Do online retailers increase their shipping fees to make more profit?
Hmm, Its possible but as shipping costs go up the price of gas goes up as well. So that might be why you see the shipping increase. I don't think the retailers share in the profit of the shipping. Just my 2 cents.
I do not think so normally they would prefer giving FREE shipping may be added the cost on to the product
Shipping time & cost is one of the biggest reasons why people don't buy online, or don't buy online from a given store. So while there's certainly a trick in using shipping for margin games, it really only works in places where everyone is listing at the lowest possible price like eBay -- and even then "total" price calculations make it less and less practical.
Instead of trying to profit more from shipping costs I would suggest the exact opposite and looking at how you can reduce shipping [i.e. free ground and discounted 2-day air] to pick up additional orders from your existing traffic.
Remember, marketing is a top cost outside of COGS in driving direct sales so the more of your audiance you can convert, the better you'll do with your existing spend... Plus with a strong enough shipping offer you build in another reason for people to return to you for that next purchase.
There are people doing this, no doubt. But, if the shipping cost is too high, it will drive away your purchasers too. Re-consider if you think earn little profit from shipping is more worth than earn from your products/services.
The vendor would add the cost of shipping, and any other applicable fees to the order before processing. Since the vendor typically makes the shipping arrangements, it is entirely possible that the cost of shipping passed on to the consumer will not be the same as the cost of shipping borne by the vendor. Some online vendors use this as a source of revenue, further increasing profits or allowing the vendor to advertise even lower up-front prices.
That's a useful description of the process but the question at hand is should you raise the prices to increase margins. Any experiences or thoughts you care to share on it?
True, we need to absorb cost or marginal profit of shipping on the revenue of products or services rendered, that way would attract more customers.
if you have products that cost say 30 €/$ and up I think it makes sense to just calculate shipping into the product price and offer "free" shipping. Depends on the business you do... Unless you are a really big company with lots of revenue coming from your webshop, I can't see how upping the shipping fee will bring a substantial plus in profit...
Why is this practice acceptable in some markets, though, and not in others?
When purchasing a new car there is always a "Destination Charge" - which I have argued thusly, "When I buy a product at Wal-Mart the cost to get it into the store is included in their operating cost. They do not charge me for getting there!"
It is very easy to become wary and cynical of "Shipping and Handling" when you:
- Pay more in S&H charges than for the purchase
- Receive the product and see it cost only a mere percentage of what you were charged to actually SHIP the product
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