Once upon a time, in 2001, when I started my online store with the Fitz Like A Glove™ Ironing Board Cover, every online shopping site showed postage and handling as a separate cost. Tacked on to the end of your shopping cart. Before your grand total.
Some well established, reputable online sites still do. Namely Victoria’s Basement. Peter’s of Kensington. Innovations.
These are very large, online merchants with a long history in online transactions.
With them, you complete your order.
Key in your postcode on the shopping cart.
And your postage and handling charge appears.
Anywhere from $12. Down to $9.00.
Regardless of how many items you have in your shopping cart. Or how heavy they are.
This charge appears just above your final total.
But there are some new kids on the block.
Online shopping sites that are very big. With hundreds of interesting and tantalising products to tempt you.
And they’re doing things in a different way.
The newest online shopping sites tout !Free Shipping Anywhere In Australia!.
Free!
The most powerful word in the selling lexicon.
Customers love it.
Because it means to them what it says in the dictionary.
Without charge.
The business absorbs the cost. Instead of passing it on to you.
When I see tweets lauding this practice. Even demanding that all online traders offer !Free Shipping Anywhere In Australia!.
I want to caution them to be careful what they wish for.
Because much of what you’re offered as ‘Free’ . . .
. . . can only be described as . . .
. . . smoke . . .
. . . and mirrors.
Retailers never give away anything for free that is a cost they incur and pay for on a continuing basis.
Postage and/or shipping is one of them.
Australia Post makes every user pay what is considered to be a premium price for parcel postage. Worldwide, Australia Post is known to be one of the most expensive parcel post services.
But it is a case of you get what you pay for. Because to those of us who use them, they give an excellent, reliable service 97% of the time.
Which is contrary to negative public opinion.
A perception that is a hanger on from the bad old days of the 1980′s.
But even with generous discounts to their biggest parcel customers who mail a million items per year, shipping is a significant cost to these merchants.
And to every other mail order merchant.
So when you’re offered !Free Shipping!, what does it mean?
For many sites, it means that the cost of postage and handling has already been added into every product in their catalogue.
The online merchant does not absorb the full cost to post.
Just as the GST is a cost that’s passed on to you, so is the cost to post your parcel.
If postage and handling isn’t a separate charge, there’s no other way to recover this cost than to add it into every product on a shopping cart.
Without. A. Doubt.
I have several business friends who offer free postage.
They all agree it’s not a cost they can absorb. And this is how they recover the cost.
They know the cost of their average parcel.
They know how long it takes to prepare the parcel for posting.
They guesstimate how many items might be in an average order.
And without history as a back up, this is a very pie in the sky guesstimate.
And in many cases means they guess that you will only buy one product. Until further notice.
And add these charges to the cost of every product.
Think about it.
If a merchant is offering !Free Shipping!, there’s no opportunity to adjust a shipping charge for your individual purchase.
Either up.
Or down.
Depending on the number of items in your shopping cart.
When you place your order.
It must be a charge already added into the retail price of every product in their catalogue before you click ‘Add To Cart’.
Australia Post calculates the cost of a parcel by weight and/or volume.
Heavy parcels are calculated by weight.
Light weight parcels that take up big spaces are calculated by volume.
Either way, Australia Post wins.
Let’s indulge in a spot of mathematics.
Australia Post increases their parcel charges once a year. As of today’s charges, the smallest parcel is 500 grams or under. And travels at a rate of $6.60 within Australia.
Add in the cost of a postage bag or box at $0.50 minimum.
And you have a raw postage cost of $7.10 for the smallest parcel via the mail.
This is the cheapest rate a parcel can travel to you via Australia Post.
Then there are the variable costs of handling.
Which is the time it takes the merchant to create a record of your transaction. Debit your credit card. Safeguard your information against hackers. Prepare your Tax Invoice. Generate mailing labels. Update inventory control. And pick and pack your parcel.
At the current minimum wage of $15.96/hour.
Then add in the cost of getting your parcel to Australia Post. By whatever means used by your online store. A company driver. A courier. Pick up by Australia Post.
Whatever the means, it’s an extra cost.
And you have a better idea of what’s included in postage and handling.
