Monday, 12 August 2013

Cost of Shipping

With so much shopping being done online now shipping costs have become a talking point among buyers and sellers alike. The postal services charge far too much, and still don't seem to be able to make a profit. I suggest they need better management, but that's not my problem, and there's nothing I can do about it. But from your POV........

1. Buy several items at once from the same supplier and you will usually save money. The actual  postage cost works out cheaper by weight as parcel size increases, therefore most online sellers offer discounts, not just as incentives for you to buy more from them, but simply because they can.

2. However, there is an exception to this. Import duties are often waived on low value packages (check the tariffs that applies for your country) and paying for shipping several small packages may then end up being cheaper at the receiving end, than paying the duty on big one. It's worth spending a little time calculating the difference.

For example, assume duty is waived on packages valued $20 and under. You have ordered 3 items, and the package is valued at more than $20, but each item individually is valued at less than $20. Shipping costs $10 for each item separately, there is no duty on any of the packages, therefore you would pay a total of $30 shipping.

But, let's say the shipping is discounted to $15 when all items are sent together. However, when the package arrives, there is duty to pay of $10 on the goods, and brokerage fees with taxes on top that (normal) - another $10. Your actual shipping costs are therefore $35. It would have been better to have the 3 items shipped separately. As every case is going to be different you will need to educate yourself, and do the math to save money.

3. When is it cheaper to have an item shipped rather than go to a store and buy it?

There's a bit more math involved here too. It all depends on how far the store is, what gas mileage your car offers, and so on, against shipping costs.

For example, if you can walk to a store that you know will stock the item you need at a fair price, buying it online makes no sense.

But just this week I bought a bottle of nail polish online. How does that make sense?

Well, the shipping cost was $2. For me to buy that bottle of nail polish, at the same actual cost, would involve a minimum journey of 20 miles. That is assuming they have what I want there, and I don't know if they will. So it could involve more shopping around. In fact I could end up spending 3 or 4 times as much on gas to find my nail polish "locally" than by having it mailed from another country. Yes, it's mad, but that's how it is.

Of course, if I was to pick it up when I was shopping anyway, I could offset that cost by spreading it over all my purchases. So that must be considered too. The question is, when I go shopping, do I/will I remember, have time for, or be able to find all the items I might otherwise buy online? This is what we have to ask ourselves. Only honest answers count :)

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