Let's talk about the elephant in the room! Shipping! We are often asked about our shipping policy and continue to see abandoned carts because of shipping. Knowledge is power and I REALLY value your input, so here goes:
Our shipping policy is $9.99 for orders under $149 and free shipping for orders over $149.
Who pays for shipping?
- There is no such thing as free shipping. Someone, somewhere pays for shipping. UPS, Purolator and Canada Post charge per shipment based on dimensions, weight, distance, postal code
- Generally, other online retailers (I've asked) mark up price of products by 5-10% to recover shipping if they drop their free shipping threshold
Amazon has also created an expectation of free and fast shipping with Amazon Prime - they have the volume to do that AND they have other businesses that help offset losses in their retail business.
What we do
- Our goal was to keep prices as fair as possible especially as I understand that we do carry premium foods
- We decided not to mark up any of our pricing to include shipping or packing surcharges (cost of the box and materials). I also made sure we don't have fancy materials so that allows us to keep the prices fair + not contribute more waste to your recycle bins
- Reduce waste and manage shipping costs - We wanted to encourage larger orders (1 - 2 orders / month or quarter versus 3 - 4 orders / month). A lot of our regular Customer Friends order periodically and reach the $149 free shipping threshold - and this encourages 1 box at a time, 1 round of brown unsexy paper and really LESS boxes and packaging
- Even with negotiated broker rates with Canada Post, UPS and Purolator, we pay an average of $13-$14/ order for each shipment in Canada. The $9.99 contributes to this cost (thank you!) and the remaining is paid from our product margins (what we have left over after we pay our suppliers).
- Same with the free shipping threshold - cost of shipping comes out of our product margins
- I commit to you that we DO NOT make money on shipping. We never have. I accept it as a cost of doing business.
Discounts and Shipping
Where I can, I share and negotiate discounts with our suppliers (who are also small businesses) and I pass that on to our Customer Friends.
I know discounts are important and in 2020, with these monthly themes (breakfast March, flavor Feb, staples January), I can work ahead of time with our suppliers to plan them.
We do $5 shipping but we do this usually on Black Friday and as you can see with the costs we have, we do generally take a larger shipping loss than usual on this day. It's important to us to celebrate with our Customer Friends on this day of the year, and so we commit to continuing to do that.
Some other companies have lower shipping thresholds unlike you
Yes. There's a reason for this. They can do this because
- they have larger volumes (i.e., larger companies)
- higher margins on their products - we carry specialty food products from smaller suppliers
- they are taking a larger hit on shipping costs and making it up somewhere
- In the future, we have considered if our volumes go up to reduce free shipping threshold to $99 from $149 or drop our flat rate shipping to $7.99. But we are a smaller business right now and we would not be able to do that.
- Another option is we can increase prices across the board by 5-10% and reduce shipping
Another option is we stay the course as is for now and work on all the other variables - growing our company so we can get more flexibility in the future to work on pricing and shipping.
Thank you for reading and if you are a Customer Friend - you are helping us grow every day :) You help us do that EVERY SINGLE DAY.
Thank you for listening! would love your thoughts!
- Neha, founder, SwitchGrocery
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