Toolvo Blog You want it when? What you may not know about shipping from websites.

I have been asked by a number of people over the years whether or not we make money on shipping charges. It probably comes as no surprise that even those sites with "Free Shipping" (like us) have to account for the shipping costs. What most people don't realize is how those costs are managed and how that affects the service you receive in all areas, not just shipping time. Here is a look "behind the curtain".We ship all of our products either FedEx Ground (to commercial addresses) or FedEx Home Delivery (same basic service, but to residential addresses). For the illustrations below I will use some round numbers, but those numbers will be pretty similar between FedEx and UPS, who also offers very similar pricing and service levels to FedEx. Most people understand that weight and size, as well as speed, makes a difference in shipping costs, but many people don't know all that can add to the expense of a carrier shipping a package.Let's take your basic 1 Pound package with a $7.00 cost to ship using the methods we use. Here are the things that can add to the cost:Fuel Surcharge (currently 6.5% as of 3/12/14) add $.46Residential Surcharge (going to a residential address) add $2.85. This is because it is much more efficient for FedEx or UPS to drop a bunch of packages at a commercial building than drive through a neighborhood to drop off one.Delivery Area Surcharge (selected zip codes that have a lower population density) Add another $3.65Extended Delivery Area Surcharge (selected zip codes that have a really low population density) Add another $3.62You can see the potential impact. This $7.00 shipment is now going to cost us $17.52 for us to ship. Just so we don't freak you out at this point, we don't build in $17.52, because obviously they don't all cost that to ship. We would build in a number significantly less with the anticipation of averaging out over time to somewhere in the middle.So if it can potentially cost so much to ship this way, why do we do it? Simple answer - We value our customers too much to entrust that relationship to another method that may save money, but doesn't give us the consistency of service that we want you to expect from us.I mentioned above that this has customer service ramifications beyond delivery time, you may be asking yourself "Self, how can that impact the customer service of a company?" I'm glad you asked. Often, the strategy of online sellers is "cheap at all costs". Just about anything you can buy on the internet, you can find 1,000+ people selling the same thing. Most companies don't strive to add any value, they are just trying make a sale. Turn and burn. They trim margins to the bare minimum. They ship the cheapest possible way. They keep their staff to a bare minimum. They don't invest in training. They outsource customer service. They ignore customers. There are 7 billion people in the world. If they honk off one customer, They'll just get another. Customers become a disposable commodity. You and I deal with many of the same companies. Is this the exception or the rule? I believe it is the new normal.I can't do that.I want you to have somebody pick up the phone when you call.I want customer service people to take care of your problem without having to ask for authorization.I want to just ship you another product when something goes wrong instead of telling you "You'll have to contact the carrier yourself." We don't see that as your problem, we see it as ours to deal with once you are taken care of.I want you to smile when your package shows up on time or earlier than you expected. Not just sometimes, but every time.I want to be able to help you, not just once, but every time I can.Shipping all of our products regular FedEx eliminates many shipping issues, it gets you your product there on time, and it happens consistently. If you are looking for the drop dead lowest price every time, we are not your company. If you want to enjoy doing business with somebody, we just might be.Oh, and to answer the question from above, do we make money on shipping? We actually manage this part of our business to try to not lose money on shipping, so no, it isn't a profit center for us.Just for reference, here are some explanations of the other shipping options out that we have used in the past, but have moved away from. FedEx Smart Post (residential addresses) (UPS equivalent is SurePost) - This service utilizes a FedEx network (different from their regular ground network) to take the package to the city where the customer is, and drops the package off at the local post office. The post office then handles the "last mile" delivery, taking it to the home of the customer. While this option costs us significantly less (no residential charge or Delivery Area Surcharges), shipping times are longer by at least a couple of days and the ship times are VERY inconsistent.USPS Priority - We used this mainly for small "if it fits, it ships" packages. We found that tracking wasn't as detailed and continuously updated like FedEx, and once it gets above the smallest size the cost is often more than FedExUSPS First Class - Used mainly for small items, but again, tracking is sporadic even when chosen, and it is a relatively slow method.Learn more herebrought to you by Bill Bass at Toolvo.com - see his previous posts here