Shipping and handling: model 5 - profit center

Some sellers price their items at whatever they can to undercut the competition.

Some sellers just try to squeeze out any penny they can from their customers.

So, what to they do? Simple...charge higher shipping.

People will gladly pay $3 rather than $6 for a cable on ebay, even if shipping is $5 for the $3 cable and free for the $6 cable. Or, maybe they just don't understand that they need to add the shipping cost in.

And some people will gladly pay a high shipping amount for an item they either really REALLY want or the item is just hard to find and are willing to pay anything for it.

Hence..."shipping as profit center" was born.

If you don't already know where I stand on this, please...let me repeat: don't do it...find another way to sell...find another way to make money...don't make the rest of us look bad.

To me, making a profit off of shipping is like Best Buy charging you to walk through their doors, or your local grocery store charging a $1.50 to use their shopping carts. It's a service that you provide when you sell your product. Unless you are a professional packer or shipper, it should be as free as you can make it. Otherwise the customer will eventually feel that you ripped them off.

And they likely won't return. That hurts you.

And the likely will be turned off by the whole on-line buying experience.

And that hurts all of us.

Shipping and handling: model 4 - flat rate

What's flat rate?

In the days of catalog shopping (who remembers getting one from Speigel or Montgomery Ward?) flat rate shipping was the only way to go.

Buying $1 to $50 in merchandise? That will cost you $5 to ship. $50 to a $100? That'll be $9 for shipping, please.

Flat rate holds a lot of promise for sellers because you can get buyers to buy tons of your stuff but not get reamed on shipping. So your sales could be fantastic...but you may have to eat a bit of the postage.

You therefore have to be careful with this.

Use it only if the following is true: your profit margin on a multi-item order is great enough that you can eat the additional postage and still profit enough for you to justify using flat rate shipping. If you can't sleep at night knowing you lost money with flat-rate shipping, this model isn't for you.

But for some people (especially those in the small electronics or jewelry business) it's a godsend.

Shipping and handling: model 3 - S&H fee

This is a legitimate way to handle extra expenses incurred with shipping: charge the actual shipping costs plus a bit more for "handling".

This "extra" amount is usually only a buck or two. A fine and justifiable amount (for both buyers and sellers) for what I call "medium" items...items that could never go first class, but aren't oversize.

Handling fees should never equal or exceed the actual shipping cost. That's just plain freaking unfair for the most part. Unfortunately I've seen it a lot. People charging $80 to ship something that costs probably around $30-$40 to ship.

Notice I said "for the most part". There are a few (very few) cases where this is justifiable, but usually in cases where the item is fragile (as in a large ceramic vase), comes in multiple pieces (like a set of china), or requires specialize packaging (like perishable goods).

Do you fall under these cases? Then fine, you can charge the extra, since many buyers expect to pay extra for that anyway. But again, the amount MUST be reasonable.

Buyers will see right through you if you try to scam them on "handling charges", so use these charges freely, but with caution.

Shipping and handling: model 2 - actual shipping

The fairest model (from the customer's viewpoint) is the actual shipping model.

USPS charges you $12.85? Then you charge the customer $12.85. No bump-ups, no hidden fees...nothing but the actual price.

OK, you still need to cover supplies and so on, right?

Wrong.

These costs should be built in to your operating expenses and spread out over all the prices you charge for all your items, or at least built in to the price of the item you're selling.

Again, nickel-and-diming is NOT the way to go...unless you want to lose your customer base.

Shipping and handling: model 1 - free shipping

OK, yeah I know. There's no such thing as free shipping.

Most people do one of two things to offer "free shipping":

• Bump up the price to help cover the costs, or
• Eat it, which is more common than your think, especially with small light items that only cost a buck or so to mail.

If you decide to do the bump (the price, not the dance), then you really need to be reasonable on what the bump should be. In my opinion, the bump should never be more than the actual shipping amount - as in what the PO or UPS or Fedex will charge you. Don't nickel-and-dime your customers to death with built-in charges for gas, supplies, your time, etc. Be fair (to the customers), be reasonable (to the customers) and your sales will do fine. Overcharge, and I can guarantee they will find other places to spend their money.

Shipping and handling - the debate rages on

There was a thread recently on bonanzle about what someone should charge for shipping and handling.

Let me say right off the bat: if you tell your customer you charge x dollars to help cover your costs of boxes, bubble wrap, tape, labels, gas and your time...stop selling - get out of the business - find something less destructive to do. Because when you do that, all your are doing is (short-term) lining your pockets with a few extra coins and (long-term) making the on-line buying experience more painful for your customers.

So, seriously, go away.

I want my thingie I bought from you, and I will pay a reasonable charge for shipping. And I'm not so stupid that I think a 3 pound item will cost 12 bucks to mail, especially since I know I can go to the USPS website and figure out the cost myself.

So...in the name of fairness, I want to present to you the basic S&H models. Each takes some (in the words of Ricky Ricardo) 'splaining to do", but I think it will all be worth it.

Resources: packing materials

In my slowly-growing list of resource for you guys, I present: bubblefast.

I have found no seller of bubble wrap that's cheaper than bubblefast. They have great deals on envelopes, bubble mailers, packing tape, and so much more.

Uline is also a great site. But I'm committed to bubblefast. I really like them. Great service, too.

A note on Fulfillment By Amazon

As I mentioned in the prior post, I really like FBA. But if you are interested in it here is a little quirk about it (or pain, actually) you need to know.

I sell a lot of things, but I usually only get 5-10 of any one item. Some are big, some are small. Some are already on AZ, some not. Here's where it gets tricky.

• And some are on AZ more than once...which itself causes me problems. If there are two or more listings for the exact same item, I can still use FBA but I also need to put a label over the item's bar code so AZ can process it. Other items, I usually don't need to do this. If they need a label, they can't be shipped with items that don't need a label...hence, they need to go in a different box when I ship them to AZ.
  
• Some items are oversize (not USPS oversize, AZ's version of oversize). Oversize items need to go to a different warehouse...hence, they need to go in a different box when I ship them to AZ.

Starting to get the picture? When I pack things up to ship to Amazon, I may need to make up to 4 different "types" of shipments:

1. not oversized, and don't need a label
2. not oversized, but DO need a label
3. oversized, and don't need a label
4. oversized, but DO need a label.

How do you avoid this?

Well...you don't. Not unless you want to walk away from a good deal from some stuff that may need a bif of extra processing on your part to ship for FBA.

Yes, it can be a serious pain, but I get a lot of good stuff to sell, and it sells well and for a decent profit, so I guess I'll put up with the hassle.

Hmmm...........profit.............what a great topic for another discussion!!!!!

Just woke up...gotta pack some stuff to ship.

OK, so I really wanted to have this blog be about selling on-line. So here is at least one entry about that topic...finally.

I have about 30 things I need to pack up and ship off to Amazon. I use their Fulfillment program which is fantastic. I ship them the stuff and when it gets sold, they pack and ship it for me. Not a particularly cheap program, but it has a lot of good points:

• it saves me a lot of time by not having to pack a lot of small orders
• sales are strong since they get free shipping
• I get the coveted "Buy Box" a lot more often
• I can actually charge more than other sellers b/c of the free shipping and that Amazon ships it for them.

So even though it costs me extra to have AZ ship for me, I can charge more to easily cover the extra cost. Nice!!!

So today I have to ship some summer things off. I got motorized bumper boats for the pool which are pretty cool. They are selling on AZ for like $120 each. I got a few for $20 a pop.

I use UPS, which offers me really cheap shipping when I ship stuff to AZ. Like REAL cheap. Like a 40-pound box costs like $9 for shipping!