You can, like a print catalog, put up a table of shipping charges so people see what the costs will be per break point.
I agree free shipping is a good incentive. But the fact is you just can’t raise prices on the items to cover shipping. Unless you are selling something no one else has, there is a general price range for all products. If you choose to be on the higher end of that range, that’s your call. But you just can’t change $15 for an item everyone else sells for $9.95.
ps- We tried a free shipping offer this summer on orders over a certain size. Can’t say it was a raging success.
imho that very much depends on what you are selling (profit range), where you are shipping to
and how payment should be handled.
Also it probabely varies from country to country.
A scenario which enables you to offer free shipping might do great execution eg to me although we (hypothetically)
do the same business but just living in different countries.
Unless you are selling seasonal merchandise, summer really isn’t the best time to try new campaigns. Most businesses experience flat sales during the summer.
Hmmm. Maybe you shouldn’t look at shipping as a product related cost, but rather group it with costs like support, hosting and, more specficially, advertising. Since that is what free shipping really is - an advertising cost.
Remember that Amazon.come are nowadays spending their ENTIRE advertising budget (which has previously been used on TV spots and the like) on free shipping, with great success.
The Amazon offer is U.S. only, by the way.
Free shipping of course does not make sense if you ship stuff internationally. That is, unless you use it as your point of difference. If your U.S. site sells stuff to europeans (what say, U.S. specific food, maybe) and you offer “FREE Shipping to Europe”, you can be sure as hell that makes you plenty attractive, since you are miles above expectation (all international customer expect expensive shipping).
I agree with Matitias. Free shipping is awesome. I love free shipping. If there is free shipping on something… I am about 20x more likely to buy it. Seriously.
I have built and have maintenance and/or promotion contracts on about a a dozen ecommerce sites, ranging from paintball products, jewlery, clothing, electronics, furniture and other.
When some one goes through the effort to fill out all their contact details and then decide not to purchase at the last minute. Myself or my client give the almost-a-customer a call. (We have done over 100 of these calls in the year).
The #1 reason people abandon their carts is because of shipping prices. Shipping fees make up for 90% of the abandoned carts we have investigated.
With this research, some of my clients have raised their prices a bit, and lowered their shipping prices a bit (below what it actually costs to ship a product). Sales ALWAYS go up with lower/no shipping rates.
What you are selling, your target market, and average product price matters, though too.
If you sell high-end goods, especially niche/hard to find goods, to a higher income target market then free/discount shipping doesnt matter as much. But it still matters enough to experiment with a run promotions with…everyone loves free shipping.
Here is what I have found to work good for the average consumer ecommerce shop:
Standard Us Postal Service - Free
UPS or Fedex faster than normal shipping - flat rate based on average real cost of this shipping method.
And if you do offer free shipping… Announce It! Stick it near the top of your website, or even in the title tag of your site.
Amazon also has many things going for it that smaller companies don’t. I’m sure that by name alone they can negotiate a better price on items than if you or I contacted the same manufacturer or distributor. And I’d bet much of thier stuff is sold on consignment so they don’t have the upfront costs nor finance costs of having merhcandise sit idle on the shelf.
OTOH, look at big companies like LL Bean, Spiegel, JC Whitney etc. They all most definately charge for shipping. And rather high at that but don’t seem to be hurting for business.
Costs still have to be made up somewhere. And like hosting, support, advertising etc in the end it all gets passed down to the consumer anyway. Infact, I’d say that by breaking out S&H seperate from the other costs you’re being even more fair and open to your customers.
Either way, I still assert that you just can’t factor S&H into the price of the individual products and therefore drop a specific S&H charge. The market place determines the range that you can charge for your items. And especially online people will shop multiple sites for the same product just to save $1.
This is exactly true. I am currently working with my software so that it includes the shopping cart total on every page including shipping and handling provided the Zip Code is known.
There will be other programs in place for my customers to lower costs as well. For example, many of my customers are big on recycling and lowering actual consumption. So we will be launching a recycling program. They return the empty packaging to us and they get a credit towards their next purchase because we will discount the price of the packaging. If they mail back the boxes and other shipping materials, I will give them a discount on their next purchase as well.
Finally, I will offer loyalty discounts to customers. They can either purchase it for a small annual fee ($10-15 for 10% discount on every purchase) or earn it through the volume of their purchases. Still working on this idea though.
Fedex employees are paid well. My company has had the same Fedex driver for 10 years; Fedex has a history of retaining employees due to great pay and benefit packages.
Perhaps in Canada. But in the U.S. FedEx (as is DHL and even the USPS) is going more with lesser paid contract delivery people (especially for home delivery) than full-time employees. That can sometimes mean less service.
Toni, you and I really think alike on this. You summed up exactly what I think. Especially the last part about annoucing it. Free / low cost / flatrate shipping is a huge incentive.
I see no real reason not to include the S&H cost ín the price. You cannot have to product without it anyway, so bleh.
Costs still have to be made up somewhere. And like hosting, support, advertising etc in the end it all gets passed down to the consumer anyway. Infact, I’d say that by breaking out S&H seperate from the other costs you’re being even more fair and open to your customers.
