Wednesday, April 18, 2007

A post about post . . .


As a couple of people responded to my comment yesterday about the cost of postage I thought that I would open out the topic a bit and ask for some feedback both from other small mail order businesses and from people who buy mail order.

What can small businesses do about the cost of posting things?

I do a mailing two or three times a year - at the start of the season, sometimes at the end of the season and before Christmas. Ideally I would like to cut this down to one mailing a year but I do feel that, from a business point of view, a clutch of pretty postcards in the hand is better than any number of e-mails. They can be stuck to a fridge, handed on to friends etc. etc. . . .I hope. Am I right? Do people relish getting a bright hand addressed envelope (Or might they be disappointed that it isn't a birthday card with a fat cheque inside?)

There is also the issue of paper. I use recycled paper for all letters and print-outs but I do not use recycled envelopes as I couldn't source them in bright colours and I could not afford the cost of recycled postcards. This is not as good as it should be. Does anyone have any suggestions?

Then there is the issue of mailing out orders. We thought long and hard about this with the website and decided on a flat fee as, when I am buying things, I like to be able to do a transaction in one go without faffing about with e-mails (spot the stressed mother). We pitched this at £4.95, sort of on a par with Cath Kidston, Plumo or the White Company which are the type of catalogues my customers tend to read.

The average actual cost of the mailings I have done so far has been £7.50 (and that is postage, not boxes or tape) so really I can't afford to bring it down any lower. None has been under the £4.95.

What is other people's experience of this - do you look at the postage and think mmmmm, maybe I'll pop into the shops in town? Are people more au fait with postage costs in our post e-bay world? Should I be conning couriers into thinking I am a big company?

That aside - I am on a high today - the first batch of letters went out yesterday, would have arrived with people today, and already I have had phonecalls from a high percentage of last year's subscription customers re-ordering for this year. If I could work out how to insert one of those smily face icons, I would.

12 comments:

Alice said...

Hi Jane,
I am the Queen of Mail Order (well, my husband thinks so!) and I love getting catalogues. I file them away and only throw them out when they are replaced with a more up-to-date version.
I think the envelopes look fab in green and would certainly be welcomed in my letterbox. I really think that one catalogue is worth many, many emails. I get a weekly email from one company that you mentioned and it has become so normal that I hardly notice it now whereas I sit and look through the catalogue from the same company which arrives once or twice a season. However, I wonder if the effort of hand addressing the envelopes is worth it unless you particularly enjoy it?? You can also get programmes to download postage which can be personalised. We are familiar with this because of a large mailimg that is done to a supporters club (1000+)
I would not worry too much about the paper issue because if your advertising is beautiful then people will take pleasure in it and keep it and show it to their friends. I do get very annoyed with Boden which sends thick catalogues fortnightly which are nearly identical.
I think that one area that is worth keeping an eye on is customers that do not purchase from your mail-out. I have had a (very attractive) catalogue from a company about once a month for seven years and never bought anything. This is an appalling waste of money and they should cut me off their list!
I hope this is helpful - it is just my immediate thoughts.
Alice

clara said...

Hi there, I often read your blog and as another small business owner I though I would offer you my experience of mail order! We also initially decided on a flat fee for parcels of £5.95, however, most items were costing us about £7.95 to post, and where people order several items it can be £9 or £10! We simply cannot afford this so unfortunately we have had to change our system! We now charge £6.95, plus £1 for each additional item up to a limit of £9.95 and any orders over £150 we send out free...it's really difficult as we don't want to penalise people for ordering more items, but from a customers point of view I would balk at £6.95! Any way, we're still finding our feet in this business so we'll have to see whether this puts people off - hopefully it won't! Anyway, hope this might be of some interest.
Clara ( www.house-on-the-hill.net )

Gigibird said...

I have phases of buying mail order – the p&p is something I look at before I start looking in a catalogue as it is a real consideration if I’m buying something comparable to what’s available in the shops.
When I receive my Sarah Raven catalogue I am always put off by the postage charges on what would be for me 2 or 3 packets of seeds, it really shouldn’t be several pounds.
Would you consider perhaps using a rubber stamp with your flower logo on your envelopes ?– even plain old manila would look lovely with a olive green ink? Have you considered a franking machine? I’ve seen some beautiful designs across the top of a plain envelope.

Tracy said...

