

As a buyer we’re presented with just the quantity option, add to basket as the primary action, the option to login or the secondary action of adding it to a wishlist.

All pretty clean.

3rd Party Seller + Free Delivery

Amazon Buy Box One Marketplace Seller

However if we now look at Amazon buy box where there isn’t Amazon and just a 3rd party seller like us, then we can see that the buy box has the extra details at the top about the seller.

We can also see the item price and the shipping amount and the sellers name, noting that the delivery amount is emphasised as “FREE UK delivery”.

3rd Party Seller + Paid Delivery

Amazon Buy Box With ShippingIn the buy box to the right, we have a product where the seller has a delivery price entered.

In comparison, the “FREE UK delivery” stands out more, but Amazon are not promoting the total price, just that there is extra postage to be paid.

And When We have Multiple Sellers

Amazon Buy Box Multiple SellersThere can only be one winner and if you’re up against an Amazon stocked item or an FBA seller then the chances of you obtaining the buy box on equal total pricing, is remote.

If there are multiple sellers that are eligible for the buy box, will rotate at differing speeds through the buy box and any sellers that are not in the main buy box are shown below.

If we look at the example to the right, then we have a winner that is at £2.65 + free delivery and three others with the same product at various prices, however the last one from TLSS is the one I’d like to point out in more detail next.

Note: If you’d like to know a formula that will get you access to the Amazon Buy box for longer, then see this article which gives you this and it’s proven to work and if you’d like to know more about Amazon’s “Seller Ratings”, the new scoring system for Amazon Sellers you can here.

I’m just a mere customer, not a mathematician.

In the buy box example above we’re given numerous options, but as a buyer I only really care about the total price and also I’m just a mere customer, not a mathematician.

Making a buyer think is a bad thing

If I’m presented with prices that all have free options, then I see the prices as the total price. However if you ask me to compare four prices on one set of terms, they’re all total prices with free shipping and you lob me a price that I need to calculate in my head, then you are making me think.

Trying sum up the prices so that I can either rule in the £1.50 plus £1.99 option when all the others are just prices with free shipping makes me think and making a buyer think is a bad thing.

We need to make it as easy as possible for them to work out if the proposition is a good one or not and if the playing field are using free shipping, then that is what you should follow, free shipping, otherwise we’re making the buyers think.

Considering Amazon Prime Users

Amazon Prime Get Your Stuff FastIf we also account for Amazon Prime accounts, this is where an Amazon customer has paid £49 a year (or $79 in the USA) these are the power buyers on Amazon.

According to ChannelAdvisor’s Scot Wingo last year, there are approximately 10-12 million Amazon Prime users whom he also believes that these buyers account for a 3 to 4 times increase in buying volumes. As such they should not be ignored.

If we consider that it was you that paid £50 to have free next day delivery on items, then you’re not going to be that excited about paying extra for shipping when you’ve already stumped up £50 for an item on the Amazon marketplace where you’ve already made a decent outlay to get free shipping. In short as an Amazon Prime buyer you expect free shipping.

Note: You can gain access to these buyers by using FBA (Fulfilment By Amazon), this isn’t for everyone and doesn’t suit all products. 

In Summary

Me me me me me me me me me me, that’s all the customer cares about. Using a quote from Seth Godin:

Customers want ME-MAIL not Email

So with me in mind (as a potential customer) I have a Amazon Prime subscription and trust me I hate paying postage on Amazon after paying £50 for free delivery and I know what the difference is between marketplace, FBA and Amazon stocked products are!!!!

I bet the vast majority of Amazon customers don’t and they just want simple pricing and the simplest it can be is price + free delivery.

While me and you may know that your postage prices are excellent, 99.9% of customers probably don’t know the latest price of a first class stamp (what is that now anyway?), let alone the different pricing bands from Royal Mail and whether your postage price is good value or not. They just want a total price.

If we consider the case for Christine, then if your competition are offering free delivery, then don’t make your buyers try and do maths, regardless of how simple it is. Customers are like babies, you need to keep it as simple as possible and spoon feed them just enough information so they get what they need to know at that moment in time.

Make it really easy for them and let them see that your total price is excellent.

Make it really easy for them and let them see that your total price is excellent. And if in doing so means you need to combine the shipping prices into the sell price and offer free shipping, then so be it.

