; Cwyn's Death By Tea: A Bit About Shipping ;

The Very Limited T-Shirt for Cwyn's Tea Fund

Monday, May 30, 2016

A Bit About Shipping


Today I’m feeling inspired to write a bit about shipping, following yet another face-palm moment when a tea head wrote “I would’ve ordered that cake but the shipping was too expensive.” I know a fair bit about shipping, not just as a buyer but as an online seller. The number of packages I’ve shipped over the past decade is in the thousands. To prove that, I suppose I’d have to give you both my EBay handle and my Amazon handle. And then I’d have to admit you into the online seller’s forum on EBay where I have been a moderator for the past nine years. Now, I’m not an EBay moderator because I love EBay. I don’t really love EBay, it is just that I’m damn good at selling there.

At one point, I was the largest EBay powerseller in the entire southwestern quarter of the state. I started doing consignment selling when people emailed to tell me they’d researched other sellers nearly an hour away to sell their stuff, but no one else had the numbers I did. So I got a lot of business from people looking to sell off their stashes of whatever they owned and couldn’t be bothered to sell it themselves. Doing big numbers on EBay and Amazon is a game, an ever-changing game, and shipping is a big part of the game. In fact, shipping can make or break your numbers. Shipping is also mind-numbingly boring, and I got so burnt out on shipping that I can’t stand selling online anymore in the volume I once did. I still sell, mainly because at this point it’s so easy that even when I’m working a full time job I can still pull in a decent part time living on top of whatever else I’m doing. I just can’t handle shipping more than one day a week. I hate it that much.

Tea heads have funny ideas about shipping, at least from my perspective. But that isn’t anyone’s fault because you all have been trained in those ideas from EBay and Amazon, from the game that sellers play. Buyers have been trained to think that Free Shipping is really free. The reason for this, is because too many sellers are selling the same items, and the profit margin is all in the volume of selling they are doing, not the profit mark-up per item.

So-called “penny dealers” once made a profit from selling 99 cent items plus shipping, and made their money in the shipping; EBay and Amazon only calculated fees on the item price, not the shipping price. To combat the penny dealers, online venues termed this as “fee avoidance,” and encouraged buyers to report on sellers who padded shipping to avoid fees. But sellers knock out penny dealers all the time, all you need is a buying ID and you can report your competition for fee avoidance without retaliation. Penny dealers nowadays are mostly Chinese sellers doing volume in low price items. Selling a $1 item is not profitable because of the shipping cost, but if you spread that out over tens of thousands of sales, you make a very small margin of profit. A tough game to win and outside of China you can’t win the penny game anymore.

Likewise, Amazon trained buyers in the notion of “free” shipping. It worked so well that now Amazon gets away with selling subscriptions for their “Free Shipping.” Amazon created a single $3.99 price for “regular” shipping, a system where you could make money if your item is small enough to ship for less, or lose money if the real cost is higher. Amazon favors itself by offering Free Shipping above a certain purchase amount, but recently raised that amount to make you buy more, or pay for Prime Shipping. I can tell you that Amazon has never been able to deliver a package to my door in 2 days and neither can anyone else.

For a number of years, a seller could get ahead in shipping by comparing the cost of services. UPS versus Post Office versus Fed Ex versus EMS, on and on. All that worked until each of the for-profit services started contracting with the post office to deliver their packages, a system which prevails today. My local post office receives nearly 500 Amazon packages every Monday for my small town, these are Prime Shipping packages which Amazon sends directly by their own trucks to post offices. UPS packages also are delivered by post office and vice versa.

Buyers are trained in Free Shipping by online vendors in two ways. One way is to give the impression that Free Shipping is the best deal. Then, after seeing Free Shipping often enough, buyers now think that Free Shipping is mandatory. The truth is, the real deal may be a combination of the item cost and shipping cost, and Free Shipping isn’t always the best deal.

