You might be surprised at what a big impact shipping fees can have on your success when you sell handmade crafts online. Shipping fees have such a huge impact on customers, they should not be overlooked as part of your marketing strategy.
In fact, in "How the Offer of 'Free Shipping' Affects Online Shopping" published at Knowledge@Wharton, the Wharton School's business newsletter, marketing professor David Bell notes that a survey "found that shipping and handling costs triggered 52% of the abandonment of online shopping carts." That's a lot of online sales lost due to shipping fees. (source)
While you do need to cover shipping costs when you sell handmade crafts online, if your shipping fees are too high, you'll lose customers. Depending on your country's postal service fee structure, your shipping costs may be greater than those of a competitor in another country, so you'll need to find a way to compete.
I'm not suggesting that you lose money on shipping just to make a sale, but you may want to be more strategic about your overall pricing strategy. If your actual shipping costs are higher than the fees your competitors are charging for shipping, you may want to consider recouping shipping costs in other ways when you sell handmade crafts online.
I saw a great crocheted hat on Etsy. It cost $22.00 to purchase, but the shipping fee was $5.00. I'm certain this seller is not adding profit into her shipping fees. Based on the postal rates in her country, $5.00 for shipping this item is not out of line.
However, some quick research shows that most similar items on Etsy will ship for about $2.00. So if most comparable items have a shipping fee of around $2.00, the $5.00 shipping fee has the potential to to turn away customers very quickly.
In a case like this, rather than using her actual shipping costs as the shipping fee, the seller may be better able to sell more crocheted hats online if she is more strategic about her overall pricing and fee strategies.
Assume the person selling the crocheted hat needs to charge $27.00 ($22.00 purchase price + $5.00 shipping) to cover all of her costs and make a reasonable profit on the hat. Let's also assume that $5.00 is a high shipping fee, and other comparable items on Etsy ship for $2.00.
In all cases, the customer is still paying $27.00 for the same item, but the psychology has changed.
A potential customer who is considering purchasing this hat views the hat as something of value. They're willing to pay money for the hat, because they see value in it. In fact, they may even view the hat as being more desirable if it costs a little more.
On the other hand, online customers view shipping fees as an annoyance, extra money that they have to spend to get the hat. Shipping fees are a negative to online sales; they don't add any value to the customer's shopping and hat owning experience.
Customers think, "That's a cute hat. It's kind of cheap for something handmade. Oh, I have to spend $5.00 just to mail a little hat; that's a lot. I wonder if the hat is not very well made because it's so cheap."
Customers may think, "That's a cute hat, and the price seems just right. Oh, and shipping is $2.00. Well, that's what other people are charging for shipping here, I guess that's a fair price for buying something online that I couldn't find locally."
Customers may think, "That's a cute hat, and the price is what I expected. Oh, and shipping is free. That's a great deal; I won't have to pay any extra annoying shipping fees."
Customers may think, "That's a cute hat. The price is in line with my expectations. $3.00 shipping is not too bad, but if I buy something else, I'll get free shipping. Hmm, I'm going to take another look at the store to see if there's another inexpensive item I like to bring my purchase up to $30.00. I'd rather pay a little more and get something of value than waste money on shipping which is of no value to me."
These thoughts happen pretty quickly. Customers may not be completely aware that they are going through this kind of thought process, but they do make decisions in this way.
Think about your own online shopping habits. How many times have you abandoned an online purchase because the shipping fees were too high or bought an extra book at Amazon just to qualify for free shipping because you'd rather pay for a book than pay for shipping?
In the same article noted above at Knowledge@Wharton, David Bell also reported that "Approximately 60% of online retailers cite 'free shipping with conditions' as their most successful marketing tool." When you sell handmade crafts online, shipping fees will have an impact on your sales. If you use good pricing strategies, your shipping fees can have a positive impact on your sales.