Watch Your eBay P&Ps

By Mark Steer

Online retailers with good reputations are able to get away with stiffing us with higher postage and packaging costs, says new research.

In a paper to be published in the Journal of Consumer Research, Amar Cheema of Washington University, shows that the seller’s reputation on eBay can have a significant impact on how much attention consumers pay to additional charges.

Cheema found that consumers spent more time scrutinizing their decision before deciding to purchase a designer scarf in an online auction when the seller had a poor reputation (72.37 seconds, on average), as opposed to a good reputation (53.75 seconds).

This increased attention made it more likely that the consumer would notice higher surcharges, Cheema explains. It also decreased the likelihood of purchase and lowered the amount consumers are willing to pay for an item.

The research looked at sales on Ebay of three DVD trilogies: Godfather, Lord of the Rings, and Star Wars. Among sellers with a reputation score of 0 to 110, every $1 increase in shipping and handling charges decreased the winning bid by $1.18. By contrast, Cheema found that the effect of surcharges was not significant for sellers with a feedback score over 111.

“This research shows that a high reputation can shield sellers from increased scrutiny by customers,” Cheema writes.

He suggests that sellers with poor reputations can avoid this phenomenon by absorbing the shipping charge or any other surcharges into the base price of the item, offering one consolidated price. Sellers with high reputations, however, can feel free to whack on almost anything they like as an extra charge.

More stories from the Null