This is just a situation I thought I would explore and explain. It may help answer questions around shipping costs and provide insight into how I make decisions for Turtle TCG.
We are going to look at two different shop scenarios and try to keep this simple. Shop A wants to offer free shipping and Shop B will charge for it at a flat rate.
Two notes before proceeding.
- Most free shipping offers are based on the order value which would lead me to believe they may adjust pricing on a % ratio but for the simplicity of it I am using dollar values.
- A standard small parcel cost for a rural area such as Orange is $12.70
Both Shops acquire Product for $100.
Shop A would need to charge $122.70 for Product to ensure they can make 10% on that product and offer the free shipping component. Overall, the customer is paying $122.70
Shop B would need to charge $110.70 for Product to ensure they can make 10% on that product and cover the additional cost from the shipping. Overall, the customer is paying $122.70
At this point both shops are equal, the downside for the customer, in this case, would be if they decided to purchase additional products in Shop A as they would continue to pay for the “free” shipping via the product itself. With Shop B, shipping will remain the same and they can add additional products at a lower cost.
This is not based on a real example but just to explore possible situations. We will explore an additional area now which may be more likely.
Shop A – Has noticed the issue with their pricing and decide based on their data that customers often purchase two products in a single transaction. As a result, they decide that when adding the shipping cost to a product they will make it half their usual amount. Product has been reduced to $116.35 for Shop A. Overall cost is now $116.35
Shop B – Has decided to absorb any additional cost for shipping beyond the standard flat rate. Product has been reduced to $110 for Shop B. Overall cost would now be $122
Now if a customer decides to purchase 1 x Product it will be $5.65 cheaper from Shop A as they offer free shipping.
So then Turtle TCG if Shop A can provide the better value for the single product why do we still charge flat rate shipping.
- If the customer decides to purchase more quantity of Product the savings will slowly disappear. At which point would vary across stores. Using Shop A it would occur once the customer purchases 2 or more.
- It gives us greater control of individual pricing if we can ignore or omit the shipping portion.
- In these scenarios, we haven’t explored the local customer. If shipping is hidden in the Product, then the person who purchases the product locally without the need for shipping is paying a fee for a service they don’t intend to use.
It should be said that there are a lot of other variables at play with this and each store can be unique in its approach to pricing, but this was just a bit of a snippet into a scenario and how I may review it on my side when making these decisions.
I agree that it can suck sometimes adding items to a cart only to be stung by the shipping fee at checkout. Therefore, we try to make it clear on the product page but although it may cause people to leave. At this stage, it is likely to remain due to points #2 and #3 as we don’t want our pricing to be controlled by the potential cost of shipping nor have people pay a fee that may not be transparent.
We will always learn on this journey as things may change in the future and we don’t claim to have this formula perfected but if a change did occur, we would want to do a similar breakdown to help ensure transparency for you as the customer.