Charging for delivery - stupid idea?

[Deleted member 136029]

We have offered free delivery in the UK for several years. As the business has grown, despatch costs have grown as extra staff have been taken on. There are a number of variables in this decision, but wondered if anyone else has introduced a P&P fee after a long period of customers being used to getting it for nothing. Is it commercial suicide?

 

[Scott-Copywriter]

I think what is more important is what your competitors are doing.

If they all offer free P&P, whilst you charge for delivery, then that puts you at an immediate disadvantage.

What you could try (unless you're doing this already) is to make the free delivery 2nd class, so it's a cheaper cost to absorb. Customers can then choose to pay extra for 1st class delivery if they wish.

 

[Deleted member 136029]

Cheers Scott. Competitors are about 50/50 between free delivery and charged delivery below a certain spend. What's tricky is that the small & large players charge, and mid-sized organisations like ours tend to be free.

 

[Scott-Copywriter]

Cheers Scott. Competitors are about 50/50 between free delivery and charged delivery below a certain spend. What's tricky is that the small & large players charge, and mid-sized organisations like ours tend to be free.

Making delivery free above a certain spend is another technique you could try as well.

Basically, it's something you may need to test. Try different P&P options and then accurately measure your sales and sales conversion rate to see if they experience any sort of negative impact. It's the only way to really know for sure.

 

[JamieM]

Do you have a lot of repeat customers?

 

[antp__]

@Pish_Pash replied to a similar thread not so long ago. As he quite rightly said, free postage and packaging is not really free. It is incorporated somewhat into the cost of the item. When working out profits after sale of an item, you are always taking into account delivery, whether it be £2 or £12 or even £50. Pish Pash mentioned in his post that this does in fact put you at a disadvantage.

Example
You sell a TV for £100 + £15 delivery.
You sell a TV for £115, free delivery.

To the end user, your customer, they instantly think the second item for £115 is going to be better than the first. Because it is more expensive. They do not take into consideration they are exactly the same and it's simply down to the fact one has the delivery cost incorporated into the final sale price.

Charging delivery will allow you to drop the product cost. Keeping you on top of the market, whether they offer 'free' postage.

Set up delivery weight bands, instead of delivery cost per item. I sent anything under 2kg free of charge. Larger items, 10kg for instance, £10 delivery. 10-20kg. £15 and so on.

Or, offer a discounted rate for each additional item. First item at 10kg is £10, every additional item of the same weight is £15. Instead of £20. It all depends on what you are selling when it comes down to actual delivery costs.

Over time though, I do not feel I have lost sales or gained sales from offer free or paid postage. It is a thing of the past in my honest opinion. The psychological game has gone from 'oooohhh free postage' over to 'this is better than that one because it's more'.

If you do have repeat customers, offer them free delivery for the first 2 months. But their product cost will ultimately be higher than advertised as it will have the postage built into it. They will soon come around.

 

[Pish_Pash]

the jury is still out on this one (from my perspective)...I think there have been many studies done that offering free postage gives a sales boost (even when you up the price to incorporate the postage cost). The problem antp_ mentioned is a very real problem, perhaps not so apparent on a TV, because after all there are only so many brands of TVs & buyers can research the user reviews to the nth degree...but if you are selling lower priced items & selling a brand that nobody has heard of (& hasn't much in the way of reviews), upping the price from £10 + £2 delivery to £12 inc. free delivery can be a very real problem ...it might seem hard to believe but adding that 20% onto the perceived purchase price raises buyer's expectations that what they are going to get is going to be better quality than the former £10 priced product! (which can lead to buyers being disappointed...disappointed buyers = more returns = more cost ....or could even mean negative feedback)

So I think the answer depends on what you're selling ...I know that if you don't offer free P&P, some buyers won't even see your product on the likes of ebay, as some buyers select the option 'free postage' in their search criteria (& if they don't see your product, they can't buy it!) ....so it's a dilemna! (but more often than not, I certainly lean to the side of offering free postage & building as much into the price as I think I can get away with!)

 

[antp__]

Yes, I used the wrong item for my example really. Oh well, it was more for simplicity.

If it is on eBay you're selling, perhaps it is worth trying the same product. Of course change the title slightly allowing you to re-list the same item. But try one with the postage incorporated and one without.

Every business will work differently as above and the only person to find this out is yourself through trial and error.

 

[bharris]

If your selling the same product as your competitors then the RRP is normally the maximum you can get away with charging for the product so you cant add £3 for postage as the customer will see you are too expensive. How many sales do you think you would loose? every sale without a postage charge has to be made up by selling more items if its a low value item then you may have to make a lot of extra sales to get your money back. Personally i would as suggested use second class as your standard postage and have first class as a paid for option i would also only offer the free postage once a spend level has been reached.

We have competitors who are offering free postage on single products selling for £2 which are too large to be posted as a large letter. They are welcome to lose money on every sale. Postage costs far to much now and the sooner more charge for it the better. I have noticed that more and more large stores are now charging for postage unless you spend over a set amount.

 

[TPH1]

A stupid idea would be to price products without considering the postage/dispatch cost that you will incur per sale.

