Seller protection for small items sent regular (cheaper) postage?

[letscleanupmycupboards]

I have a large quantity of small cheap items to list. I'm aware that there's an increasing level of fraud happening (it never arrived I want a refund) and want to avoid this but also need to keep costs down for buyers. So how can one do this as a seller?

As I see it I can either:

Post cheap and hope that 99% of buyers are honest which I'm sure they are. 

Put stuff in lots to make up a 500g parcel and charge for signature or insurance. 

Charge the extra $4 for registered post (many are small so would go as letters) and it's not as cheap for the buyer so maybe less sales. 

Is the tracking number provided free on a standard parcel enough for PayPal and eBay in the event a buyer says it didn't arrive? Do I just need to prove lodgement these days or is it still up to me to prove the parcel arrived to the addressee? It's hard to get a straight answer from eBay or PayPal. Anyone got actual insight from either point of view?

[yeoldecoinco]

What some sellers do, if their PO will play ball, is take in their standard letters, get them stamped, then take a picture of them with their mobile phone, then hand them back to the PO for posting.

Whilst this may not help in an INR case as far as eBay/Paypal is concerned, it at least gives some proof to the buyer that you actually posted the item.

Sending a photo to a buyer who says that they have not received your letter may cause them to re-think their position and re-check their mail (sometimes spouses or family members have picked up the item) or at least make them realise that you did actually post it and that Australia Post is to blame for the non delivery, rather than you, the seller.

I have sent a few buyers photos of their envelope and this has caused several to suddenly "find" the item and the remainder to realise that it was not my fault.

Phorum_Junkie has got it right, this is what I do, in my case the amount is $30, anything at or above that goes Registered to minimise potential losses. Under $30, I quite often send standard mail, take a photo of the packet or envelope with the stamps affixed and the buyer's address before posting it and take the risk.

A few standard mail items have gone missing over the years, which I have had to replace, but really, the loss rate as a percentage has been very small.