Forum Moderators: buckworks
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shipping costs
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Our product-lines are very, very inhomogeneous, product-weights range from 2g to 30 Kg. Since I do not have the (staff-)resources to add weight-data to my database over 12000 items, I use a general figure of 6 Euros net for shipping costs. Fairly easy to handle: for small orders it is a sort of extra charge for packing-time; in case of bulk-orders, where we calculate discounts by hand, we skip shipping costs completely in most cases.
All in all, what I receive form my customers fairly accurately matches what I pay to my shippers. It amounts to approximately 8% of our overall ecommerce-turnover, quite a lot I assume, because we have an amazing amount of small orders.
What will happen, if I raise shipping costs to 6,90? On the one hand I might have some four figures additionally in my pocket by the end of next year. On the other hand I definitely will lose some orders, because I suspect quite a number of these small-order-customers might skip clicking the buy button.
What are your exeriences turning this knob?
Due to low profit margins he adds extra to shipping cost $5,10 or 15 dollars,
Adds up to a considerable hunk of change by the end of a year!
Hasn't had one customer complain in over 4 years...KF
We actually have our total shipping costs (inbound + outbound) account for 14-16% of our annual costs but charge $2.95 shipping :) It works with our model.
I have a small niche so your results may differ.
shipping from $1.99 for small item to $4.99 for same item in increments of $0.25.
Basically no NOTICEABLE difference in purchases. Since my products are not xmas related, I have no noticeable increase during holiday season.
My shipping revenue was typically 7% and now has grown to 15% all the while not incurring any NOTICEABLE drawback
I have placed an order of less than $50.00 online at a tool store and paid close to $9.00 shipping/handling and was glad to be able to get them (still a good deal and what I wanted) Ordered yesterday from LEGO USA and S/H was $12.50 for under $150 So I added another $20 item to make it worth while - Still not bad since the products on the web site are not available locally.
And if so: Where do you draw the data from? Is it all clear from your product-line? I mean: If I'd only sell books or CDs it would be quite clear (and low) from the very start, but as I said: We have some products of only a few grams and others of several KGs of weight.
For instance, we have one product of about 10 KGs, and the price is about $25, the margin about $8. I have one customer, who regularly orders 10 of these boxes, but after shipping costs I have only some very few $$ left. I might rise prices for this particular item, but then our local customers might complain.
Do you have any elegant solution for this problem?
What can I do instad of adding weight data for more than 12000 products?
Was there a noticeable difference above $4.99 or did you not test that high?
However I tripled teh price and set a shipping cost of a $1 per item plus a $3 handling charge per order and sales took off.
I am guessing you do not have a lot of competition for this product.
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Somebody asked how to display shipping costs on the order form.
We create a large database for all of our 13 000 products. In the database we have the measurements of each item plus the weight. When somebody has a cart full of goods, it adds up the weights and dims of the products. On the check out when the address is captured it checks 3 other tables (with the shipping charges from the courier companies) to get the shipping cost and gives the customers the 3 shipping options.
We can massage the data in these tables to subsidize the shipping for some products, add shipping to other items.
We have a goal to try and break even on shipping over the course of the entire year. It is not a profit center for us because we have lots of competition and the shipping can be a deal breaker.
a $19.95 item with $15.00 shipping charges is a lot less attractive value-wise than a $29.95 item with $5.00 shipping. Or better yet, a $34.95 item with Free Shipping.
Communicate value with your inventory-people don't value shipping.
When is the right time to do so: Beyond 50k shipping costs per year?
akmac, that is really interesting, because I observed just the opposite: We have quite a number of orders, where people are willing to pay 6 Euros net shipping costs for one or two small (niche-)items worth less than 4 Euros. But maybe you're right for the heavier stuff? I don't know.
On the contrary, I have the impression that, for competitive items, competitors tend to lower product-prices and "not-talk" about shipping costs on their website?
Weight is one of more parameters you can use to calculate the actual shipping costs. You can also just store the price that you are invoiced for shipping by your partners and use that price instead of weight in future calculations.
But no matter how you turn it, 12000 items are a lot.
[edited by: JesperFJ at 1:23 pm (utc) on Dec. 13, 2007]
On the other hand, you could look at your accounts and evaluate your shipping costs and shipping revenues. If you have no margin, act NOW! if you are breaking eaven, you are not allowing for handling... eating your profit. If you are satisfied with what you see, don't touch anything.
If you find that one popular product is eating your shipping because of weight. either increase this product's price or add a handling surcharge. Even consider dropping the product.
I suppose a small operation like mine is easy to make experiments as the risks are smaller and the results more immediate. Still it is my livelyhood since I am the sole provider in my household.
Most of my products fit in an envelope and I print directly on them so I have very few boxes, tape - No lables.
Still I have increased by $0.30 my shipping / handling charge on Monday to $5.30 with little or no NOTICEABLE effect.
Some of the extra money is being used for my Adword campaign.
If it was boiled down, I'd prefer shipping less but make the same amount of money.
What I'd really like is to make more money and ship more but that's another story.
Rugles, that is a similar scenario to mine, and as I said: to add weight-data to such a mass of products is a huge effort (particularly since 70 % of these products are order-on-demand-items, which we never saw before, and my suppliers did not provide weight-data on their CDs). I'd guess that'd take at least three month time for one of my employees to walk thru our supplier's catalogues and type that data. And I desperatley need all of them for everday's business;)
When is the right time to do so: Beyond 50k shipping costs per year?
Yes, adding all the weights and measures was a huge project. When we were developing our first ecommerce website back in '99, we sent 2 employees around the warehouse with a scale and a tape measure. Now as we add new products (which we do nearly every day) it is just part of the procedure.
Our annual shipping costs are north of a half million dollars, so it is really important to be as accurate as possible. A few percent error in the wrong direction cuts right in to our bottom line.
So it was definately worth it to go to such efforts for us.
I always used to work with "dirty" data: for instance, I updated prices only every third year or so, depending on how important a specific product line was. I thought of starting with a dummy value of lets say 500 g per item and then continuously insert accurate data beginning with the fast-turners.
If I'd do so myself, ignoring minor differences for a start (i.e. wiping out only the biggest dirt), I might probably manage to set values for two or three thousand items in one or two days.
Have you continued to test shipping charges over $5?
Even odder for me is after UPS rate hike and the fact they really stunk for holiday shipments i increased my UPS prices 30% and left USPS standard and people are still primarily paying for UPS.
This would suggest that free shipping would stimulate 1 item sales or low value item rather than larger amounts. I did increase the flat rate $6.25 for orders to $65 whereas before I had a tier at $25.
Example:
1 widget $11.00
S/H 2.25
would only sell one
now, 2 widget 22.00
S/H 6.25
Very odd, not at all what I expected. I'll take it.
Saves from the cart abandonment at the checkout, and if they think the price is a little steep, then they may buy more items they like, knowing that the shipping cost will not go up. End result - more profit, as shipping costs do not increase at 1:1 ratio with weight.
One flat charge for Canada, and one flat charge for the USA.
Now this will not work if
a) your parcels range from small packets to large articles.
b) you have intense competition
c) the product is not worth much as compared to the shipping charges.
d) you only have a small selection of product
Otherwise the KISS principle works quite well.
