What should I charge for shipping

When I first started my first store, this was perhaps the hardest thing to figure out. For most of us, free shipping is very hard to do. My feeling is that you should do your best to break even on shipping. With rising shipping costs, consumers are becoming more and more conscious of it. The store that tries to sell items really cheap only to charge big time for shipping will be out of business fast. Customers simply won’t be fooled and will shop elsewhere.

So how do you find a balance? First of all always be up front with what your fees are. Make sure your store has a FAQ page that explains all of your store’s policies, including how shipping is determined.

One of the most popular ways to charge shipping is with a tiered approach. Almost every catalog that you get in the mail has a shipping table. $0-$25 ships for $x; $25.01-$50 ships for $x; and on. This works really well if you don’t have any heavy or large items. I collected a bunch of catalogs in my industry, looked at all of their shipping tables, and created my own that was similar. This is a pretty good way to do things; you’ll overcharge some, and undercharge some. But hopefully will land somewhere in the middle when all is said and done.

You could use flat rates. If all of your items are pretty much the same size, and you’ve got a pretty good idea what they’ll ship for, make it easy. “All orders ship for $8.99”. Or maybe “The first item ships for $6.99, each additional item ships for only $.50 more”. This can work on big stuff also. Most of the big stuff I carry has flat shipping from the supplier. So I know it’ll cost me $50 to ship every time. I can adjust to make it work.

Finally, there are plenty of third party applications that can help. Yahoo! Merchant Solutions
hosts my stores, and I use accuRATEship from Solid Cactus to configure my shipping. It costs me $75 a month, but I never have to worry about losing my shirt, or losing customers, due to shipping costs. It figures real time shipping costs based on weight, to and from zip code, box sizes, etc. An awesome tool. I’m sure there are other things out there for different store platforms. Search around and see what you can find.

Let’s share our knowledge. How do you configure shipping costs?

Oh no, an item is on back order with my distributor, what do I do?

This is the worst.  You work so hard to get that sale, and once you have it you can’t deliver because your supplier is sold out.  Communication is the key.  When this happens to me, I take the following steps.

I communicate with the supplier

I first have a conversation with the supplier to see what has happened.  My goal is to get a good idea of when the item will be back in stock.  I want to make sure that the item really is coming back and isn’t discontinued.  I also check on alternatives.  What similar products are ready to ship immediately?

I communicate with the customer

Secondly I communicate with the customer.  I let them know that the item is currently unavailable and that we are truly sorry about the inconvenience.  I let them know when the item is expect and ask if they can wait.  I also offer them the alternatives.  Maybe they’d be just as happy with the same item in a different color.  This is a great way to save a sale.  A word of advice; it is better to suggest specific products as alternatives.  Just asking if there is something else they’d rather have will usually result in a “NO”.

Conclusion

It is my experience that most customers are satisfied if you simply let them know what is going on with their order in a timely manner.  In my business, 75% of the customers are willing to wait, 10% will take a different item, and 15% will want to cancel.  Not too bad in my opinion.  Even if you loose the sale and have to cancel, the excellent customer service you displayed by communicating with your customer will compel them to come back next time.

Tags: drop shipping, ecommerce, back orders

Should I Profit On Shipping?

Today’s online shopper is very savvy and will catch on to most things pretty quickly. Gone are the days where you can make a low margin on your products, then add on high shipping and handling fees to make it up. Your customer will notice and will move on to another store. In my opinion, shipping and handling should not be a profit center for your business. Most customers understand that S&H is a cost that they cover in order to receive their product. So you need to make it as fair as possible for them.

This starts with having a good understanding of what you will pay for shipping. Your drop ship vendor should give you full information as to how they calculate shipping to you so you can act accordingly. Your estimates will sometimes be good, and sometimes not. Some customers will overpay for shipping; some underpay. Your goal should be to get it as close as possible.

 With that being said, I do consider it alright to make a little profit on shipping. After all, you are in business to make money, and S&H is a service you are providing. As I mentioned before, just be sure to keep it fair. Maybe try to make 10-20% on shipping, not 50-60%. And remember, any shipping charges you take in over and above what you pay in shipping needs to be reported as income, and you will be taxed. So it’s not free money.

How do you feel about shipping and handling charges?

Tags: drop ship, business, retail, ecommerce