I have really struggled with deciding on postage charges and have not as yet found the answer!
I started with a flat fee of £4.95 but had feedback from customers that thought this was way to high when all they wanted to order was a lavender filled heart!
I have tried the free p&p for one month which did increase sales - but cost me so much in postage that i doubt if it was actually worth doing. I have now set it at £2.50 as i really do not know what else to do.
As for the wonderful green envelope - i would love one to drop through my door - due to having a shop i shop almost entirely from catalogues and online, and given the choice i will always order from the catalogue. Plumo is a good example - they send me emails at least once a month and yet i only ever order when the paper goodness appears on my doormat.
Hope this helps x
Tracy x

Jane said...

Thanks all - It does seem to be a problem. I don't mind paying a reasonable p&p as otherwise I would have to drive into Glasgow and park. I am not a great shopper though - Although I browse through the catalogues that arrive I don't think I have ever actually bought anything from the majority. I find the ubiquity of the Boden and White Company catalogues actually offputting.
I see that Sarah Raven's Cutting Garden has rebranded as Sarah Raven Kitchen and Garden and seems to have dropped all the home, garden and kitchen ware. I suspect this is because it wasn't profitable.

Lynn your idea about the stamp is a good one - perhaps a bright green stamp of our logo might look good.

Tracey, I generally feel that there is about a 10% delivery margin on goods - the price that it would cost to sell from a stall. It means that if I was funding the £5 gap between my average posting and a £2.50 it would have to be on items costing £50 for it to be worthwhile. I don't think I could sustain it.

I am definite in not wanting to go down the phone up or e-mail for a price as I know that I have abandoned several purchases from websites for that reason (and our highly subjective research about the pricing for the website showed that I am by no means the only one). I also don't want to be pursued through the day by people wanting to know how much it costs to post a garden kneeler.

I'm not sure that there is an ideal solution.
J

Jane said...

Thanks all - It does seem to be a problem. I don't mind paying a reasonable p&p as otherwise I would have to drive into Glasgow and park. I am not a great shopper though - Although I browse through the catalogues that arrive I don't think I have ever actually bought anything from the majority. I find the ubiquity of the Boden and White Company catalogues actually offputting.
I see that Sarah Raven's Cutting Garden has rebranded as Sarah Raven Kitchen and Garden and seems to have dropped all the home, garden and kitchen ware. I suspect this is because it wasn't profitable.

Lynn your idea about the stamp is a good one - perhaps a bright green stamp of our logo might look good.

Tracey, I generally feel that there is about a 10% delivery margin on goods - the price that it would cost to sell from a stall. It means that if I was funding the £5 gap between my average posting and a £2.50 it would have to be on items costing £50 for it to be worthwhile. I don't think I could sustain it.

I am definite in not wanting to go down the phone up or e-mail for a price as I know that I have abandoned several purchases from websites for that reason (and our highly subjective research about the pricing for the website showed that I am by no means the only one). I also don't want to be pursued through the day by people wanting to know how much it costs to post a garden kneeler.

I'm not sure that there is an ideal solution.
J

Marie said...

Hi Jane
I started my business a few months ago and am now at the stage of developing a webste, so I am faced with the question of working out how much to charge. From my experience with eBay - as a customer, I accept postage charges as part of the deal, but if they are too high, I don't bid, unless it is something that I really want.
I tried selling on eBay and it did not work - I think that people may have been put off by postal charges, but I tried to be fair and charge at cost without a handling charge. I accept that if I shop by mail, then I will have to pay for postage - from a business point of view, I cannot afford to subsidise shipping costs.
I much prefer to receive a nice catalogue or letter in the mail than an e-mail. Call me old-fashioned if you like!
Marie

carolyn said...

