Thursday, August 7, 2008

Are you selling nationally or locally? Are you sure? (Part 1)

Do you think you are selling nationally but most sales are local?

A recent caller from the New York City area suddenly realized this. He brought up his 50-60% cart abandonment rate. He also said he charges his exact shipping amount to his customers so he does not "screw" people (gotta love NYC!) by charging them more than the actual cost to ship the package.

I asked him if he wanted to sell his products in Florida. He said "Yes!" "California?" "Yes!" He knows his shipping costs are higher to ship to me in Florida vs. a customer in New York. The way he charges for shipping means that he charges more for his products to customers who are further away. So if I shop at his site, I will quickly realize this and recognize that it's cheaper for me to buy from a competitor of his in Florida. It dawned on him that, by doing this, he makes his products more expensive nationally than locally. That effectively limits his market and leads to abandoned carts. Now, who's getting screwed? He is, of course, and he doesn't like it.

"How do I get around this?" he asked. I suggested that he offer flat rate shipping for ground and air service to make his prices look competitive nationally. Then he should monitor his average charges on a weekly and monthly basis to determine if he needs to adjust his flat rate prices. Besides increasing his national sales since shipping costs will be the same for all, he also thought that it would be much easier to maintain shipping prices at his web site. Are you where he is?

Next time, part 2 - an easy way to discover the right "flat rate" price to charge for your shipping.

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