The effects of hiding postage costs
I have been reading a paper by Tanjim Hossain and John Morgan entitled Shorouded Attributes and Information suppression: Evidence from field experiments which makes some interesting points about how to treat postage charges on eBay. Their study looked at how differences in display of postage costs can effect the final price of the auction. They varied the opening bid, shipping cost and timing of the disclosure of shipping charge while selling matched sets of products. The study came to the following conclusions:
- When the shipping charge was disclosed in the title of the listing there was no revenue effect of changes in the shipping charge (i.e. shipping + final price = Total price for variations in shipping charge)
- When the shipping charge was disclosed in the body of the listing but not the title, a seller earns a higher revenue with a higher shipping charge.
They also found the the final prices achieved were the shipping price was displayed in the title of the product.
This research suggests that sellers should experiment with higher postage charges vs. displaying postage charges in the title and potentially gaining higher revenue. As ever, a policy of clear costs will probably win out.
I think that this research is also interesting as products such as Marketworks do not support postage attributes in the UK which according to this research could mean lower prices for their customers. In addition, many ecommerce websites do not display postage costs until the end of the purchasing process, leading to confused buyers and high rates of shopping cart abandonment.