What calculation do you use to charge shipping for product? Have your customers complained that the shipping charge is too much? Have you lost customers because of your shipping rates?
Do you use a flat rate, a charge based on weight, a charge per item, a percentage of the total amount ordered, a rate based on the amount spent, or a real-time calculation through UPS or FedEx?
Thanks for your input!
My only direct flirtation with e-commerce where I had full control over making decisions like this was when I sold t-shirts online as part of an event I ran in April-May this year. I used a fixed shipping price of $5.50 for each order of 1-5 shirts or $11.00 for each order of 6+ shirts. I felt that this was a simpler and easier method that would allow customers to understand exactly how much it would cost thus building trust/confidence in the purchase.
I am also interested in other people's experiences.
Supposedly OScommerce has correct UPS rates -- but they don't. So I tweak all products upwards by 3 pounds so that OScommerce's UPS system spits out the correct rate.
I also use integration with USPS's API which gives rates for that.
i personally use flat rate - makes things easier
But basically it depends what and with whom you are shipping.
You also may think about a free shipping at a certain amount of purchase.
Free shipping is a HUGE benefit for your online store. Consider offering it.
Or at least free shipping with purchases over a certain amount, where you'll be making more money to be able to afford it
The free shipping would of course not really be free.
We sell items where the shipping cost (for us) is more than 20% of the product cost. I agree that "Free Shipping" motivates me as a customer but it seems as though I would either have to jack the prices up or take a major revenue hit. I'm not sure that a VERY small revenue company such as ours could pull "Free Shipping" off.
(most of the products we sell for about $50 and shipping is typically around 13.00)
I'm planning on offering free shipping if they order $X, but I need to figure out my base calculation for figuring out shipping. I'm using X-Cart, which has the capability to use whichever rate calculation I want.
So, two votes for flat rate and one vote for weight-based. Anyone else? Thanks for all of the responses!
What do you have your tare weight set to in osCommerce?
If you have this set to zero it would account for the discrepancies since once the product is packaged for shipping there is usually about 3 pounds of weight for shipping materials.
We use the following method to determine total order cost:
Product cost + $2.00 (handling fee) + rates determined by shipping method + sales tax (if applicable).
We currently offer the following shipping methods:
Free Local Delivery (as determined by zip code within a 15 mile radius)
UPS 2nd Business Day
USPS Priority Mail
All rates are determined by hooking into the UPS or USPS APIs over the internet and consider a 3 pound tare weight on all packages. Both API's use weight and distance shipped to determine a shipping fee.
In my state, sales tax is charged on shipping and handling as well as product if you are charging the customer a flat shipping fee. Since we are charging exactly what it costs to ship, we do not have to charge sales tax on the shipping. This saves our local customers (about 200 individuals) some money.
Then charge 60 and offer the "free shipping" if it's doable (depending on competitors' advertised prices and whether you can take a $3 hit in your margins of course).
I think jacking up a price to offer free shipping is a bad idea.
First and foremost customers will compare prices -- they won't always figure shipping when comparing prices. So for that initial "wow what a great deal" factor it'd be better to have lower prices and charge for shipping.
I agree Aspen. In our particular case however, we sell unique handmade products so there isn't a direct "price comparison" that one can make.
What I am thinking of now is to promote free shipping with a promotion saying "Free Shipping on all orders over $150" and just eat the losses.
Anyone tried that?
You also have to consider returning customers. If your items are not something that customers will buy over and over, then eating the costs on free shipping is not worth it.
Places like Amazon get away with it because it builds a form of customer loyalty. However what started as a special bonus or sale at Amazon has become a standard feature that people expect there. They make up the difference through contracts for reduced rates from their shippers and volume on returning customers. If you can't do that then it probably won't be worthwhile in the long run to offer it on your site.
Did you find that UPS was cheaper than FedEx ground? Does the API work pretty well? Do you get charged a different amount than what it quotes the customer? I'd like to charge the exact shipping rate for the same reason you gave.
We offer free shipping for all the products in the UK, and subsidised to the rest of the world. Works really well and can grab a sale.
The cost of shipping varies according to product and we absorb it although with our unique products it is of course built into the cost of the product.
For some products like the RWEP shipping can be upto £15 but we are lucky enough to be the only supplier, we find we sell more with free shipping than charging a lot of money and so the extra income covers it.
Of course we also offer a faster paid service which a lot of clients take up as its such good value
I find that UPS offers and API that provides valid shipping values where as FedEX closed down their API last year and as far as I know hasn't replaced it with anything.
I have also found FedEX's delivery to be spotty in the past with misdirected packages, late packages and not getting signature confirmation as requested on delivery. I believe part of this is the fact that Fedex employees are the lowest paid and have no incentive to do their jobs properly.
Good to know, W. Luke. Thanks! I was going to go with FedEx because it looked like their rates were lower, but I'd rather have happy customers who get their products. The less headache I have to deal with, the better. I really appreciate your help!
When I was the marketing consultant for a online grocery store here in Australia our free shipping policy was free shipping on the first order by a customer to encourage a trial of the service and then without telling them beforehand on every 5th order we gave them free shipping on that order to suprise them and thank them for being a regular customer. But outside of this shipping was a fixed fee based on location eg if you lived in Brisbane shipping was $5, Gold Coast or Sunshine Coast it was $10 and Toowoomba was $15. In our quarterly customers satidfaction surveys, customer's indicated that they liked the simplicity.
Customers may feel your prices are better if you sell an $8 product with $4 shipping, instead of a $12 product with free shipping. However, I also know that I have personally backed out of many shopping carts when I saw the additional shipping cost.
It depends on your type of product and the exact amounts, but personally I'd lean towards free shipping unless it was a very competitive product. Try it both ways, see what seems to work best for you.
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