And why it’s necessary for a company to recover these costs.
My business friends calculate the average cost of a parcel at $9.50. For light weight parcels of 500 grams or under.
And add that to the cost of their products.
Not to the cost of each parcel.
But to the cost of each product.
So . . . .
When you see XYZ Product is $49.95. + !Free Shipping Anywhere In Australia!.
Postage & handling is assumed to be $9.50.
Subtract that from $49.95, and the real retail price for your XYZ Product is actually $40.45.
$49.95 is a fair and equitable price for you to pay. Regardless of the weight of the parcel.
For one product in the mail.
Taking into consideration that the cheapest a parcel can travel in the post is $7.10. Before calculating handling charges.
But there’s more.
Say you love !Free Shipping Anywhere In Australia! so much, you decide to buy more than one product.
Several items in the catalogue might make fabulous gifts.
Two of XYZ Product at $49.95. + !Free Shipping! Is $99.90.
Remember that at Peter’s of Kensington. Victoria’s Basement. Innovations. Postage is a flat fee regardless of how many items you put in your parcel. Tacked on to the end of your purchase.
With these merchants, two of XYZ Product at $40.45 (the price less the assumed postage of $9.50) is $80.90.
Add a flat postage fee of, say, $9.50 from Peters Of Kensington. And you should only be paying $90.40.
Not $99.90.
With your second product, the online merchant is taking $9.50 out of your pocket.
And putting it into their pocket.
Add several more items of !Free Shipping Anywhere In Australia! and you’re adding $$$$$ to your bill for every item after the first one.
Smoke.
And mirrors.
It’s no different to a magician’s conjuring trick.
It’s a promise of something that isn’t quite what you think it is.
Online merchants know just how powerful the concept of !Free Shipping! is.
And they pander to your lack of knowledge as to exactly how !Free! their shipping is.
And how this cost is recovered by the merchant.
And they are also very aware of how adding postage to an online transaction at the end can be a contentious issue for a buyer.
Even though the cost to you of getting into your car and driving to a shop, finding a parking spot, then spending time in the shop, waiting in line, et al, can be more than $9.50 in your time and petrol.
!Free Shipping! is not the same as Buy One! Get One Free!
It is Buy One! Pay More For The Second One!
So next time you see !Free Shipping Anywhere In Australia!, and you can stop at just one item, you’ll be neither better off nor worse off by availing yourself of !Free Shipping!
It’s a perfectly good transaction to enter into.
But if you can’t stop at just one product, and you’re going to place an order for more than one item, remember that you’re paying more $$$$, not less, for your ‘Free Shipping’.
The true cost to you is hidden because there’s no fine print or an order for transparency attached to the words !Free Shipping Anywhere In Australia!
‘Free’ is such a powerful and seductive word, it’s often hard to come to grips with its real cost to you.
I will say it again. Businesses cannot afford to give away a significant cost to them like postage.
If a business doesn’t recover their operating costs, they can’t stay in business.
And it’s for this reason they need to find a way to incorporate !Free Shipping! into the cost of a product.
Trust me.
Shipping is never free.
It’s an illusion that you’re getting something for nothing.
My take on !Free Shipping Anywhere In Australia!?
In every discussion I have with online traders, postage and/or shipping is nominated as a significant cost to their business.
As a business woman, I refuse to believe that these new catalogue sites are giving away what is a minimum of 17% of unrecovered costs, in order to indulge in !Free Shipping!.
It’s akin to not including the cost of making a product into your retail price.
And one more time. Every business must cover all their recurring costs to stay in business.
As a business woman, I believe it’s a sign of disrespect to a customer to allude to the fact they may actually be getting something for nothing.
As a business woman who will happily walk over broken glass to make sure her customer is treated with the utmost respect, I think including postage in the price of every product is simply penalising your customer for buying more.
When they should be rewarded for adding extra items into their shopping cart.
A more honest term I’ve seen is on the OzHarvest site.
They’ve just launched the OzHarvest Cookbook, produced by OzHarvest. It’s a not for profit organisation that redistributes excess food to more than 380 charities across Australia. And all proceeds from the book go to OzHarvest.
The price? $59.95. Shipping included.
