It is by far the biggest challenge of running an online store. And so I also struggle with it.I am struggling with the question from customers why shipping is “so expensive.” I am struggling with the price I have to pay for shipping. Not that I think the service is expensive, but my customers sometimes think that the price is too high.
From A to B
First of all, the principle. You want to buy something and have it shipped to your home. You pay an amount for that. Only you probably don’t pay the actual costs anywhere. Since this has become the norm, everything seems very cheap. The perception people now have of those costs is very low. When you think about it, it’s actually dirt cheap. A driver picks up a package from my studio and drives dozens, sometimes a hundreds of kilometers, to bring it to your door. Of course there are different drivers because there are also stops to be made in distribution centers. Sorting has to be done by someone or something. This way they can keep the costs somewhat low, because you can then have drivers drive around in neighborhoods more efficiently.
If you are not at home, the driver will come by again with the same package at a later time. If you are not at home the 2nd time, it will go to a collection point where the parcels must be registered. Because, of course, there is also a whole system behind it so you can see where the packages are. It has to be scanned and registered because something gets lost quite easily in this enourmouse endeavour.
It takes time. Time and therefore labour. People have to be paid.
As an entrepreneur you pay what the parcel service has calculated that this costs, and they must of course also be able to make a living. If you are going to send a package and you are not yet big enough to have hundreds of orders to ship out every day, you pay a higher price, plus costs for collection of the packages at the studio. Otherwise, we will spend an hour several times a week to deliver the packages to a distribution center. That is even more expensive.
You may have heard of the pressure on delivery drivers. That is not because they are paid so much and have a luxurous job, of course.
If you then pay nothing at many large web shops, it seems free. But of course it is not. Go and send a package yourself with track and trace. At the time when I type this, it is already € 6.75 and that is uninsured. Insured it is € 8.45. And you have to bring it to the post office yourself. It is of course way too expensive to have to do that for every package. Either way, it’s more than the $ 5.99 I’m asking.
I still pay part of the shipping costs, even if you paid € 3.99 or € 5.99. I also offer free shipping above a certain amount. And that is actually a bit normal, that there is a free shipping option. That means that I pay a little more than € 7 (at the time of typing) myself.
The cost of a product
A product price at the bottom of the line must of course cover all costs. Then you also have to be able to make a living as an entrepreneur. It is not wise to break even, of course.
The big ones among the online shops are very efficient and often also work without people but with robots. They keep their costs relatively low. But they still make a profit. Purely because of the volume and … their margin! That is the difference between a purchase price and a sales price.
Because let’s be honest; the products they sell are made in low-wage countries in dire conditions and per thousands of pieces. So they do have some leeway in the costs. If you sell a product for €40,- that you have made for €4,-, you can offer free shipping and still earn €30,-
Here too I have less space, because my products often come from the Netherlands and we make a large part ourselves. Everybody gets fair wages!
Then there is something else: there is a war going on for the customer. Because a limited number of incredibly large players now want to take the market, a race to the bottom is underway.
Bol.com wants everyone to keep buying from them, Coolblue wants that too. But Amazon plans to conquer the market. They want everyone should think of Amazon before ordering. They will do this by offering everything to you very cheaply. If they only make a few euros in profit, but can ship thousands of parcels per hour without much labor costs, then it is even more interesting for them. They benefit from the quantity. Little comapies cannot, so it’s done for us. The rich are getting richer and the little ones are giving up.
The market is being completely destroyed. This also eliminates people’s awareness of the real costs.
Then back to me. What can I do? The price should go up! Include the shipping costs in it. But is that fair for everyone? If I put 3.5 € on each product, because then I will have the shipping costs back anyway, you always pay too much if you buy more than 2 products. But I’m fine then and you think you have free shipping. It would be fair to just take the costs that I incur; a little more than 7 euros to be paid by every buyer. But everyone is so used to it. Then I seem expensive! It’s about just a few euro’s extra but it feels too much for customers and too little for me. If you want to go to the city, you also have to pay high parking costs and spend a lot of time getting what you want.
I still run my business with the idea that packing and sending it to you is a service. Because you can also pick it up from me (except during corona). But actually, mainly because it also involves human work. It doesn’t just fly to a customer. And if you want to return an item, you will notice that too. The conclusion is therefore that it costs money to bring a package from A to B because people have to eat.
Free returns, I haven’t even started about that yet. Perhaps this has given you some perspective of how things work. And who is actually paying for the costs.
I hope you believe I am doing the right thing.