Before going into pricing and delivery models and more, we have to take a step back and ask ourselves, “What do our customers expect from us, what is it that they want?” The customer is ultimately the boss and decides if our business succeeds or not. Therefore, it is important to understand the needs of the customer and what they expect from us as vendors!
Understanding the customers.
Will the customers understand where we as vendors are coming from? Let me put out another analogy when eating at a restaurant do you think about how much the cost of making the dish was? Probably not. Customers just want value for their money, by offering free delivery choices that satisfy customers’ expectations for delivery while strategically recovering postage costs might produce a favorable outcome for all parties to the transaction.
Also, Setting the free delivery threshold above what your average product costs would encourage multi-item orders, this ensures that you can sell out more products and helps you create demand in a way! This, help with recouping associated postage costs and increase value and revenue for your company.
Incorporating postage costs into pricing strategies.
Now that we know what our customers’ expectations are, we can make more informed decisions regarding our delivery pricing strategy. But what are some of the ways to make even high postage costs seem less of a red flag to customers? How do we incorporate those into our pricing strategy?
You can just summarise this with one word ‘balance’. So we know that our customers want unconditional free delivery, it’s the deal that everyone wants. But how do you recover that postage cost of delivery costs? Well, you can always adjust the prices of your items to recover postage costs, but beware, this has to be done carefully. If you go overboard, it might end up worse. The key, is to analyze your orders and ask yourself, “What is the price range my existing customers are willing to pay and what would marginal increases in items affect customers?”
Alternatively, minimum orders encourage customers to make larger purchases from you. Customers may be persuaded to spend more in your store to receive free delivery by adding a free delivery minimum to your purchases. Tracking your average order value, or the typical amount each consumer spends in your store can allow you to evaluate the success of your free delivery offer and again find a ‘balance’. This could be done with various spreadsheet tools to help graph trends and calculate past order values.
Optimizing delivery times to get your products to customers
Do you know how people say ‘with a cherry on top’? Where is our cherry on top for the vendors? Well, now that we have most of our logistics figured out. We need to get the items to our customers in a timely fashion, to wrap up a great customer experience.
There are two sides to the equation, on-time orders vs competitiveness and again the thing we need to look for is ‘bal…’, yes you guessed it it’s ‘balance’. How do we make sure that we are on time? Well, we can just set a longer delivery time, that is vaguer. But that takes away from the competitiveness, as we vendors might lose our sales to other vendors if they can deliver it in a much timely manner.
There are two things we need to consider, our competition and customers. How long are your competitors taking to get their similar items delivered? Are they longer than yours or shorter? If they are longer, can you do better while charging a lower price? On the other hand, if your competitor’s delivery time is shorter, are you able to offer a similar product for maybe a lower price, or higher quality products. We need to find a balance, a compromise so that again, everyone gets what they want in the end and the customers’ expectations and needs are satisfied.
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