Return to: GROK Dot Com 8/01/2001
Shipping Cost Sticker Shock
Sure, folks perceive the Internet as an opportunity to shop more conveniently, but not at any price. Shipping costs are part of the total value proposition your customers are weighing as they decide whether to click on that Submit Order button. Listen! You can hear their brains working. "I really like those roller blades, but the shipping is going to cost me $14.95! Sheesh, I wouldn't have spent a quarter of that on gas to the sporting goods store! And look here. For just 25 cents more, these dudes would ship the same package internationally? Like because Iím in the next state, I'm next door to London? I don't think so."
A friend of mine needed a special microphone line level adapter for a Macintosh and had to have it within two days. Nobody locally carried this $20 item, so she went cruising the Internet. She found several companies who would supply it, for roughly the same cost, within the two-day deadline. One company located only a state away wanted to charge her $30 for 2nd Day Delivery. The other company, on the opposite coast, offered to send the item for just $12.60, the amount the carrier would charge them for the service. Guess who got the sale? And guess who is never going to see my friend as a customer again?Day Delivery. The other company, on the opposite coast, offered to send the item for just $12.60, the amount the carrier would charge them for the service. Guess who got the sale? And guess who is never going to see my friend as a customer again?
Your customers aren't fools, and it's a rare customer who isn't going to scratch his head when confronted with a shipping charge that looks way out of line. Folks expect to get charged something for shipping - after all, it's a trade-off for the convenience of not having to drive anywhere or hassle with crowds. That's worth something, and customers, for the most part, are fair-minded. But theyíre not willing to get taken to the cleaners. When you pull this sort of sticker shock with your clients, your credibility isnít just weakened, itís destroyed.
What can you do? You certainly don't need to ship at a loss (although 50% of e-tailers lose money this way - another brilliant strategy). But you can charge at your cost, possibly with a nominal handling fee if absolutely necessary. You will make it up on more sales volume (assuming youíre selling your product or service at a fair profit, of course). Or, you can build your shipping charges into the price structure of your products. Another option is a "flat-rate" shipping fee, which represents the average of all your shipping costs. Naturally, you need some good historical data to set this fee wisely, but your prospects do perceive a lot of value in policies that promise "$3.99 shipping to anywhere in the U.S." (or wherever).
Equally, if not more important, donít make your customers wait or guess about shipping charges. Most of them wonít; theyíll bail. Make shipping charges (and any other extra charges) clear before you ask for credit card information, make sure the charges are fair, and make the bottom line worth the convenience of foregoing a trip to the store.
Whatever you do, don't abuse your customers with unreasonable (or hidden) shipping costs. Do so and they'll quickly become customers of someone who doesnít.
"Five Battle-Tested Rules of Online Retail."
Paul Kaihla, eCompany, April 2001. <http://www.ecompany.com/articles/mag/0,1640,9599,00.html>.
2 Paul Kaihla.
Return to: GROK Dot Com 8/01/2001
© 2001 Future Now