By now you understand that the solo information business strategy discourages dealing in physical products that require shipping and handling. These products require human intervention and a lot of financial costs that are the antithesis of the one-person solo Internet home business model.
Nevertheless, many of you will continue to do business in a physical delivery world because of the types of products you sell.
So I have a few suggestions about shipping products that will hopefully help you in your business to avoid the pitfalls and traps that some solo businesses have fallen into in the past.
1. Don't base the amount you charge for shipping an item on the cost of the item. Some feel this is a simple way to judge how much shipping will be - inexpensive items ship for less, more costly items ship for more.
In actuality, the cost of shipping is generally more reliably based upon:
- the shipping carrier used,
- the physical weight of the product shipped,
- the length of time allowed to get the product to its destination,
- the distance between the sender and the receiving party,
- the options the sender chooses as a part of the transaction (return receipt,
insurance, expedited delivery, etc.)
Your business shipping policy, and customer preferences (if you allow them) will influence the actual shipping costs more directly than the price of the product.
2. Online shopping is a very competitive and cutthroat environment. Sometimes, the cost and speed of shipping is the determining factor in a customer's purchase decision. If your profit margin is high and the expense of shipping the product is low, it will most likely be a smart business decision to offer your customers free shipping.
3. On the other hand, shipping products for free could spell disaster for your business. Many owners don't have a clear handle of the amount of money they are losing on each sale by not charging for shipping.
Remember there are a number of real costs to shipping a product besides the actual dollar amount the carrier charges as the shipping fee.
Someone's time is involved in handling the product, packing it properly, wrapping it up, preparing the labels, taking the package to the drop off site, etc. Additional material costs include shipping boxes, packing or padding materials, wrapping paper, tape, labels, gas for your vehicle, wear and tear on your vehicle, insurance, and on and on.
You get the picture - shipping expenses can add up very quickly!
4. Don't plan your shipping as a profit center. Some business owners figure they can pull a little extra profit from each product sale by gaining a few dollars in extra shipping fees. They presume that most customers will never know the difference.
But consumers these days are smart, they have experience in purchasing online products, and it's a safe bet that they will have a pretty good idea of what reasonable shipping costs ought to be for their product.
Repeated studies on customer preferences show that most consumers resent business policies that include overcharges for shipping and handling.
Customers find it an offensive practice and will often abandon the product purchase if they suspect they are being taken advantage of.
5. Aim to charge what it actually costs your company to prepare and ship an order. A Jupiter Media report found that nearly half of the companies it surveyed made a little money on shipping, nearly the same percent lost a little money, and approximately 10 percent felt they were breaking even. Your business will be more credible if you can justify the cost you are incurring to send out an order.
6. It may be best to offer your customers a choice of shipping options. Yes, it will mean a little more work on the business end, but there will be a payoff to the shipper in that the customer will understand that the cost is directly the result of the options and methods of shipping he/she chooses.
7. Most small businesses ship with the Postal Service (USPS), FedEx, UPS, or DHL. For larger, heavier packages, it seems the Postal Service generally has the best rates. Of course, you should compare rates for the various sizes and weights of the products you frequently ship to fully understand the price differences among carriers.
Customers may prefer the speed and convenience of FedEx for a particular product, even though that will most likely be the most expensive alternative. Giving the customer a choice allows him to decide which shipping options are most important (speed vs. cost, for instance.)
8. Did you know that most shipping companies have local representatives that are willing to meet with small businesses to discuss how they can best take advantage of shipping services like discounted or free shipping boxes, at home pick-up (even twice a day!), frequent customer discounts, online package tracking, and many other cost savings measures? Simply contact your local shipping office and ask to visit with a small business rep.
9. Each one of the major shippers maintain a user-friendly web site where customers can obtain both good information about rates and policies, but also centers where the business can deal online in purchasing services, shipping aids, and materials. Take advantage of the competitiveness of this industry to swing the best deals you can for your own small business.
If you have to ship your products, spend a little time to understand this competitive service niche - it will save your business hundreds or even thousands of dollars over a year's time!