A most successful seller is the one who has a complete monopoly on their items. If you sell unique items, things nobody else has, you can avoid playing the shipping game entirely if people want what you have. But in the tea world, the monopoly seller is not necessarily unusual. Plenty of tea sellers have teas that no one else sells. The competition is in the sheer number of tea vendors. Too many vendors have items no one else has. Rarely does the buyer have the option to cross-check teas among several vendors, unless you’re savvy about wholesale suppliers. But let’s assume that we do have the option to buy the same tea from several different vendors, and the one difference is shipping cost. It’s easy to compare when everyone offers Free Shipping, but not so when the shipping isn’t free.

First, let’s get some perspective on what shipping actually costs today. When I started shipping, we didn’t have the Priority Flat Rate box. As I recall, the first Flat Rate Box (not envelope) cost $4.60. Today that same box is $6.45. This small box might hold a 200g brick or small samples. Of course most vendors use an envelope for small orders, and take the risk that the tea doesn’t arrive crushed or the buyer doesn’t care the tea is crushed.

A medium flat rate box cost in the $8 range when I started using it, but now is a whopping $13.45 base rate. The base rate is higher at the post office nowadays because of online discounting, you can get Medium flat rate for as low as $9.95 or maybe even lower than that if you look around.

When I sell today, I mostly sell unique items. I don’t have another item to sell if my shipping goes south. Also, the cost of shipping for me depends upon where the item is going. Generally, I offer Free or Flat Rate shipping only because it saves me time and headaches. If I’m having a bad day, I’ll eat shipping by choosing a better box because I don’t want to hear that the item got damaged. Free Shipping allows me to choose the box size. I add in the cost of the shipping to the final price minus fees for selling. So the shipping looks free to the buyer, but is actually in the cost of the item. In the case of my t-shirts, the buyer who lives one state over from me is paying more, but the person from Europe is paying far less. Is that fair? Maybe not, but in the end I merely break even on shipping and that’s the truth.

The Weight/Box size game.

Most sellers play a weight versus box size game. This is a game that favors the seller over the long haul when the seller has many of the same items to sell. It is NOT a game for the seller of unique items because you can’t ship a new one when the buyer complains. But to some extent, tea packages are different sizes for each sale, so buyers and sellers end up playing a weight/box size game whether you want to or not.

Figuring out the cheapest shipping really comes down to the actual package, the weight and size of the box. If you play the weight and box size game, you end up shipping fragile items in too-small boxes and packages arrive with shipping damage. As a tea buyer, you surely know all too well how many packages you get with damaged tea items because the seller skimped on the box and the padding. The seller is playing the shipping game using weight x box size. He pays a lower price to make another buck or two and you get damaged goods. Skimping on the box favors the sellers over the long run, because the few damaged boxes requiring reshipping, refunds, or even better a coupon to make that buyer come back costs that seller less than using a decent box plus padding on every order.

A reasonable shipping cost for average puerh tea orders, worldwide, is in the range of $10-20 today.

Free Shipping versus Paid Shipping

1.      Choose Free Shipping if you’re willing to risk your items arriving damaged.
2.      Choose Free Shipping if another seller has the same tea, but charges extra to ship. If you order cheap shou or Fu bricks, you can find sellers willing to ship these free.
3.      Paid Shipping: divide the total shipping cost by the number of items.

A tong contains 5 cakes, total shipping is $20. Therefore the cost per cake is $4.

But shipped normally a single cake will cost $7-10 to ship. So that $20 shipping fee for a tong is actually less than if you bought each cake separately.

4.      Take slow boat shipping every time. Especially if you paid via Paypal. It might take longer, but the seller will have to replace your box or refund you if your tea doesn’t arrive.
5.      EMS is not better shipping, it is just faster. Mostly. Sellers will still skimp on the box size and weight.  Shipping cargo is the same whether you pick slow boat or packed on a plane. The result is ships and planes are over-stuffed and piled high, your tea is damaged or arrives fine either way.

The 2kg weight myth.

Some buyers have found that the price of their tea box flattens out as you approach the 2 kg weight mark. However, this is often due to where the tea buyer lives. If you live near one of the coasts, this might be true, but if you live in Europe or the middle of the US, that 2 kg number may not be accurate for your mental calculations.

