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Learn: Everything You Need to Know About Shipping

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What You Need to Know Before You Get Started

If you have a Standard Store in your ASF site or have a Self-Fulfillment site this article is for you!!!

We’re not going to sugar coat it -- the process of packaging, shipping, and coming up with a clean way to charge for art shipments is a nightmare and is a pain felt by tens of thousands of businesses in this industry.  

 

Take solace in the fact that you are not the first person who has attempted to do this, and you are certainly not alone.  

 

It is important to understand that this nightmare is not something seen in every industry.  You may have a friend who sells t-shirts or shoes, and who tells you that shipping is simple for her.  That’s because those are very simple products, with small amounts of combinations, that are easy to package and estimate.  Art is not a simple product to ship.

 

The good news is, at the end of this article, you will see that we have created a few easy ways to solve this problem.  If you want to learn why it is so difficult to calculate and charge for shipping then you must read this article. Otherwise, you can skip down to the last section.  

 

Let’s get started.

 

How the Shipping Companies Charge for Each Shipment

 

As a starting point, you first need to grasp how the shipping companies like Fedex or UPS charge YOU for making shipments.  

 

They charge based on what they call “girth”, which is a calculation that accounts for the total width, height, and depth of the box(es), in addition to their overall weight.  In other words, you are essentially charged for how much space and weight you will be taking up on their truck or plane.


Therefore, your goal as someone who is shipping product is to obtain the absolute cheapest shipping price that you can, so in turn, you can charge the least possible amount to your customers.

To accomplish this, you need to be as efficient as possible in regards to how you package.  If you take a basic paper print and ship it in a large box, you are going to get charged for all that extra space regardless of how low the weight of the box is.  This is because you are taking up space on the truck or plane, and therefore the shipping companies will charge you for a minimum weight even if you don’t meet it.  In other words, they penalize you for being inefficient. In turn, you penalize your customer by charging them a higher shipping price than you should have, because you don’t want to lose money.  This has a cascading negative effect, because some prospective customers will be turned off from making a purchase just because your shipping prices were too high.

 

How to Obtain an Accurate Shipping Cost for Each Shipment

 

So far, we have learned that if you want to charge your customer the cheapest price possible, you need to package your product as efficiently as possible.  But how do you know exactly what your shipping company (i.e. Fedex or UPS) will charge you for a given shipment?

 

The shipping companies provide you with software that will allow you to input information about the shipment, and from these inputs (i.e. width, height, depth, weight of each box), it will quote you the cost.  This software can be installed on your computer, or you could use it on their website as well.

Usually, you will have to package the order in advance to determine what shape and form the shipment will take after it is all packaged up.  In some cases, you might have one box. In others, three separate boxes. In some cases you might be shipping a large expensive print and as such you may choose to package it much differently for added protection than you would something smaller.  These packaging decisions all change the size and weight of the shipment.

 

Nevertheless, once you have packaged a shipment, you can enter in all the dimensions and weights of the boxes, and output the accurate cost.  With this, you now have a way to accurately charge your customer.



The Problem with Charging for Shipping Online

But there is a problem.  The above process is manual, and you can only do it when a customer orders from you over the phone or in person.  

 

But when someone is shopping on your website, you do not have this luxury.  Instead, you have to “program” your website to calculate a shipping price on-the-fly, for all the different combinations of items someone might order, given how you specifically are choosing to package each of those shipments.  Because the possible scenarios are endless, this is where things get extremely complex and easy to screw up.

 

In the end, you hope to program this shipping calculation as accurately as possible, so that you don’t end up under-quoting or over-quoting customers.  If you underquote, you lose money. If you overquote, you turn off customers. Neither are good.

 

There is No “Automatic” Shipping Calculation Solution



At this point, those who have never shipped art online before usually wonder why there is not a super simple way to just have UPS or Fedex just “connect” through the API to your website.  A way for the shipping companies to calculate and charge exactly what needs to be charged, so that you charge your customer perfectly, and you never lose money on shipping.

Well, the reality is, the shipping companies do not do this.  This is because they strictly rely on your inputs in order to calculate a potential cost.   Your inputs -- which are your own personal packaging decisions -- are 100% determined by you.  

