Long, long ago (around 1999) in a galaxy far, far away (actually, it was on the planet “eBay” in the Silicon System), it was perfectly acceptable for sellers to pass along shipping costs to eager online buyers.
Today, the billing of shipping costs has become a bit more contentious. Buyers are looking for free shipping, while sellers are struggling to keep from depleting their profits.
There are ways, however, for both sides to be happy. Here are some ideas, from the seller’s perspective, to control shipping costs while also assuring they can attract buyers without having to forsake revenue in the process.
In the good old days, buyers paid shipping without protest
In the early days of eBay, the matter of shipping cost responsibility wasn’t a matter of discussion at all; buyers paid. In fact, it was the de facto method that quickly took hold within the grassroots auction community, usually stipulated in most auction listings by a familiar statement: “Buyer will please prepay, plus shipping.”
That was then. This is now.
Sellers need to actively review their chosen carriers’ costs and determine if they’re reasonable—no matter who’s paying the billIn the new millennium, it has become a much tougher proposition to insist a buyer pay all shipping costs. Some sellers would offer free shipping as a special incentive on occasion, but still, the general rule was buyers would pay shipping costs.
Today, when money is tight and bargain hunters are skeptical about any added costs of a purchase, online sellers have been tasked with seeking new ways to navigate the minefield of recovering shipping costs.
Seller, analyze your shipping costs
Regardless of if you’ll ask buyers to pay shipping costs or you’ll aim to cover them yourself, you want to have a firm grip on how much shipping is costing you with each package you ship. Sellers need to actively review their chosen carriers’ costs and determine if they’re reasonable—no matter who’s paying the bill.
Consider who’s shipping your packages and what level of service they provide that would be best to gain you lower costs:
- If you ship packages only occasionally (perhaps you’re not a high-volume seller), then a fully dressed account with a carrier might be overkill for you, costing you more per shipment, dependent upon your rate structure, than if you were shipping hundreds of packages each week. Usually, the more you ship, the lower your rates will be.
- Conversely, if you ship in high volume but haven’t yet established a carrier account, there could be savings awaiting you for creating such an account. Many carriers offer merchant discounts to standard at-the-counter costs, rewarding their high-volume clients for higher levels of business.
- Whichever method you’ll choose, based on your volume, compare the rate structure costs among the major carriers (FedEx, UPS and USPS) and compare the service levels. Watch out for special services, which you might not actually use and will cost you in your ongoing account fees, nevertheless.
Choose the best right shipping materials
In the earliest days of online selling, many sellers took pride in packaging their goods in top-quality, super-durable packaging. Those were the days when average-sized and average-weight packages shipped for about $5. Now that rates have escalated more than double, sellers need to avoid the “best” packaging materials and, instead, choose the right materials.
Rather than buy a package of 20 shipping envelopes, opt for the carton of 100, and you’ll likely save 50 percentWhat this means is, if an item can be transported safely and inexpensively in a bubble-lined envelope, it’s likely a cheaper solution than a heavier and bulkier box. With shipping costs on the rise, packaging companies have been hard at working developing lighter-weight yet duly durable package solutions to combat the rate increases.
This might be a good time to reassess your packing goods and determining if you can use a different solution that will transport goods safely and at lower cost.
Purchase shipping materials in bulk and save!
While it might seem obvious to most of us, some sellers have yet to discover the remarkable savings when buying shipping materials in large quantities, as opposed to onesy-twosey purchases. Seek out companies that specialize in shipping goods—there are many with online stores right at your fingertips.
Rather than buy a package of 20 shipping envelopes, opt for the carton of 100, and you’ll likely save 50 percent. Also, avoid purchasing shipping goods from retail locations (office supply stores, mailing center stores) where such goods are significantly marked up. One warning, though: Be cautious of the online sources that offer great bulk-item prices then surprise you with amazingly high shipping costs. Your best bet is to find a supplier that’s local to you where you can pick up yourself (even if you need to special order items).
So, will your buyers pay?
This brings us back to the original dilemma: Will you pass along shipping costs to your buyers, and will they pay? Generally, if you’ve contained your costs through choosing a best-value service and using best-purpose and best-price materials, you’ve already reduced costs. From here, you’re in a position to offer “reasonable shipping rates” that will appear as a bargain to shoppers.
If you feel you must offer free shipping to properly attract buyers, you’ll need to fold those reduced shipping costs into the price of your items or absorb the cost directly in your cost-of-goods-sold algorithm.
Despite the pressure on sellers to offer free shipping, many still charge their buyers—and there’s no ethical foul here. But if you want to balance the scales for yourself and your customers, take steps to control and contain your shipping costs, passing along those savings to your customers in whichever method you find works best to satisfy them while maintaining your profit goals.