Whether you add that cost to your product price or as a 'delivery charge' is up to you. It's almost irrelevant.

 

[LowPrices.uk]

Free delivery is a major selling point, so I would try to keep it if you possibly can.

 

[japancool]

I have noticed that my customers at least, don't figure in postage and delivery costs when comparing prices. In all the various internet discussions with customers about my brand vs competitors, not once has the delivery cost been mentioned.

 

[Fluxo]

I am building an e commerce website selling eyewear, I am thinking testing an innovative way for the shipping fees. I say that I'll put in say £4 or £5 as a company contribution in delivery costs, the balance is on to the buyer ? Any comments please ?

 

[moo-tique]

We have always offered free postage to our customers, and have found this to be a good 'hook' in attracting new (and repeat) customers. Even though we offer this, we are still cheaper than our UK competition (although there are very few here in the UK!)

 

[pbeard18]

I agree with the first comment. It all depends on what your main competitors are doing. Dropping to second class delivery is a good idea to save money if you want to keep the Free Delivery.

If you do decide to charge for delivery, perhaps send an email to your customers, explaining that rising costs etc... have forced your hand. The consumer is normally smart enough to understand...right?

Perhaps offer free livery if you spend a certain amount of money.

 

[JMRidley]

We used to offer free delivery on orders over £50 - we removed this 6 months ago. At the same time we also increased some of our delivery charges as the actual cost of posting some items was quite a lot higher than we were charging. We haven't changed our product pricing strategy. There has been absolutely no impact on level of sales (in fact they are up on this time last year) so wish we had done this a few years ago. The reason we didn't was that we kept reading posts on forums saying that free delivery was a must in order to be competitive!

 

[bharris]

We used to offer free delivery on orders over £50 - we removed this 6 months ago. At the same time we also increased some of our delivery charges as the actual cost of posting some items was quite a lot higher than we were charging. We haven't changed our product pricing strategy. There has been absolutely no impact on level of sales (in fact they are up on this time last year) so wish we had done this a few years ago. The reason we didn't was that we kept reading posts on forums saying that free delivery was a must in order to be competitive!

So i'm not alone in thinking this. Most of the large companies charge for delivery (below a certain spend) so why do we small businesses think we know better? You have to make money or what the point.

 

[fastprint.co.uk]

We use FREE delivery to increase order value to £50

 

[Tom Porter]

That's a difficult one, especially if you have built up a client base who know you've been offering free P&P. You could test the water and offer free P&P for orders over a certain amount, this usually helps increase your average basket amount too. Another idea would be for a premium service where your customers pay an annual fee for free delivery - helping to increase customer loyalty.

Hope this helps

 

[Abe Choi]

You may not have freedom on your website but if you are on a platform like amazon or ebay. I experiment by running 3 different variations, for example sakes these are extremes

- £10.00 for product and free postage
- £5.00 for product and £5.00 postage
- £0.01 for product and £9.99 postage

My thinking is why force the consumer to choose the way I think is right. I try to offer whatever the customer might look for whether I understand the customers' logic or not. I tweak the pricing when I collect enough significant data.

 

[John Cameron]

I sell on both Amazon and eBay and have found the Free post model a lot less hassle. You never receive complaints or questions about post charges. Its the delivered to your door price that counts. Of course it needs to be factored into your bottom line. I would say that most customers out there appreciate this approach.

 

[Aileen B]

I'll offer a customers perspective: if I see a product with a reasonable delivery cost, but free postage or discounted postage for each additional item, i usually end up buying more items to "spread my cost", mentally adding the postage to my total and averaging it out across however many products I buy. Hope that makes sense.
my mother and aunt are the same. There must be others like us.

 

[Leather Briefcase Company]

As we sell relatively high value items we make clear that there is a courier charge.
A year ago when this was £6.95 we lost a few sales at the check out, and received a few customer comments that they expected "free delivery".
We now charge a flat rate for UK delivery of £4.95 including shipping in from our factory in Italy, and do not lose sales at the check out, and do not get negative comments about PP.
You just have to suck it and see, and watch the competition.

 

[TMGG]

I'll offer a customers perspective: if I see a product with a reasonable delivery cost, but free postage or discounted postage for each additional item, i usually end up buying more items to "spread my cost", mentally adding the postage to my total and averaging it out across however many products I buy. Hope that makes sense.
my mother and aunt are the same. There must be others like us.

Reasonable delivery but free postage? Could you elaborate, Aileen, I didn't understand that

 

[Aileen B]

For example : £4.95 delivery with free postage for each additional item.

 

[Chris Ashdown]

Google shopping shows the product price and i understand Bing are going to do the same so for non Amazon or Ebay then it may be better to charge for shipping

The main point is to make it clear on the home page the costs involved, if they are not shown most people will walk away, just as bad as making people log in to be able to buy

 

[antropy]

You should do A/B testing on this and then you'd know for sure.

 

[Simon.P]

Sports soccer charge delivery as normal and give you that value in vouchers if you collect from their store. Perhaps you could do something similar?