The Complexities of Shipping & Handling Fees
Flip to the order form of any catalog or go to the checkout of a cataloger’s Web site, and you’ll find one truth: There’s no standard for shipping and handling (S&H) fees.
What a catalog charges to ship product depends on many factors, such as type of product (soft goods or hard goods) or the shipping method chosen by the customer. Others are less-than-obvious and depend on how the cataloger chooses to account for S&H in its operations.
These variables make S&H a widely debated topic. According to F. Curtis Barry & Co., an operations consulting firm, about half of catalogers charge customers more for S&H than the actual costs of the outbound freight. How does your catalog view this important element of back-end operation? Is S&H a line-item on the expense or revenue side of your balance sheet?
Catalog Success spoke to three catalog operations experts who have differing opinions on the complexities of S&H. Here they make recommendations for the best ways to manage your S&H costs.
What to Charge
In determining what to charge, look at the total expenses for all your S&H activities. Start at your cost per order, suggests operations consultant George J. Mollo of GJM Associates. “What does it cost to pick, pack and ship?” he asks.
Also consider how many packages will mail for every order. Says Mollo, “This depends on your backorders. There’s a direct relationship between the two.”
A major factor in discerning what to charge for S&H is the kind of product you’re shipping. Hard goods obviously cost more to pack and ship. Soft goods such as apparel (which Mollo says often can ship in manila bags, and stay less than the 2 lb. weight) will be cheaper to ship.
Curt Barry, president, F. Curtis Barry & Co., adds another element to be factored into your S&H costs: freight damages. “Look at the cost of the outbound freight, also taking into account the damages and freight losses.”