Not free. But included.
And you can extrapolate that if you buy two books, the extra charge for ‘shipping is included’ is actually a donation to the charity.
And the most genuine postage free of all . . .
. . . is . . .
All orders over $100 are postage free.
This is, of course, just my opinion.
And I acknowledge I have no one to answer to in my business except my customers.
Therefore honesty in the form of wanting to do the best for my customers in my transactions is not subject to the magnifying glass and questioning of an accountant.
Or other investors in a business.
Who might be more concerned with generous profits rather than goodwill.
My last word.
Which do you think is more disappointing for a customer?
The knowledge they are, in fact, paying for postage?
Or.
That light bulb moment when they discover that their shipping is not actually free and that they might be paying more for postage than is necessary?
I lied.
This is my last word.
My first job was when I was 13 years old. Working Saturdays in Leggett’s Department Store in a small town in southern Virginia.
USA.
The country of my birth.
I was a young girl who found herself in a racially segregated small southern town.
Newly arrived from a big city up north.
I had no sales skills.
And I had no prejudices about race or economic status.
But I instinctively knew how to treat a customer with respect.
What I didn’t know until much later . .
. . . was that the line of people waiting for me to serve them . . .
. . .preferred me because . . .
I loved serving them!
And I loved treating them as if they were the most important people in my life at that moment.
Black. White. Poor. Wealthy. The very elderly.
It didn’t matter to me.
Trust and respect and caring about the welfare of my customer is everything in my business.
And yes. Postage and handling is still a separate, flat fee when you shop with me.
Regardless of how many items you order.
Or where you live in the world.
This Ironing Diva loves sharing her experiences in business with you.
Join me next time?
Tell me what you think.
Your comments are always welcome.
Your stories, thoughts, experiences add to the fabric of the conversation.
And I acknowledge your comment with a reply.
All the best,
Carol
Supporting links to websites.
Photos are courtesy of Ironing Diva and taken on her rural property in the beautiful Central Tablelands of NSW. In the early morning. At first light. Or at sunrise.
Photo 1. Hanging Tree At Sunrise
Photo 2. Crested Pigeons In A Stringybark
Photo 3. Kangaroos On The Hop In The Paddocks
Photo 4. Welcome Swallows Chatting
Photo 5. Black Faced Cuckoo Shrike
Photo 6. Stringybark In The Paddocks
Photo 7. Welcome Swallows On A Paddock Sculpture
Photo 8. Sunbeam On The Hills
Photo 9. Kangaroos Up Close & Personal
Photo 10. Woolshed & Storm Clouds
Photo 11. Early Sunlight Tickles The Treetops
Photo 12. Full Moon Setting As The Sun Rises
Photo 13. A Sunbeam On The Hills
Photo 14. A Welcome Swallow Watches The Sun Rise
Photo 15. Crimson Rosella Fledgling. In The Hazy Shimmer Of The Rising Sun
Australia Post Website To Calculate Postage
Information About The Minimum Wage Scroll halfway down the page to ‘What Is The Current National Minimum Wage?’
When I’m not out in the paddocks in the morning photographing my beautiful Wild Blue Yonder, I’m the purveyor of the one of the world’s finest ironing board covers, The Fitz Like A Glove™ Ironing Board Cover. And 5 other beautifully designed items of excellence. You can read all about them at my website, InterfaceAustralia. The home of Simple Solutions For Difficult Problems!
And made with love and care in rural Australia by men and women who have a disability. They put their heart and soul into everything they do. And it shows.
Every product is a joy to use. I guarantee it.
{ 4 comments… read them below or add one }
Good afternoon Carol.
Thankyou for your analysis of online postal charges. A topic I believe is worth sharing.
I doubt many people would stop to realise the possibility of unscrupulous companies factoring in the cost, handling and postage charges on each individual item in their multiple purchase delivery. Which is of cause outrageous.
No-one likes to have the wool pulled over their eyes. And as you say, there are those good reputable companies who are trustwourthy because they do the right thing by their customers.
I can relate with you on your Leggett’s retail experience. Good service brings good customers, and a quality fair and square relationship with them all, regardless of whom they may be. Which creates good business. I’m at the end of my working life in retail.
