Free Shippng

[aet]

I still can't work that out. I believe we all agree that no any postal service works for free , right?
If sending 100g box to one country costs me 4$ but same box to other country is 10$ or even 20$ ( if no e-pack available , but of course offer can be set only on e-paket countries ) , what kind of margins I'd have to put on products in order not working for free or even loosing money?
Same with all those Cyber, Black and whatever days with ridiculous 60% discounts.

I know that from psychological research discounts work well on human brain.
Also from marketing research that online buyer / consumer is not focusing on the value ( and consequently the price ) of the actual product but more than likely on total price has to be paid ( means incl. the shipping ) .
That leads some vendors to run those free shipping concepts.

In my opinion the customer looses , because hard to asses the actual price/value/quality ( in condition that vendor's margins are fair ) between individual products as the price of the actual product is not transparent ( as it includes that partial shipping costs ) .

Should I offer free shipping from certain value of purchase ( lets say 100$ ) , means I'd have to somehow calculate that if somebody buys 10 items or only 1 item , apart of my generally needed margin , I also have to make those extra $$ for shipping which also vary from the destination country and amount /size/weight of the items .

I would have to set some min. threshold line which I'm not suppose to go below in order not loosing , which means ( as described conditions above ) buyer from countries with cheaper shipping or buying less items , would be way overcharged.

So to sum all that up. Should I follow some schematic formula for margins for free shipping concept , I definitely wouldn't feel like pricing / charging fairly , as you might ended up buying 10$ tea for 20$ because of that.

If I miss something , please do correct me, I'd be very happy to improve our business model and start to play this game as well ..if this is what general tea drinker want.

[faj]

If I miss something , please do correct me, I'd be very happy to improve our business model and start to play this game as well ..if this is what general tea drinker want.

If asked, buyers would probably say that they would rather know the value of the tea separate from the value of shipping. But how things are sold has to do with how people buy, not what they say they want.

Having shipping costs itemized adds complexity, and any added friction, however small, is an impediment to impulse buys. Less choice means less anxiety and hesitation for the buyer. So there is that.

People have become used to "free" shipping, with Amazon surely being one of the main factors. Now Amazon is a bit of a special case, as they have, over an extended period of time (decades without being punished by investors for their low profits), been willing to sacrifice short term profitability in order to invest in building market dominance, sinking in huge sums into habit-forming business practices. Their "free" shipping may actually be a very good deal, a subsidy to a habit-forming business method, and current market conditions mean they can tap capital markets any time they want, with no risk of running out of monopoly-building money. Small operations like tea vendors do not have that luxury of losing on shipping costs on their way to building a future of market dominance, but are still under pressure from what customers have become used to.

Also, inflating the price of tea has some upsides too. It may give the consumer the impression of buying tea of higher quality. I would bet most people will intuitively feel that 20$ of tea + 20$ of shipping feels not as high quality as 40$ of tea with free shipping, assuming the exact same tea.

In the end, it probably depends who you are selling to. If your customers are busy people with more money than tea knowledge, who will buy relatively small quantities on a whim, free shipping probably makes sense. If your customers are heavy tea drinkers that carefully plan their purchases and have a better grasp of the quality level you offer, then maybe non-free shipping with "fair" tea prices is preferable, but a rebate program to reward cumulative purchases or order size might make sense.

[Iizuki]

I appreciate as transparent pricing as possible. If I could have my way, I would force every shop to provide a complete breakdown of the price I'm paying (shipping, margins etc). It's just not realistic by any means.
Still, a separate shipping cost is a step in that direction. It provides more information and that's why I like it.

On the flip side, if a shop "offers free shipping", I don't hesitate to use it and order just one product.

I feel that in the end the only viable shopping strategy is to ignore all shipping/noShipping, sale%, original price... thingys and just look at the bottom line and what you're getting for it. That way you'll just look past most of the pricing obscurities. Unfortunately for a subjective human being it's harder than it sounds..


Ps. I don't sell anything.

[Slurp]

Also from marketing research that online buyer / consumer is not focusing on the value ( and consequently the price ) of the actual product but more than likely on total price has to be paid ( means incl. the shipping ) .
That leads some vendors to run those free shipping concepts.

You are correct that from a consumer standpoint, the final price is what matters (and not just for online buyers), but it's much easier to understand the incremental price of purchasing additional items if shipping doesn't add anything. Let's say you don't offer free shipping. A box, which holds up to 3 items may cost a certain amount. But adding another item might add a certain amount more, except if it's heavy, then it's still more, or bulky, then it's even more still. And especially if it's both heavy AND bulky. Far simpler to say "$X for up to 3 items, and $Y for each additional", but then a buyer who wants something heavy and bulky is still getting a sort of incremental free shipping.

The point is, if you are charging actual shipping cost your costs need to be both perfectly transparent and incredibly simple to understand. Otherwise, you end up undercharging some and overcharging others, making some happy, and others think you are cheating them.

In my opinion the customer looses , because hard to asses the actual price/value/quality ( in condition that vendor's margins are fair ) between individual products as the price of the actual product is not transparent ( as it includes that partial shipping costs ) .

Don't fall for the fallacy that price somehow reflects quality. The customer will evaluate your performance as a seller based on what they actually get vs how much they paid for it.

As a final point, free shipping can be valuable to vendors to encourage buyers to purchase more, since they generally are tied to a minimum purchase. To relate to your other thread, in that sense the free shipping acts as a form of volume discount where the vendor accepts a lower margin to achieve a higher total sale.

[StoneLadle]

Good for Amazon et al bad for specialised vendors...

you can apply all this, but for the most, it's reputation above all else, especially when specialised/specialized...

[YumCha]

I have tried what you are talking about. I have a tea company called yum cha tea company and a kava company called art of kava. The kava community is super responsive so i was able to get near immediate feedback on options.

They hated shipping prices built in.

First. They said it just made the price look inflated. They to know there was free shipping before hand and underatand the concept that theyre likely paying the same (or so) or eben less on some cases as the pre shipping price plus shipping.

Pricing reasonabally at different quantity levels is in my opinion the best option. Charging a bit more per lb for an ounce or half an ounce sample than u would for 1lb can work out if the perceived value of the customer equals or is more than the cost. On your side you want it to be as equal as possible.

In this case, your slighy inflated pricing at smaller levels covers loss of margin in free shipping at higher quantity levels.

As long as pricing and value remains fair people will be happy with your options.

I hope this helps