 “The cost of the shipping is the same as the cost of the tea.”

Well sure, if you’re buying cheap tea. Let me tell you something. If your tea costs the same as the shipping, you might as well buy tea from EBay or from within your own country because the quality of what you are buying isn’t worth ordering special from overseas. I can guarantee you that you get just as “good” crap tea from free shippers on EBay or Aliexpress, and you might as well order from them. For decent tea, expect to pay shipping.

Premium Packaging

Nowadays we are seeing new puerh vendors design premium boxes made of wood or cardboard drawers, along with special wrapping papers. As a seller I’m looking to maximize my profit. Even though some packaging materials cost less today than in the past (like tape), as a seller I dumpster dove my boxes and bought tape in bulk. Any packaging you have to buy cuts your profit. I see a lot of tea vendors spending money on special boxes and wrappers, and I know they are all new at this game. Or they get their tea for free from Aunt Minnie. Or they hope that they can win so many buyers that all the investment in packaging will pay off. Cosmetics sales are all about packaging, the actual cosmetic costs very little, the package sells and the package design is what buyers pay for. Some tea vendors confuse cosmetics with tea. 

While buyers do indeed appreciate lovely packaging, those sellers are taking a bath. Trust me. They love their brand more than making money. Maybe they just love selling tea and don’t care about money. That’s fine, but they won’t make a decent living using premium packaging. On top of the cost for the fancy packaging, the final cost for shipping is even higher because the carton is heavier and larger, thus losing in the weight/box size game. Most vendors using fancy packaging will go out of business in short order.

Flat Rate Shipping

This is, all around, the best deal for tea buyers. I hear people complaining all the time about the flat rate sellers, such as White2Tea who charges $14.99 flat rate no matter how much or how little you buy. While $14.99 may not be a deal if you order a single sample, a single tea cake or more actually costs more to ship than this if you want your tea to arrive intact, but this flat rate is usually less. Remember that Priority Medium boxes WITHIN the states are currently $13.45, and they don’t hold tongs. They don’t even hold more than one full size cake (decently bubble wrapped).

The Shipping Quote may not be the final price

This is true for sites like Chawangshop. When you add teas to the cart, the calculator makes a shipping estimate. But you don’t pay your bill from the checkout. You have to wait for Chawangshop to actually package the tea. The final total for me is always lower than the quote. Generally, my boxed tea orders run around $19, still within the reasonable range of $10-20. Then I divide the number of items I ordered. If I ordered 5 items, the shipping cost per item is under $4, quite a decent deal.

I recently bought a sleeve of 5 tuos at $4 each from Chawangshop. The shipping cost was $20. In this case, the shipping did cost the same as the tea. Now, if Chawangshop added the cost of shipping into the tuos, each would cost $9. Nine dollars for a tuo is still reasonable, when you look at the cost of a tuo from around the net. So they could choose to sell that tuo for $9 plus free shipping. I might be a buyer who is attracted to the free shipping, and I might click Buy on that $9 tuo simply because the shipping is free. But I also recognize that the $4 tuo with $5 to ship is still reasonable because I can do the math. The real clincher is nobody else has that same tuo. Unique won, but so did the shipping because anyone living closer to China got that tuo for even less than I paid.

What to Take Away from This

Shipping favors the sellers.

Free is not necessarily the best deal.

Shipping charges per item cost less from China than shipped from within the states.

Flat Rate is usually a deal.

$10-20 for shipping is a good range for most packages from overseas.

You can always get a refund.

If shipping cost bothers you, there’s always loose leaf.



2 comments:

  1. OMG I am having ebay seller flashbacks....shipping really was the worst part. I had a team, my mom and I sold antiques and (before I went solo) some of my fancy jewelry creations...for some odd reason my mom actually liked shipping, which worked for me since I could focus on the research and listing side of ebay, but oh man, I hated when I got stuck with shipping.

    ReplyDelete
    Replies
    1. Keeping up with listing antiques is tough because things sell right after you post them.

      Delete