In another fortnight, I will have completed 14 years at my current place of work. And am “hanging up my boots”. And I know that trust and respect with my customers is always a two way relationship which is enduring, and necessary for good business. Many times I have had to explain itemised accounts. “Accounts” are just one of my designated jobs. And its a two way street called ‘trust’. No room for errors, overcharging or even payable interest in this reputable company.
Online shopping maybe less personal. No face to face. But there’s still no excuse for manipulative fraudulant deception with delivery charges.
Carol, I’m pleased you have made me aware to be on the lookout.
Thankyou, I’m enlightened. And I have always known your company has always been honest and reliable, always doing the right thing by me and all of your customers.
Till another time,
Beverley.
Good morning Beverley,
It’s always a pleasure to hear from you.
Gerry Harvey of Harvey Norman unleased a storm of resentment from retailers about the offering of ‘free shipping’.
As a result, online shopping is coming under more scrutiny than usual from regulators and the media.
As that storm gathers momentum, the practice will come under ever increasing attention. And I predict merchants will find themselves defending whether or not their shipping is actually ‘free’.
Which, of course, can never be proven. Without opening their accounts for public inspection.
But those of us in business know it’s not a cost that can be tossed aside. It has to be recovered somehow.
There was a recent program on ABC Radio National’s Life Matters about hidden charges. Specifically by credit card companies and online services like ticket buying. It was a discussion with Choice Magazine. And one of the parting comments by Natasha Mitchell, the radio host of Life Matters, was that there’s more to a price tag than meets the eye.
I went onto an Australian business site recently to book an online seminar. Which wasn’t free. But also wasn’t expensive.
It gave the price. And stated there was a $25 administration fee for paying by cheque.
So my only other alternative was credit card as they didn’t offer direct deposit into their account.
I keyed in my credit card details and suddenly a pop up window appears to tell me they will be adding a 3.5% charge for using my credit card.
I closed down. And didn’t book.
Why not tell me that up front? Like they did with their $25 admin fee for cheques?
And.
Why penalise people for paying you?
I’ve charged postage and handling for 18 years. I started out at $11 per parcel and am now at $15 per parcel. My cost to post increases every year. I’m not in a position to absorb this cost as I don’t make super profits on my products.
But I’ve only been challenged 3 times about postage and handling costs.
One customer refused to pay. And hung up on me in a huff when I couldn’t offer a reduction.
The other two listened to my explanation about what’s involved in handling. Thought they were reasonable costs. And went ahead with their order.
Hanging up your chemist shop boots! That will be a very sad day for your pharmacy, Beverley.
Not only for the people you work with.
But your customers too.
You will be SORELY MISSED!
And so very hard to replace.
I know you won’t be idle! And I wish you nothing but the very best for your days of busy retirement.
And once again, Beverley, thank you so much for taking the time to comment.
Best wishes always,
Carol❤❤❤
Goodmorning Carol.
Many thanks for expanding on the truth even further. And here, where more like me will become clearly informed.
As always you are amazingly ‘right on the button’. With everything you have aforementioned.
I truly appreciate your kind wishes for my future, Carol. I’ll “take them with me” in the myriad of all I plan to be doing. Although I don’t plan on going anywhere. I love my home. It allows me to fulfill all my pleasant passtimes. And friends and family are only a ‘buzz’ away. And each time I go out, I have the fortune of bumping into, or rubbing shoulders with customers.
But there comes a time “in the tide of men, when taken at the flood”, we make a landmark of a decision. I’m told by a financial consultant, the next landmark is death!! So I reckon on making the most of the time inbetween. For a long time.
Carol, thankyou once again. And the very best always to you too. Till next time,
Take good care,
Beverley. xxx
Morning again Beverley,
I couldn’t help but zero in on “…the myriad of all I plan to be doing.”
Why do I think you’ll be busier than ever?!
And happier, no doubt.
Although I do think you’ll miss the day to day contact and admiration you received from the customers at your pharmacy.
And I predict that if it stays with you, you’ll quickly find a way to fill that void.
Not with a job.
But with your generous nature.
Enjoy the future.
Best wishes,
Carol❤❤❤