Saturday, November 06, 2010

The Business Chat - Shipping

Yay! Someone clicked the Add to Cart button on your website/online store and purchased your fabulous earrings!!! Congrats!!! Now, before you run off to celebrate you still have work to do. You have to get those earrings to their new owner. You have to ship your product.

Of course it won’t be that much work because before you listed those earrings you thoroughly researched how to ship, what packaging to ship in and how much to charge for shipping. And of course you posted all of this online or in your booth (where you took an order for the earrings). The customer is well aware of how much the shipping is and how long it will take. All that you have to do is put the earrings in the package and mail them out.

Since the busiest buying season is gearing up and the orders will soon be flocking into your inbox let’s talk about how to get those products out the door in an organized and lucrative manner.

The actual cost of shipping
How much does it actually cost to ship a pair of earrings? Or a heavy necklace? Or (fingers crossed) 5 items? To calculate this, put together several sample packages and visit the post office or their website. Use a variety of addresses, I used BC, Nova Scotia, Florida, California, England and Australia. Go on, dream big and imagine your jewelry shipping all over the world. Put together a sample package of a small item such as a pair of earrings, another package of a heavy necklace and a package of several pieces. You don’t have to use the post office; there are also courier companies such as UPS, Fedex or DHL. While you’re researching investigate all options.
While most companies (including Canada Post) have their rates listed on their websites, I found it easier to go to the office and have them weigh it and tell me the options. Sometimes they have information or suggestions that aren’t easily found online.

Packaging for shipping
For the most cost effective shipping you may need to reconsider your packaging. In Canada, using Canada Post, there are height and weight restrictions. If the envelope is higher than 2 cm it is considered a parcel (much more expensive). So a package containing earrings in a box is called a parcel, the same earrings in a gift bag can be mailed as a letter. As cute as my boxes are the extra $6 in shipping costs isn’t worth it for me, and all my items are mailed out in gift bags. Whatever you use to ship in, make sure it will protect the items. On a suggestion from my local post office, I never ship a package with my company name on it. I use my personal name and handwrite the address rather than use a label. Why? Because it is less likely to be stolen. And it works.

Insurance
Insurance is to protect you, the seller. Shipping is an aspect of customer service, and in the event there is a shipping problem, you may face an unhappy customer. Consider purchasing insurance on big-ticket items, or adding a small amount to each item cost so that in the rare cases where packages get lost, you have a fund that can cover you.
You can find out the cost of insuring your package from your postal service. Some expedited services have certain insurance packages built in, so look into that before buying additional insurance. Keep in mind that insuring a package will cost, so if you are offering this as a free incentive you must remember to build the cost into the price of the jewelry. Another tip, courier companies will not insure jewelry when shipping internationally. They will however insure fashion accessories.

International shipping
If you are shipping to another country, you'll need to include the proper customs documentation. Do not mark it a "gift" if you're mailing an item you've sold to a customer. Check with your country's postal service to find out exactly what forms you'll need to attach to your package. Theoretically, filling out these forms thoroughly should prevent your package from getting held up in Customs.
Shipping internationally will go smoothly most of the time. Every so often a package can get stuck in customs. Make sure your customers are aware that you can't be responsible for these delays. It's nearly impossible to track a package once it leaves your country. The buyer is responsible for any additional fees that may be charged at customs, make sure you add this to your Shop Policies page.

When in Canada for U.S. and International Xpresspost and Expedited parcel services, fill out the 'Customs Declaration' section of the shipping label. For U.S. Small Packet/Light Packet, CN22 Customs Label (white for SP, green for LP). In the USA you'll need a green CN 22 customs form which you can pick up at the post office or order for free from usps.com.

To charge or not to charge – free shipping
And the most important question, what should you charge for shipping? Or should you charge at all? Many new sellers automatically offer free shipping thinking that will be a great incentive to new customers. Free is always good, however free isn’t always good for your bottom line. If you sell a $15 pair of earrings that you ship in a box and your shipping cost is $8, offering free shipping means that you will lose money.


Let’s use Judy as an example. Judy is just starting to sell online. She has made a pair of earrings and wants to list them. The earrings cost $4 to make (including the box she packages them in), her labour cost is $4. Judy doesn’t intend to sell wholesale or on consignment, so her retail price on the earrings is a minimum of $24. Note that this price doesn’t include shipping costs. If Judy want to include free shipping she must add the actual shipping cost to her cost of materials. When Judy visits the post office to research shipping, she finds that to ship her earrings in a box and bubble wrap envelope the cost is $8. The same earrings in a gift bag ship for $1.22 (plus the bubble wrap envelope). If she wants to ship for free, her earrings (in a box) must be listed $48. To ship for free in a gift bag, the earrings will be listed $30. Best for her to repackage in a gift bag, list the earrings at $24 and charge $2 for shipping.

A huge mistake most new sellers make is to downplay what people are willing to pay and give away the farm. Not charging for shipping means that you are willing to lose part of your profit. Oh and also not charging for shipping packaging. I know that mailing envelopes are cheap but they aren’t free. It’s called Shipping and Handling, when you buy online from large companies not only are you paying for the envelope, you are paying the labour costs of puting your your item into the envelope, filling out the address label and licking the stamp.

While Free Shipping may seem like a great option it is generally not cost effective on lower priced items. And it is never cost effective if you haven’t built the cost of shipping (and shipping packaging) into your price. Don’t pay too much attention to what other people are doing, just because someone else is willing to lose money this holiday season doesn’t mean you have to follow. Do your research, crunch your numbers and come up with your company shipping policy. Once you know what this is, tell your customer. Inform them on the front page of your web site how much shipping costs. Tell them how long shipping takes. Tell them again in each item description and on the shipping policies page.

One last tip.Do your online customers a favour and let them know your holiday shipping deadlines! What’s the last day that a customer on the other side of the country can order your earrings and expect to receive them before Christmas? (time for another trip to the post office!)

ps: An excellent source of information when shipping in Canada is Canada Post’s ABC’s of mailing.

1 comment:

Sarah said...

This is the BEST article!! After many complaints about my $10 shipping fee (I use a little gift box in a bubble envelope) I have decided to lower my rates by using something flat. Your article is EXACTLY what I needed to read! Thank you for explaining it all!! Now I know what to do! :-D