Many retailers calculate their delivery charges according to value of the goods purchased, the reasoning being that this simplifies matters for the customer. However, as dabs.com has realised, this means that the more expensive items attract the highest delivery charge, even if the cost of delivering them is comparatively small.
Some charge by the number of items purchased – but again, a large number of inexpensive items could incur unreasonably high charges.
Others have fixed shipping costs – which is a bargain for large purchases, but can seem unreasonable for small orders. This prompted a lawsuit against Buy.com, when a customer alleged that its flat rate of $1.95 for any CD amounted to an inflated shipping charge to boost profits in breach of a Florida law.
Another approach is to offer free delivery. But most have found this financially unviable. Pets.com, for example, went out of business in part because it subsidised the high costs of shipping pet food.
The main issue for merchants is that these delivery charges, are among the primary causes of virtual shopping cart abandonment.
A survey carried out by analyst firm Jupiter Media Metrix in June 2001, showed that 73% of US consumers evaluated the total price of products, including shipping and handling, before making an on-line purchase. Only 10% of consumers believed that price and order size should drive delivery costs.
Jupiter stressed that firms carrying out this practice ran the risk of alienating customers, as its results showed that shipping and handling charges had dissuaded 63% of consumers from completing on-line purchases. But dabs.com is among a minority of merchants to follow its advice about basing charges on weight.
Dabs.com consulted its customers and has made the change. Delivery charges are now made in accordance with both value and physical weight – a move that the company believes is both "sensible and fair".
A reader writes...
An OUT-LAW reader in Northern Ireland has written to complain that Dabs.com's now categorises Nothern Ireland as an "outlying region" which qualifies for a £5.88 surcharge.
"This on top of the other charges makes them ridiculously bad value for the 2 million people in Northern Ireland," he writes. "We're not the only place to "qualify," either. Check out the list of postcodes to enjoy this prohibitive charge [see: this page of Dabs.com]."