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Shipping and Handling of products
I've already talked about opening
small, focused Internet Stores on Yahoo Shopping. There are many
valid reasons for this, and Shipping and Handling are a biggie.
When you sell products to your
Internet customers, they want to know the FINAL price before they
buy. They're going to go through your order process until they get
to the price PLUS Shipping and Handling, and THEN they'll make their
final decision.
You need to make sure you can
supply that final price. That means you have to know what the
shipping and handling fees will be BEFORE the order is completed.
Your Yahoo Store site will actually
contact UPS Online for you. It will perform the shipping cost
calculation based on the address and zip code your customer has
entered (and the shipping weight of the product, which you will
enter when you put the product on the site). Then it will display
the final product price plus shipping and handling for your
customer, right at the time of order. That's a GREAT feature. Many
Internet storefronts will do this, but they all have the same
drawback: You can only supply the store software with ONE "Zip Code
of Origin".
That means that when your site
calculates shipping, it calculates it FROM the same zip code, every
time.
If you have more than one
distributor, they're probably going to be in different zip codes.
Say a customer comes into your
store, and purchases a really nice Coleman Tent from you. Your
Coleman distributor is in Utah. While the customer is there, they
decide that camping isn't much fun without music, so they add a
battery-powered Panasonic boom-box to the order. Your Panasonic
distributor is in Miami.
You can only enter one Zip of
Origin in your site when you set it up. You've entered the zip code
of your distributor in Utah.
Now, your customer lives in Oregon,
which isn't all that far from Utah, relatively speaking. Your site
is going to calculate what it will cost to ship BOTH items from Utah
to Oregon. The site doesn't know any better, because it thinks that
ALL your products come from the same zip code, in Utah. That's the
shipping price the customer will pay, on top of your product price.
The customer thinks the total price is pretty good, so he makes the
purchase.
Who pays the EXTRA shipping cost to
send the boom box to Oregon from MIAMI, instead of Utah?
You do, when your Panasonic
distributor in Miami charges you for the wholesale price plus
shipping.
Normally, shipping gets passed on
to your customer, but in a situation like this, you lose money.
If the situation was reversed, and
your Zip of Origin was listed as Miami, the CUSTOMER loses, because
he will pay too MUCH for sending that tent from Utah to Oregon. Your
site will think the tent is coming from Miami also, and charge
accordingly.
As I said, that's one very good
reason, among many other good reasons, to open small, focused sites
that deal with the products of one distributor each. Remember that a
single distributor can carry hundreds of brand names, so you're not
limiting your ability to carry different products. You're simply
avoiding an ugly situation. Losing money to shipping costs is UGLY.
Trust me, I've been there.
Another thing I suggest you avoid
is Motor Freight. That's the shipping method used for large, heavy
packages. It means that the item is too heavy to be shipped by UPS
or FedEx, and must be carried on a tractor-trailer.
Motor Freight is EXPENSIVE, and
you'll never be able to set your site to calculate the costs. The
only way to do it is to get your distributor to agree on one set
price to ship the item anywhere in the country, and that's HARD to
get a distributor to do. The only way they might do that is if you
agree to pay the maximum possible shipping charge every time, no
matter where the product goes. You'll never make any sales that way
your customers will not want to pay it.
In other words, we don't sell
anything that weighs more than 70 pounds (the UPS max shipping
weight) on our sites.
Now, what's this about Handling
Charges?
Many drop ship distributors charge
a "drop ship fee" per address delivered to. It can range from $1 to
as high as $4, but generally it is in the $1 to $2 range. There are
many other drop shippers who do NOT charge a fee at all, but it's
something you need to be aware of. Those who charge this fee do so
to offset the extra work they have to do to ship out single items
for you.
This is NOT a "per product" fee.
It's "per address". That means that a customer can order 10 products
from you, and as long as they are from the same distributor, and
going to the same address, you will only pay that fee ONCE per
order.
One way you can cover this fee is
to build it into your product price for each product when you figure
out your pricing. When your customers DO order more than one product
that will go to the same address, from the same distributor, that's
a good thing in more ways than one. It means that the extra drop
ship fees you calculated into your price on EACH ADDITIONAL item are
yours to keep. You make extra profit, since you only pay the fee
ONCE, and you've sold more than one item that has that fee built
into it's price.
For example, if your Drop Ship Fee
from your distributor is $1.50, you add $1.50 to the price of each
product when figuring out your wholesale cost. You may actually
raise your retail price to cover this. If you do, and your customer
orders 10 products from you, and you only pay ONE fee of $1.50
because it's all the same order, you make an extra $13.50 (9 x
$1.50)
Alternatively, in Yahoo Store you
can set your shipping section to add that $1.50 ONCE to each order
as a handling fee. That way you can keep your retail price down,
although your shipping and handling charge will be a bit higher.
Shipping and handling are not hard
to deal with. Your site will handle the work properly for you if you
remember two basic things:
Try to use only ONE distributor per
web site that you build
Try not to sell anything that
weighs more than 70 pounds
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Article by Chris Malta. Chris Malta
is a Microsoft Certified Systems Engineer. He has worked with
computer Systems for 18 years. He's been involved in eCommerce
systems, networking and site design for more than 6 years. He's
taught college-level computer courses in Western NY. He developed
The Drop Ship Source Directory, and he and his partners at Worldwide
Brands, Inc., publish the Directory and run eCommerce sites of their
own using Drop Shipping as their only business method.
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