Which means, you still have to come up with all the possible order combinations, then tell the software how you plan to package each, and enter in all the weights and dimensions.  This step is unavoidable and nobody can do it for you.

Once you attempt to come up with these combinations, you quickly see that there will be scenarios where you will either have to under-quote or over-quote customers.  You will also see that coming up with a perfect way to charge for shipping is impossible. Understanding this fact is very important, because it will give you the freedom of mind to approach this problem in various ways -- which we will discuss shortly.  



A Simple Example that Illustrates the Complexity

But first, to fully appreciate the complexity of what we discussed, let’s consider one simple example.  

Let’s say a customer orders a 24”x 36” loose paper print.  In this case, the most efficient way to ship the package would likely be in a tube and let’s say that costs you $10.  So you set up your shipping calculation, or the dimensions, to charge to $10 for that.

But then let’s say another customer purchases a 24” x 36” canvas print as well as a loose paper print.  In this case, the most efficient way to package it is to lay the print on top of the canvas print, and ship them together in one box.  This might cost $20 -- but the most important part here is that the loose paper print adds almost zero weight or cost to the shipment. So the canvas print would likely cost $20 to ship on its own.  However, the way that you set up your website with or without the API connection, UPS or Fedex believes you are going to ship that loose paper print in a tube, and that you are going to have two packages instead of one.  So instead of costing $20, it costs $30 ($20 for the canvas print in a box, $10 for the loose paper print in a tube). And so your website displays $30 to the customer at the time of checkout, and now the customer is baffled as to why the shipping price is so high.  And they are right -- you are unnecessarily overcharging them. The more items they try to buy, the worse the calculation gets.

The problem gets even worse as you start considering all the possible combinations of sizes, framed and unframed prints, or metal prints which are sensitive and should be packaged separately or in the case of large sizes, have to be shipping individually on a pallet just to prevent it from being damaged and creating a bigger problem.

If you have 5 medium options, 10 size options, 10 style finish options (i.e. gallery wrap, framed, loose print), the possible combinations can be calculated by multiplying them all together.  5 x 10 x 10 = 500 possible combinations! All of these combinations can cause you to charge more, or less, to each and every customer.

 

Accurately charging for all the different combinations is virtually impossible and is a sentiment shared by anyone who prints and ships art.



Refocus on the Overall Goals


Now that we have learned about the complexity of shipping art, we can start exploring what options we have.  Before we do that, let’s step back and refocus our minds on the overall goals:

  1. To never scare off a potential customer from buying anything (or, buying higher quantities) because you inadvertently displayed a high shipping price to them
  2. To charge enough for shipping so that you generally break even.
  3. To have a process for this that is simple to set up, and simple to manage as things change over time.

 

If you accomplish these things, you will be set.



The Options

Option 1:  Bake your Shipping Cost into your Prices, and offer “Free Shipping” (for ground shipments)

 

This is without question our strongest recommendation, and for several reasons.  

 

First, “Free Shipping” is one of the most powerful marketing weapons there is.  

Amazon has used this weapon better than anyone to build a company that is approaching One Trillion in market value.  The idea of “Prime” and free shipping came from a lengthy customer study that Amazon conducted that showed that the number one thing that bothered customers was being charged for shipping.  Eliminate this, and you get customers happily coming back for more.

If you offer Free Shipping, you can (and should) display this loud and proud all over your website and everywhere else you sell where customers can see it.  If you have a retail storefront, or you sell at art fairs, make sure this is loud and clear.

 

Second, it is dead simple to manage.  Just figure out what percentage you want to charge for shipping, and apply it to your prices.

 

If you are new to shipping, you may need to do some tweaking over a couple of months to find your sweet spot percentage that you want to apply.   But overall, we believe that the combination of simplicity, saved time and headache, and the marketing benefit is the most powerful approach you can take.


Option 2:  Apply a Flat Percentage based on the Shopping Cart Value

 

Some people prefer not to bake in their shipping cost into their product pricing.  One reason for this is if you feel you are in a highly competitive market, and you believe that your customers are judging you based on a price list alone.  

 

In this case, if your product pricing is too high, you feel that you might scare off customers.  You would therefore prefer to keep your product price as low as possible, and charge for shipping separately.  

