The topic of shipping costs and struggles with getting exact costs to the customer, matching what you pay, has come up many times over the years.
With so many factors, it can be a daunting task.
I will share my experience.
We have a huge variety of products. Some small and light, some small and heavy, some large and light, and some large and heavy.
This can make it difficult, particularly when you consider US shipping companies factoring in "dimensional weight" (extra weight when the package is bulky, yet lightweight).
In the early days of my store, we did not want to jump on the free shipping bandwagon. When customers would abandon a cart with a large order, I would hurry up and email them to offer a discount, or tell them I would ship for free.
Finally, as business grew, I decided to do it.
It turns out, it was one of the smartest decisions I ever made when it comes to the sucess of my company.
But along with that came some orders where I pulled my hair out thinking, "well we gave all that profit to the shipping company"
.
But I also (with time) learned to look at the big picture of shipping costs versus overall sales versus shipping revenue collected on orders that did not qualify for free shipping.
It turns out, for us, shipping costs (consistently) run about 10% - 12% of gross revenue.
Literally, I could raise my prices 12% and never charge another shipping fee and make the same money. Although I would lose sleep every time a customer ordered a $3.00 item and it cost us $4.00 to ship it.
But my point is, that I took a step back and realize that the overall numbers over a period of time is what's most important.
Yes, we may lose a few dollars on shipping costs, but then a customer comes along that we made a few extra dollars on their shipping costs.
I should also point out that we show retail shipping costs on our website. So the discounts we get from shipping carriers, helps offset the cost of our free shipping orders.
I also developed some custom front end javascript that shows delivery dates for each shipping service. The customer sees that free shipping will take a day or two longer than a paid service. So this has encouraged more customers to pay for their shipping to get it faster.
I was curious how much you lose in the scenario
1 case of paper weight 10kg
1 ream of paper weight 2kg (has a special FSA)
and I can imagine that it is expensive to ship a case of paper.
Keep in mind that I sell a case of marble that weighs 35lbs (16-17kg) at about $55.00 I have free shipping on orders over $99
Customers come along and order two cases and nothing else. Then want it shipped across country.
The shipping will cost us about $50.00 and that's just about all our profit going to the shipping company.
Luckily not too many customers hit us with that scenario.
But I don't worry too much, because the next customer may need air shipping and we make extra revenue there, so it evens out.
I'm not going to pretend to understand your business or situation, but again, this is just some insight into my learning curve with shipping costs and how the website handles that.
I have learned that customer hate paying shipping, so it is imperative to offer a free shipping promo. At the same time, you can, and should, have upgrade options for those who need or want your premium services. Customers will appreciate the free shipping option, but will sometimes upgrade if given the change.
Think of airlines offering first class. Some customers want that first class service.
I just checked my lifetime stats (
great numbers and the ect alumni party is in planning (first beer is on Andy))
The shipping revenue we have collected is almost 10% of that. So if we pay the shipping companies about 13% of revenue, then our free shipping promo only really costs us 3%.
It's not hard to roll that 3% into our pricing.
In closing, I suggest that store owners look at the big picture over a healthy time range (6 months minimum) to get a real image of what FSA actually costs them and don't dwell on individual orders.
Free Shipping BUG or design
Posted - 08/20/2018 : 07:59:52
