Hall of Shame #5, S&H

How many times have you shopped online only to abandon your shopping cart when you see the shipping and handling charge?  I do it all the time.

When I talk to the packaging industry about changing packaging to improve postage rates, a common response I hear is, “That’s okay, the customer pays for it in shipping and handling?”  Wrong.  Here is why.

If I buy a small part like a data card for $45, I am charged $7.99 for shipping and handling.  Let’s do the math:
$0.30 for the box
$0.05 for the peanuts
$0.10 to print and apply the label
$5 for UPS shipping
Total packaging and postage is $5.45.
$7.99 – $5.45 = $2.54 profit.  Not bad.

Light box. What could it be?

Here is my data card, looking cozy on a bed of peanuts.

Now let’s make some smarter packaging choices.  Data cards are flat.  There is nothing to crush, and they are unlikely to be damaged.  If the data card were shipped in a flat paperboard mailer, the package would likely qualify as a first-class USPS flat.

Again, the math:
$0.25 for a paperboard mailer
no fill material
$0.10 to print and apply the label
$1.39 to mail a first-class flat by USPS
Total packaging and postage is $1.74
$7.99 – $1.74 = $6.25 profit.  Much better.

Better still, slash your shipping and handling, pass the savings on to your customers, and watch as your customers abandon shopping carts less frequently.

by Bob Makofsky bmakofsky@conformerinc.com


3 responses to “Hall of Shame #5, S&H

  1. I agree, and pointed out to a customer that paying 4.00 for a flat product and then 10.05 in shipping was…prohibitive. Although it makes sense to modify, for this customer the changes needed to modify the process ( the site, the steps ) were too costly, time consuming, and also not on the ‘hot list’ of things to address. Until it gets higher on the urgent list it will remian unchanged. How do you discover and provide concrete data that points to the obvious – lost sales? Let me know if you have ideas that are somewhat uncomplicated and costly to help get that done thanks!

    • Sean, thanks for your comment. I have heard this same response myself from many operations managers. Ops managers are always concerned about process changes and costly re-programming tasks for IT departments. The ops folks don’t care about abandoned shopping carts. It simply does not fall into their responsibilities. They don’t get a raise if they reduce abandoned sales, but they will lose their jobs if deliveries are thrown out of whack.

      The simple answer is you need to talk to the marketing folks responsible for website page views, visitor retention, and most importantly close rates. The marketing folks know the exact percentage of shopping carts that are abandoned when they see the shipping and handling charge. You need to pitch reducing S&H charges to them as a means of closing more sales.

  2. Bob –
    I wholeheartedly agree with you. I’ve often abandoned the product in the cart (like leaving the bride at the alter?) when I found out the shipping fee. If companies looked at the stats, perhaps that would drive the change.

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