 

If this is how you prefer to do things, then applying a flat percentage based on the shopping cart value is the best option for you.  

 

Here’s how it works:  

 

If the subtotal of a shopping cart is $100, and you tell the system to charge 15% based on this, then the shipping price will be $15.  

 

It is important to understand that on some orders you will slightly overcharge, and others you will undercharge.  That’s just the way it goes for all businesses, so don’t stress about it. Remember that your goal is for everything to even out at the end of a month.  

 

All in all, this option is extremely simple to set up, and easy to change as time rolls along.  If you notice one month that your shipping costs have outweighed what you charged, then all you need to do is bump up your percentage by one or two points, and next month you’ll be good to go.  


Option 3:  Attempt the Mathematical Wizardry to Come Up with Every Possible Packaging Combination for all Scenarios

 

For some customers who only sell a few items, and not a lot of different combinations, this could actually be a potential solution.  Still, we feel strongly that Option 2 is better. But for those who want to take on the task, here’s how this works.

 

The important concept to understand is that with this option, the software is just a way for to set up pricing logic so that you can attempt to charge your customer as accurately as possible.  

If you sell prints, you would essentially add “weight” and “price” combinations for each media type, size, and the style finish.  You would then set up the price you want to charge based on those weights. When a customer reaches the checkout page, the software will add up the total weight, and it will find what you want to charge for that weight, and it will display that to the customer.  

The best approach to take here is to look at the top 15-20 most popular shipments that you get regularly.  Take each one and cost it out using the Fedex or UPS software, using a generic shipping destination. Then, set up the software to charge exactly what you want it to.  The logic here is that if you cover all your possible shipment combinations, then it is safe to say that you will accomplish your goal or something very close to it.

 

The major benefit of this approach is the precision with which you can charge for different, unique shipping combinations.  You can ensure that these shipments never or rarely overcharge your customers and prevent them from being scared off.

 

Option 4:  Use the Fedex / UPS API Connection with Your Website, Overcharge Your Customers for all the Inefficiencies, and Accept the Consequences.

 

This is essentially the same as Option 3, except it is far worse for one main reason -- you lose all the precision benefits that will allow you to charge accurately for your most popular shipments.

 

Here, you rely on the just-in-time quote from Fedex or UPS.  If certain combinations of products trigger a shipping cost that is too high, it can scare off customers and prevent people from buying.  

 

At the end of the day, and now that you understand how all of this works -- you are not gaining anything by connecting to the Fedex or UPS API and getting real-time quotes.  You still have to set up set up all the weights, size, style combinations mentioned in Option 3. You still have to use all of this, you still will have to tweak things, just to try to charge the right price to the customer.  This has nothing to do with Art Storefronts; it is something standard in many industries and is especially so in the art industry.

 

Because of this, Art Storefronts to date has chosen not to connect to the Fedex or UPS API as it seems to be a pointless endeavor and not something that would benefit our customers.  

 

Remember that Your Shipping Costs are always just a percentage of your Total Sales

 

There is also one very important concept to understand about shipping.  At the end of the day, once you have been receiving orders and have been shipping for 3-6 months, you will be able to look at your total shipping costs, the total shipping that you charged your customers, in lieu of your total sale -- for each month.

For example, let’s say for January you gather these numbers, and they look like this:

Shipping Cost on your Fedex Bill - $1,500
Total Shipping Charged to Customers - $1,600

Total Sales - $10,000

You can now calculate what percentage your Shipping Cost is when compared to your total sales:

( $1,500 / $10,000 ) x 100 = 15%

When you do this each month, over a 6 month period, you will probably see something similar to this:

Jan - 15%

Feb - 18%
Mar - 16%

Apr - 15%

May - 14%
June 17%

The average of these is 15.83%.

The main takeaway here is that if you just charged a flat rate of 15.83% during each of these 6 months, you would have ended up at the exact same place.  

 

Conclusion


And that wraps it up for how to charge for shipping.  It’s a good time to revisit the initial goals:

  1. To never scare off a potential customer from buying anything (or, buying higher quantities) because you inadvertently displayed a high shipping price to them
  2. To charge enough for shipping so that you generally break even.

 

Take a moment to think about which of the above options will be best for you, and pick one.  




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