Hello Jane,
I have a wealth of experience on this topic but from a different sector. Couriers are wonderful as they come to your door and collect, saves loads of time at the post office and generally they are not too concerned about the shape of packages as the post office can be. But be warned they are expensive, you could probably negotiate a reasonable deal to start off with but they will continue to increase their prices with things like fuel surcharges, and don't forget the VAT. You don't pay VAT on postage, obviously if your registered you can reclaim it but otherwise your paying an extra 17 1/2% for nothing.
Generally speaking I don't think that your customer's would be prepared to pay the full price of a courier. In fact I don't think that many are prepared to pay full price on postage and I think that the cost of p&p really has to be taken into consideration when you are fixing a price on your items. It is afterall another expense. Sometimes you have to be sneaky, like Gordon Brown! And if someone is buying from the van or a craft fair well it's extra profit for you, maybe. I think you would probably find it swings and roundabouts, the extra gained through a personal sale would offset the loss on not being able to charge full p&p charges.
Re. mail shots. In the business sector we are in most of them end up in the bin. Sad fact I'm afraid as it is something that I like doing (ex marketing background). Some folks do keep things but most thow them away, or put them in a pile where they get forgotten.
However you do need to keep in contact with your cutomers, let them know when the van is opening etc. Email is probably the most cost effective, but not very personal and not everyone has it. I see that you are using 1st class stamps, why? If your going to send something out it has to look good but you could save a few pence by using 2nd class.
What about advertising, how much would a "ROP" add in the local papers cost to let your cutomers know about opening, what about special features local papers do for eg. bank holiday weekends. Have you done an advertising feature with them? The type where they do some editorial about you, you take an ad yourself and provide them with a list of suppliers / well wishers who they then contact to take out an ad on your feature. You know the type I mean?
In fact you could easily negotiate a deal to have a small ad in maybe "events" every week giving your opening times etc.
And don't forget to get friendly with your advertising sales person and when they have space left on deadline you can get a really (I do mean really) good deal. I have seen thousands of £s of advertising space going for £100 at the last moment, especially if the ad is already prepared, otherwise the paper would just have to use one of their own "fillers" and not get any revenue at all.
Advertising is worth looking into. Then there are those leaflets that sit in the local Tourist Board office and in hotel receptions, might be worth looking into.
Don't forget the magazines, I know you were featured in Country Living but what about the bridal magazines, Sunday suppliments etc? Do you have a Press section on your website offering use of photographs / products in return for full credit? Sorry can't remember if you did that or not.
Am I going on a bit? Sorry love doing all this stuff and just maybe it will spark a few ideas.
Carolyn

Samantha said...

Hi Jane,
not sure whether I can add anything original into the mix, but p&p can be an issue.

As my items are not too heavy, I set it at £2.50 and that covers it.

But I have ordered from a small on-line company and it was £4.50 for a notebook which arrived second class and took AGES to arrive. Not a good experience and I won't be buying from them again!

It is interesting to read everyone elses viewpoints.

Jane said...

Thanks Carolyn and Marie,

I just knew that someone would pick up on the 1st class stamps. It is all due to disorganisation I'm afraid. I had forgotten allow extra time for the new additions to the mailing list. The first 250 or so went out 2nd class but I ran out of time and the ones in the picture wouldn't catch the Wednesday post and therefore needed to be 1st class.

My great worry about mailings is that people might just chuck them out. I don't think it happens that much though - partly because people have to ask to be on our list, I don't buy or swap lists.

The distinctive envelopes and the handwriting are designed to stop people just chucking the envelopes in the bin and the postcards inside are designed so that they are attractive enough to stick to a fridge.

A lot of people do tend to keep them - I actually have a problem with people still using a phone number that was on a postcard of tulips I sent out in 2002, unfortunately we have moved since!

I advertise in Park Life - a local Whatson (and the one that people keep in their drawer along with take-away menus and the like) but I don't advertise anymore in local papers as it just isn't worth it for me.

However, by far my most successful marketing tool is my existing customers - word of mouth is how most new customers come to me. I am very lucky, my customers are very loyal and go out of their way to promote me - one has just gone off with postcards to distribute with a mailng she is doing. I don't think that I would be happy with local customers subsidising the postal rates for others.

Another may have solved my courier problem, she has a hamper business and is a formidable negotiater. She has a courier giving a very good rate and she is prepared to get this same rate for me. Result - much lower than the PO.

I don't have a specific press photos area on the website and I think that is a very good idea. I am trying to build up photos of wedding things but it is going to take me a year to get them available in the correct (media) season.

I'm also fairly booked up on the wedding scene - had to turn down 3 this week (ouch) so until I can sort out the practicalities of upping output without losing the personal touch I am steering clear of advertising the weddings too much.

Fear of being overwhelmed and having to do something that isn't quite right is a big sticking point. Face the fear!

Anyway, I didn't think you went on at all - it is very interesting to hear comments from different viewpoints - that is why I asked the questions.

I'm still not sure how the economics work out on the Boden catalogues I get every fortnight - I last bought in 2002!
J
x

Jane said...

Thanks also Samantha!
We were obviously posting at the same time and crossed over.
I feel that it is a bit of a "split the difference" thing with postage - I pay a bit, the customer pays a bit. However, I know my Mum is put off by postage charges.
I just hope that people want to buy £75 worth from my site and then they get it free!
J

Anonymous said...

Jane,
I'm a bit late in posting this - just catching up after a busy week. I don't charge for posting my (card) orders but I wouldn't recommend this course. I think it depletes your profit considerably. Some people do free postage over a certain amount which could be worthwhile - economies of scale etc.
Also, I think you have to keep doing your mailings, it's essential for your biz. I have your postcard propped up on my desk in Kenilworth. I'm sure people will pass them on for you and your empire will flourish!

Annie