For years now I’ve been reading “research” showing that when you offer “free” shipping your online sales increase exponentially… and for years I’ve been resisting because ultimately there is no such thing as free shipping, it is simply built into the cost of a product and I haven’t wanted to put our prices up.
However, we’re redoing our website at the moment and I’m doing my head in a little over this one. We either need to double Queen B sales in the next 12 months (low margin x twice the sales = covering costs) or put our prices up. So, I thought I’d turn the question over to you guys.
First, some facts for you to base your decision on (and please don’t read this as a winge… I absolutely love what I do. I simply think that it is helpful for those of you who don’t run a manufacturing or online business to have some information upon which to base your decision/vote).
1. Queen B is a very low margin business. Pure Australian beeswax costs around 50 times the price of paraffin, and 20 times the price of [chemically bleached, heavy metal hydrogenated soya bean oil] soy wax. Every Queen B candle is handmade in Australia (paying the highest manufacturing wages in the OECD). Our packaging is printed on 100% recycled card with soy based inks.
We haven’t increased our prices across the board for over 8 years despite EVERY cost in the business going up.
2. It takes an average of 10 minutes to process an online order broken up as follows:
– 1 minute to print the order & process the card
– 1 minute to prepare the invoice
– 1 minute to write a personal note
– 2 minutes to prepare the box (water activated arabic gum paper tape, brown tissue paper & biodegradable corn flour foam)
– 1 minute to pick the stock
– 2 minutes to pack the parcel carefully and lovingly to ensure you’re absolutely delighted at your end
– 1 minute to enter the shipping details into eParcel (or write the courier label & send a text for pick up)
– 1 minute to take the box downstairs
(that’s an average! Smaller orders take around 75% of the time, larger orders may be 150%). That means we can pack an average of 6 orders an hour and with labour costing around $25 per hour (taking into account superannuation and workers comp) that means it costs around $4.17 to process and pack an order.
3. It’s costs around $2.00 in packing materials to pack an order (we use Australian made boxes, arabic gum paper tape, brown tissue paper, educational information in with the order, a beautiful sticker & the invoice is printed on 100% recycled brown paper)!
4. Australia Post charge based on weight and where the parcel is being shipped to. The average cost to ship a 1.5kg parcel (this is the average weight of our online orders over the past 12 months) within Australia is $10.50.
So on average it costs us around $16.67 to process, pack and send an online order.
The costs outlined above don’t take into account our rent, electricity, wages (for everyone other than the order packer), telephones, furniture & equipment, EFTPOS and bank fees, tradies (all too frequent visitors to the hive), packaging design, photography, web design, accounting fees etc etc. And remember 10% of what you pay is GST which we’re simply collecting for the government and gets paid to them regardless of our profitability.
OK, so that’s a quick small business 101… now for the big decision…
Our current shipping policy is that shipping is a flat rate of $11 for orders under $100 and ‘free’ shipping on orders over $100. Basically we subsidise small orders by $6 or so, which by the time you’ve taken into account the cost of the product to produce and the overheads of the business makes them very marginal. The larger orders at least contribute to the overheads. BUT we know that when someone tries a Queen B candle, they will more often than not be converted so we can’t afford to make that shipping hurdle too high or too much!
I need you to really dig deep here and think about it honestly. There’s no point in telling us to leave things as they are if you’ve not gone ahead with a purchase from Queen B because of the cost of shipping. This is a really pivotal decision for us and I’d really appreciate your vote and I’d particularly love your thoughts if you have another idea or your feedback if the cost of shipping has played into decisions that you’ve made in the past.
So, how do you think we should handle online shipping in the future?
If you’d rather put your feedback in an email, please email me at thehive[at]queenb.com.au
Thank you so much in anticipation. Queen B has always been an amazing community of wise individuals and I look forward to seeing and hearing your thoughts.