In the original question from Christine, Christine was considering moving to a free shipping model on Amazon, the answer now with the explanation why, is yes you should move to a free shipping model on Amazon and I’ve hoped I’ve explained why.

Do You use Free Shipping on Amazon or Another Marketplace?

If you do and have seen a positive or a negative impact to doing so, let Christine know by leaving her a comment in the comments box at the bottom.

The Amazon Buy Box – You know the Secret Formula Right?

 

If you’ve not read this article before, then you’re in for a treat as the Amazon Buy Box pretty much obey’s the formula and has been proven to do so time and time again.Amazon UK

If you’re new to Amazon, then in short the holy grail of Amazon is the blue buy box and if you’ve not come across the buy box before, you cannot miss it, it’s blue and on the right-hand side of almost every product on Amazon.

Hey, they’re infectious! There is one over to the right :)

When there is only a single seller fighting for the buy box, there can only be one winner, but when there are two or more sellers, then assuming that everything is even, you can win the Amazon Buy Box with the formula in this article.

The Amazon Buy Box Factors

However there is a but… This assumes that everything is equal and we know that nothing is ever a level playing field, especially when it comes to marketplaces and Amazon, well is not always even either (see this article Why do eBay Sales Stay Consistent? for further reading).

There are many factors that influence who gets the buy box on Amazon and ChannelAdvisor points out the obvious in their help file,  as a reference, I have put an amended table below.

Factor What Amazon is Considering Winning Practices
Featured Merchant Status How trustworthy you are based upon account history. Being noticed by the Amazon account managers.As ChannelAdvisor suggest, it doesn’t hurt to ask Amazon support about your “Featured Merchant Status”
Price What is your product price? What is your shipping charge? Low total price, including product price and shipping
Availability How many do you have in stock? How quickly can you ship? Quick and consistent fulfillment
Volume Do you sell many of this product? Consistency
Refunds How often do you issue a refund for seller error? Low refund rate
Customer Feedback How do customers rate your service? Low negative feedback ratings
Customer Support How quickly you deal with customer queries Answering in less than 24 hours, 7 days a week (yes that’s weekends included)
A-to-z Guarantee Claims How often do you get returns? Low A-to-z claims

A Special Note on FBA

But that’s not all, because we have not included the “motherload” which is “Fulfilment By Amazon” AKA “FBA”.

FBA means that the seller has one or more of their products in Amazon’s fulfilment centres and because Amazon has it, have verified it’s condition and knows it can get the product out to its Amazon Prime subscribers, then it promotes FBA held items heavily against seller fulfilled items and routinely it’s going to take a hefty price difference to shake FBA products out of the buy box, or is it?

The Amazon Buy Box Rule?

If you have had a slap from Amazon, whether that’s an account warning or a suspension and very worryingly even if it was not your fault and a mistake on Amazon’s part (we have this documented in a support email back from Amazon) then this can count against you if everything is even.

But course your business exceeds in every area on Amazon, you are the perfect seller, well second to Amazon that is, so for the following to work, we’re assuming that everything is level.

So to the “Amazon Buy Box Formula”:

(Lowest Selling Price – 2.7%)

– £0.01
= The Buy Box, For Longer

By taking away 2.7% off the lowest selling price (including postage) and an extra penny, you receive the Amazon buy box for much, much longer.

It took me ages to work this out, testing, refreshing over many days it’s this worked out to be the lowest % and value I could get trigger the buy box and for it to stick.

The minus one penny is in the formula for the lower priced goods in the sub £20 area, it always seemed to take that extra penny to kick the box into action.

There are a few clauses, on the accounts I tested this out on, they were ALL of a great standing with Amazon, no major issues and all had long track records of great service. The other is none of these accounts were using FBA (Fulfilment By Amazon). FBA is a lethal advantage as I mentioned above, to shake FBA items takes a little bit more.

Also none of the products that were tested on were over £50, I am sure there is alterations in the trigger for the buy box, the percentage is likely to be a lot less than 2.7% at these levels.

Your Feedback

I would like for you to try this on ONE product for ONE day and let us know your results.

I know that several of the readers here have used this formula to great success over the past year since I first published this article, what I’d for you to do is try it for yourself for a day and let me know your results here by leaving me a comment below.

Alternatively if you have been using it, let us know your feedback as the formula does move around in different categories and price brackets, again let me know in the comments box and of course if we lost you anywhere in this article, don’t hesitate to ask in the forums.