Tea business owners, what is your shipping strategy?
I’m looking at selling some teas online and am beginning to look into shipping processes and solutions. It’s pretty daunting.
Mind offering some insight into how I should go about this?
I’m in the US and plan to ship only in the US.
my question to US sellers is hence the reluctance to ship to Europe?
I’m not a tea seller but I can tell you it’s very expensive to ship anything outside the US. I’m sure many tea sellers would love to but it’s simply too cost prohibitive. Even shipping a package up north to neighboring Canada is expensive.
Yes, it is expensive. And it seems that the cost keeps skyrocketing!
And it’s also not quite as simple as it is to ship in the US. International shipping requires extra documentation and together with the cost would explain the reluctance.
I don’t think it’s reluctance to ship to Europe, but rather internationally period. It is expensive to ship even within the US. Once you leave North America even a small 2lb box is $20+for the cheapest option. Not many people want to pay that. I know some companies with absorb a portion of the cost for international shipping. Additionally there’s a problem with tracking working once it gets to certain countries. Which creates a huge problem when customers say they didn’t receive a package. To ship FedEx/UPS is just ludicrous.
No one is trying to exclude you, I’m sure companies would love to expand their customer base. But until USPS is allowed to fix its issues prices are going to be sky-high. Sadly it hurts smaller businesses the most.
Shipping to Europe with Canada Post would cost us $19 and up plus packaging. We are willing to ship to Europe, but the customer needs to understand that we have to charge that for shipping. So at the end of the day, unless someone really, really, really wants our tea, they are going to seek out local alternatives. Even shipping within Canada is expensive. But people need to understand that a responsible business owner cannot absorb the cost. You don’t take a hit for the sake of it. The cost gets added on to the product. I think shipping is one of those psychological things. People see the price of their product, and then the shipping cost added onto it and leave the site. But a lot of people are willing to pay $50, even up to $100 just to get free shipping. We lowered our shipping rate from $10 to $7 dollars. We pay between $7 and $12 to ship our product in North America with Canada Post. If we factor in boxes and envelopes, it’s a little higher. Shipping is a massive cost for small businesses that engage in e-commerce, because of that, you cannot afford to absorb the cost or you won’t be in business very long.
With sales you are always managing perceptions. You can either offer a low cost for shipping and add it onto the product or charge the actual price and scare customers away or you can take the hit. Only one of these options is a sound business move.
We ship anywhere and everywhere, and we only charge a flat rate of $2 in the US, $6.55 to Canada, and $9.45 to anywhere else.
As for my strategy, I’d have to say that I think customers would rather pay for tea than shipping charges, so I typically use the least expensive method I can (Normally USPS Parcel Post through Endicia and using ShipStation to get their preferred-level discounts (yes, I have given this a bit of thought, lol)), and then I try to keep the shipping charges to the bare minimum. Sometimes our packages might take a little bit longer to get there, but I don’t think anyone is going to die if they have to wait an extra day or two to get their tea. …but then again… nah.
I have taken the approach of absorbing the shipping costs on all UK orders and all international orders over £25/$40/€32. It has a few drawbacks such as I cannot sell any tea within tins or teaware due to the effect it would have on shipping costs.
But the economist in me believes it is best for the customer as it incentivises the business owner to minimise shipping costs. In my case, I have effectively started another new ‘side’ business which has enabled me to reduce shipping costs by roughly 25%, which is why I’m able to absorb international shipping costs on orders over $40 while keeping tea prices down.
What exactly does it mean to “absorb the shipping costs”?
Sorry. Total noob here on shipping.
It means that they are incurring the cost of the shipping. Rather than charging the actual cost of shipping to the customer, they are absorbing the excess shipping charges into the business expense and reducing their profits. If it actually costs 10 dollars to ship the package to the UK, but they only charge the customer 5 dollars, the other 5 has to come from somewhere. It comes out of the company’s pocket.
Rather than charging customers a shipping fee, I offer free shipping and internalize the shipping cost. It means that my margins are a lot smaller as I have the tea cost and the shipping cost to pay for before I can make a profit and has in certain cases resulted in my selling tea at a loss when I have a promotion.
Another thing to consider is that when a percentage discount is offered it is effectively a greater percentage discount than a company which charges shipping.
To give an example, 10% off a £40 order would yield a saving of £4 (10%). Whereas, a company which charged a shipping fee of £6 on a £34 order, a 10% discount would yield a saving of £3.40 which would equate to an effective percentage discount of 8.5%