Working out shipping charges to customers

gibby · Oct 2, 2008

Hi

Im revamping the shipping charges to customers as we seem to be missing out on business fro smaller items.
Currently we just charge a flat fee per delivery until it gets to a certain figure & then its free.

Im wondering what everyone else does & how they work it.
Is it best to charge so much by weight or by price of order?

thanks

G

sysops · Oct 2, 2008

gibby said:
Is it best to charge so much by weight or by price of order?

That's a pet hate of mine - I can't stand sites with variable shipping rates (weight or price based), and never buy from them. I want to know that my shipping will cost £3 or £4 regardless of my order.

Mattonella Tile Studio · Oct 2, 2008

We charge it out at exactly what it costs us to send.

sysops · Oct 2, 2008

Mattonella Tile Studio said:
We charge it out at exactly what it costs us to send.

While this may sound fair, and even virtuous, it doesn't make sense.

Do you also change your margin on each order depending on how much storage space the product takes up? Or how long a product has been in your warehouse? No.

Shipping cost is just another business cost, like rent, rates, heating, lighting etc. What you need to do is cover it from your takings, like all your other costs. Whether you do this by charging zero for shipping and more on your products, flat rate, by weight, or by order value depends on what you think is most acceptable to your customers.

Mattonella Tile Studio · Oct 2, 2008

sysops said:
While this may sound fair, and even virtuous, it doesn't make sense.

Do you also change your margin on each order depending on how much storage space the product takes up? Or how long a product has been in your warehouse? No.

Perhaps this is why we can do it then, the product does not take up space as it isn't in our warehouse. If a customer collects tiles from the showroom it doesn't cost us anything to have them delivered to us. If a customer wants them sending out to them, it costs us.

We make the same profit on the tiles either way if we just pass on any carriage costs.

downsouth · Oct 2, 2008

gibby said:
Hi

Im revamping the shipping charges to customers as we seem to be missing out on business fro smaller items.
Currently we just charge a flat fee per delivery until it gets to a certain figure & then its free.

Im wondering what everyone else does & how they work it.
Is it best to charge so much by weight or by price of order?

thanks

G

Are you able to have a couple of shipping bands based on a price range? ie

£1.95 upto £20
£2.95 upto £50 etc etc

I prefer a site which displays this rather than have to add products to the cart or even worse have to register to actually see the confirmed shipping costs

sysops · Oct 2, 2008

downsouth said:
£1.95 upto £20
£2.95 upto £50 etc etc

What twisted logic leads you to want to penalise your customers for spending more, thereby encouraging them to spend less?

Christiane · Oct 2, 2008

My delivery costs are depending on order value. I think it depends what you sell. Some of my customers just want to top up or have forgotten one item, etc so the lowest delivery cost is there so they know they won't pay high delivery cost if they ony want something that cost a couple of pounds.
I am trying to break even on the postage, i.e. take as much as I pay Royal mail + packing, which I manage most month.

downsouth · Oct 2, 2008

ok, so regarding the OP and prob many 1000's of other ecommerce stores which stock products of vastly differing values

Would you buy an item which you roughly know only costs £1 to post but are being charged a flat of say £4.95

Or if you want a product which is a heavy item and would cost @£7.95 to deliver but you are only being charged the flat £4.95 again.

You would obv feel more comfortable to purchase the heavier item as in total the 2nd product delivery costs shows some value

Its not a case of penalising customers who spend more and I have found that this model of delivery pricing proves quite accurate for both my items and other internet purchases I have made.

You can absorb a good proportion of the delivery cost I agree with a flat rate cost but this doesn't always suit the value of the item

sysops · Oct 2, 2008

downsouth said:
Its not a case of penalising customers who spend more and I have found that this model of delivery pricing proves quite accurate for both my items and other internet purchases I have made.

Ah, that'll be why it's been adopted by all the top ecommerce sites then. NOT!

downsouth · Oct 2, 2008

I'm under no illusions its not great but nor is a flat rate postage charge they both have pro's n cons

If I was to stock high value products or postage could be built into prices and remain competitive then I would look to go with a flat rate scheme.

gibby · Oct 2, 2008

thanks for the replies.
Its really difficult to know which way to go.
We are charging a flat rate at the moment to make it easier with a free delivery over £60.

We are trying to make it as attractive to customers as possible.
A few have complained that we were more expensive than our competitors although our main range is 40% cheaper than our nearest competitor.
When Ive checked into it we were no more expensive than our competitors & often cheaper for larger orders.

We do get some small orders and the flat fee is probably double what it costs to send but Im not so sure I want to encourage small orders as there is no profit - but does get us customers for bigger orders later.
We also have the challenge with highlands & islands as a normal size order is costing us £10 - £15 to send out but customers expect to pay the standard rate and get offended with the real cost.