More open and fair? Well, I suppose you can look at it that way. You can also look at it this way.
Tubbys Widgets offers a CoffeeStirrer Widget for $19 on their frontpage. Once you add it to their shopping cart, it calculates the shipping cost, and it lands on $12.96, a total of $31.96. In one way, that is being open to the customer, but in another, it’s hidden until you add it to your shopping cart, and may actually be an unpleasant surprise if it’s high.
Lauras Widgets also sells the coffee stirrer, but they include the shipping in the price, and offers it for $25 or so, and loudly advertises FREE SHIPPING on their homepage. This is open. It costs $25 to order, and that’s it. How this is less open than the above, I fail to see. The cost is $25, and that’s it. There are no other costs, unlike in the above example.
Why do people have this thing about charging shipping cost separately, while not charging the customer separately for packaging, stocking, invoicing and all the other costs that are directly associated with an order? What about charging a support, advertising and hosting fee?
The reason merchants don’t charge this is because the customer doesn’t give a rats buttocks about them. They want to know what the product is really gonna cost them to order. They won’t care how cheap your price is before shipping cost is added, because shipping isn’t optional. They want to know the total price, and they want to know it fast.
I can’t add the price of shipping into the price of the product. Many of my products cost $1.00 or less and they weigh less than an ounce.
Take an 8 gm package of Incense (which I sell), this retails for about $.75-$1.50 depending on brand and type and the goal is to get them to purchase multiple packages of incense along with other items. Now, the minimum Priority Mail service from the USPS is $3.85 plus we add on $1.00 handling (to offset packaging and delivery confirmation). So now my 75 cent incense package (which is a bargain) is now $5.60… Get ten packages which would last a serious incense user a week, and it is $56.00 instead of $7.50 + $4.85 shipping and handling. I won’t even get the chance to adjust the costs after they complete the purchase process because it will never get there.
So by adding in shipping, I have priced myself out of the market and I can’t figure out what it would cost to to ship just 8 grams because $3.85 is the minimum fixed cost for shipping. Nor can I subsidize $3.85 on an item I only make 50 cents profit on.
This is why I am designing it so that the shipping cost will be shown in the shopping cart at all times. This way they know what the shipping cost is upfront plus offer free shipping if the order is over a certain amount (probably $50.00 or more), and yet I can actually make a little money. Adding it into the price of the item isn’t feasible for every merchant.
Can’t you send it in a letter? I sell very small, cheap goods, and we send all of them as letters. The smallest possible order we have is $1.9 dollars (not below $1, i’ll give you that) and we can send them in next-day envelopes for $0.63.
We make miniscule profit at that quantity, actually, but I see those small orders as a marketing expense. When a person has bought one item, and are satisifed with the service, they are very likely to buy again.
The formula I worked on for my upcoming ecommerce site follows:
Since I’ll only be selling photograph prints (sometimes matted) and CDs, I can use the same packing for all of them (bubble wrap envelope with cardboard insert for stiffening). Costs so far for packing material is about $2.25 per package. I can fit 1-2 units per package.
A larger package that can hold 6-8 units costs $3.00.
Shipping will be via USPS (priority post envelope $3.85), return recipt for merchandise ($3) & delivery confirmation (.45): Total $7.30.
So actual costs for small package: $9.55
Large Package: $10.30
I typically add 20% of costs for my “handling”, so shipping and handling fees are:
Small: $11.46 (Rounded to $11.50)
Large: $12.36 (Rounded to $12.50)
If the buyer wants insurance, that will be charged extra at cost.
If the buyer wants to waive return receipt for merchandise & delivery confirmation, I will reduce the prices $4 (so small= $7.50, large= $8.50).
Not incense… It would be crushed and useless if sent as a letter. Even if we had the post office hand cancel each package it would be smashed and crushed in normal handling in the trucks.
Even then, the cheapest postage is 49 cents and that is two-three days. Cheapest overnight is like $13.85, even for a letter. At regular postage, I built it into the price so now my incense is a minimum of $1.25 and they can get it the corner convenience store for 99 cents, albeit a lesser quality product but most end-users won’t care.
Now most of my customers are local within five zip codes and there are 400,000 people in the area. For them we do delivery already… It costs them $1.50 for orders that are under $25.00 and it is free for orders over $25.00. They can also arrange for “Store Pickup” either at our location or at a festival that we will be attending.
I agree that free shipping is a very good way to induce people to shop and I have taken advantage of it myself. However, it isn’t feasible for every market or even every product. Each merchant has to crunch the numbers to see what they can actually offer to their customers.
Not only that but in the United States, I don’t see it as an overriding concern of customers. They expect to pay shipping and not pay sales tax, that is why they shop online to begin with. Probably much different in countries with a VAT or national sales tax. National Sales Tax doesn’t exist in the United States. If I buy something in California, I pay sales tax. If I buy it online from a store in Florida, I don’t. As long as shipping is not more than 10% of my order then I am happy because I get the product for a lower price usually and I don’t pay tax.
I might try subsidize shipping though in the future… Something like $6.00 for every order. Will have to spec it out though.