G

sysops · Oct 2, 2008

gibby said:
We do get some small orders and the flat fee is probably double what it costs to send but Im not so sure I want to encourage small orders as there is no profit - but does get us customers for bigger orders later.
We also have the challenge with highlands & islands as a normal size order is costing us £10 - £15 to send out but customers expect to pay the standard rate and get offended with the real cost.
G

If Highlands & Islands are a big problem, charge extra for H&I - they will complain, and spend hours on the phone trying to tell you that the Isle of Skye is really part of the UK Mainland because it's on the same continental shelf, but just ignore all that - they are a tiny, tiny part of your customer base, and if you end up losing a few of them it won't hurt you.

What matters is that to the bulk of your customers, your rates look good.

gibby · Oct 2, 2008

when we used to do flat rate for Ireland we did get alot of big orders.
Since we changed to charging for the extra its really hit business.

Just today a lady took offence for a £10 charge that is normally £15.00 on a £30 order. I don't think she was lying but says she normally pays £5.

the challenge is the big guys like Amazon & ebuyer dont charge the extra so ppl are used to that price

I agree they should expect to pay more.
we can cheapen it by using the post office but it is a hassle, they lose a few items and the tracking system is a bit BT

G

Oct 2, 2008

Shipping charges are one thing that p*ss customers off big time.

Always have a shipping charge related to the value of the product or price to cover some of the shipping charge if possible.

selling an item for £400 and then asking £7 shipping could well lose you that order.

same goes for selling price £1 shipping £2 .

many years experience of online retailing so trust me I know a Doctor.

Earl

Online Trader · Oct 3, 2008

sysops said:
If Highlands & Islands are a big problem, charge extra for H&I - they will complain, and spend hours on the phone trying to tell you that the Isle of Skye is really part of the UK Mainland because it's on the same continental shelf, but just ignore all that - they are a tiny, tiny part of your customer base, and if you end up losing a few of them it won't hurt you.

Agree 100% with this one, we have additional charges for this and most (95%) of people in these areas will pay the surcharge

Connexions · Oct 3, 2008

I usually suggest 3 basic delivery costs, one for UK, one for rest of europe and one for US/Canada and other other far away places (UK stores). Regardless of weight or number of items. If you sell more items then naturally your making more profit.

It works.

Why make it complicated, the customer wants to know exactly how much delivery will be and not have to resort to 'finding out at the checkout' or having to click a 'check delivery cost'.

I can tell you now, the number of people leaving your site at checkout stage is most likely (well a good number) of people suddenly discovering the delivery cost.

davidjgoss87 · Oct 3, 2008

Not sure what type of products you are selling, but breaking even on postage isn't really a realistic or sensible aim - you need to be competitive. For instance, I just bought a phone and even though it was cheaper on Shop A, I bought it on Shop B because the delivery was free.

On our site, which is clothing, we just charge £3 every order no matter what it consists of. It's easier for you and easier for the customers, because they never have to bear the frustration of having a £99 order with £5 delivery to pay on top when they would get a £100 order delivered free - that's the problem with having tariffs based on order value. £3 is enough to recoup some of the courier cost, but it doesn't sound like a lot of money even if the order is only £14 for a pair of socks.

petersoftware · Oct 4, 2008

We (mailingsuppliesonline.com) recently started offering delivery for free within the UK. These costs are now built into the advertised sale cost of each product. That way, if a customer buys a quantity of one, we make an ok profit, but the more they buy the bigger profit we make, exponentially.

We think that our previous flat rate did not work for two reasons. The first was that we think customers we scared off by a postage charge that could be a large amount of the sale if the product that they were buying was of a small value. The second was the although we would take in more money if a customer bought more products in a single sale, the actual profit would be hit by the increase in postage charges.

In response to PhillipH regarding people leaving at the check out stage, I don't know the full answer to this and have already started a post on why people are leaving our site at this stage (we have free postage) - see post "Converting Interest into Sales" in this forum.

Connexions · Oct 4, 2008

petersoftware said:
In response to PhillipH regarding people leaving at the check out stage, I don't know the full answer to this and have already started a post on why people are leaving our site at this stage (we have free postage) - see post "Converting Interest into Sales" in this forum.

Theres lots of scripts out there, that can give any leaver a popup box asking them why they dont complete the order. Well, not those exact words but it gives the chance for them to say.....if that makes sense

petersoftware · Oct 4, 2008

Thanks PhillipH, adding one of these scripts is a good idea. I will see if it is possible to do this without annoying the potential customers.

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Working out shipping charges to customers

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