Shipping Prices are Killing Me....

[11BC2]

If it's "free" to you, some else is paying for it.
Spend more with smaller business to keep them in business.

[Glenn]

You could always save on shipping by driving there and pickup your stuff at their location.
_________________
Glenn
74 Beetle Specs | 74 Beetle Restoration | 2180cc Engine
"You may not get what you pay for, but you always pay for what you get"

Member #1009

#BlueSquare

[jimf909]

I'm sure it's just a coincidence, but this week GW offered Free Shipping for a week or so and today I received an e-mail from VanCafe offering free shipping on orders of $99.

Free shipping can be a tough pill for a retailer to swallow. Early on the traffic and the orders look great, eventually, the shipping expense line is a real impact to profits - free shipping doesn't grow on trees.

I worked for a larger retailer that struggled with free shipping for years. As for thresholds, Van Cafe will definitely see orders plussed up to reach the $99 threshold but they may also see far fewer orders under $99. It's an analytics puzzle that was fun to work with.

_________________
- Jim

[TomInAlaska]

Neither of those free shipping offers apply to Alaska. They never apply to Alaska.
_________________
'73 Super Beetle (resto-mod/rally look, 1776)

'84 GL adventure van project (1.9L, 4speed) https://www.thesamba.com/vw/forum/viewtopic.php?t=755844&highlight=

[AndyBees]

I've purchased a lot of the Pink Stuff Anti-freeze with the Free Shipping orders. I'm sure that hurt the bottom line.
_________________
'84 Vanagon Tin-top, ALH TDI. 1989 Tin-top
1983 Air-cool, 225k miles, 180k miles mine. Seven trips to Alaska from 1986 thru 2003.

[Busdepot]

"Free" shipping isn't really free. Unlike the Amazons of the world, us normal-sized retailers pay a lot to ship, and we can't stay in business if we lose money. So the cost of the "free shipping" will always be borne by the consumer in some way. Either the product price will go up, or the quality will go down. It's a popular gimmick right now, but it's still a gimmick. We will have updated shipping on our site in early April which will take advantage of some recently negotiated shipping discounts, but it still won't be "free." However you'll often find that "apples to apples" (like quality and brands) our actual delivered price is still cheaper. (And if it isn't, let us know and we'll do our best to beat it.)
_________________
- Ron Salmon
The Bus Depot
www.busdepot.com

[vanis13]

[skemems]

Shipping with many online retailers is absorbed as an operating expense just like visa transaction fees, website costs, marketing and advertising, the electric bill to keep the lights on. Shipping is not much different.

If you compare online retailers with brick and mortar stores - many times they stay competitive by offering free shipping. While brick and mortar stores need to pay rent and leasing cost of hundreds of location. Online retailers cost in many cases is covering shipping costs.

As an example some auto part stores that have offered free shipping for many years.
ECStunning.com - free shipping over $59
FCP euro - free shipping over $49

By offering free shipping - I'm sure they will gain back some of that business being lost to online companies that offer it already.
_________________
87 VW Westfalia - EJ25
86 VW Westfalia - EJ22
85 VW Westfalia - WBX 2.1 project

[Sycolyst]

I agree on the free shipping....nothing is free, somebody pays. All I'm asking for is FAIR shipping. Don't charge me $34 to ship an item that when I get the box and plug the weight/dimensions/location into the calculator comes out to $13ish. And, make every effort to use an appropriate sized box to ship items. Be respectful of keeping costs down for your customers. Honestly, there are a few places I avoid due to their shipping practices.

[dabaron]

i just order parts from several vendors. instead of me spending hours in the car to go get stuff, it arrives at my door for a nominal fee.


$20 to get a box of parts from 2600 miles away is CHEAP.
_________________
1991 Vanagon GL Camper
i had no idea i wanted to be a mechanic
"burnin oil and cookin coils" -- Destructo

BiWerks Design, LLC

[Rocky Mountain Westy]

Howdy Samba folks,



I wanted to share some the journey that has gotten us here to the point that we are able to offer Free Shipping in our Van Cafe store. This thread is full of some very accurate info and some that is presumptuous and not really accurate. It is no secret, it is expensive to run a business and sometimes the rewards are challenging to find. It especially challenging in a niche market. The blessing of a niche market is a loyal customer base and a limited amount of competitors. This couldn't be truer in the Vanagon parts business. Obviously, you are all very loyal, tough to make everyone happy all the time, but we are all enthusiasts and we help each other out. As far as the vendors go, while we all compete to a certain degree, we all have our strong suit and our lane and our specialty. This is what keeps it healthy for the consumer. You can't just shop at one site because it is near impossible to do everything the best. I am pretty biased so it is not proper for me to identify those differentiators, but you as the consumer have certainly molded and sculpted our businesses to what category we excel in. Of course, I know what we are good at but I am not going to try and change the consumers mind in an area we don’t excel. The old cliché is , “You can’t be everything to everybody”.

So how can we offer Free Shipping? Some people in this thread shared it is an expense of doing business. That is sort of true. We look at it as a Cost of Goods (COGS). COGS are basically identified as a direct cost to a product itself. Not only the physical product but some examples are the labor for manufacturing and fulfillment, the packaging supplies, the sq footage of our warehouse, and of course, the cookies 😊. It is all in COGS. Our customer service team, our finance team, our software and so many other expense fall into the cost of doing business or indirect costs. This is kind of irrelevant to the conversation. Although the efficiencies I will further explain do actual play into this aspect of the business as well. I am going mostly share about COGS or I will surely put you all to sleep and I have probably lost half of you by now.... We found the money for free shipping in automations and efficiency of labor.

The internet is crazy. So many buzz words in the world and Amazon has certainly trained our brains. We obviously didn’t come up with the theory of free shipping. We listened though. This has been a calculated and methodical plan for quite a long time in our business. Three years ago, we started asking the question internally, how do we do it? We are a small business, we obviously aren’t Amazon and likely way smaller than even CIP1. The answer is actually simple. Reduce expenses and create efficiencies. Shipping is not as expensive as some people might think when it comes to gross revenue. It is way less than 10%. The execution of it is way harder. There are three basic commitments that we made. An unwavering commitment, the right systems and of course, the right people.



Unwavering commitment, what does that mean? That means staying focused. Our focus was not free shipping. It was certainly a byproduct of the work we were going to do. By focused I mean, don’t worry about the competition, ignore the non-believers, don’t get distracted by shiny objects and opportunities. Those that know me well, know this last one was the hardest for me. We have some great manufacturing equipment along with some new capacities and opportunities that I can’t wait to get too. I have learned a bit of patience. Here are some more buzz words and phrase for you; “Do more with less”, “automate”, “efficiency”. When we bought Van Café and moved it to Colorado is was chaos. We moved into a small rented warehouse and thankfully we were naive. It was our saving grace. Six months later, in the summer of 2018, we found our forever home and were able to purchase a 16,000sg ft industrial building. In hind sight, this was the precipice to the journey we were about to start of rebuilding the company although we didn’t realize it at the time. In a manufacturing business, infrastructure and workspace is the key. We then realized there was no way our native systems were going to allow our company to grow. We wanted to serve our customer base in a consistent and process driven manner. It was time to rebuild from the ground up and stay focused to get there. This meant new technology, better systems and processes and the right people.

I can hear a question from the crowd, “Better technology? What does that mean?” Business is all about process, consistency and accountability. This day in age, it takes software. It is how it all happens whether we realize it or not. Nowadays it all about “Software as a Service” or SaaS. It is how the world operates and it will only become more important as the future unfolds. Good systems are the only way a business can grow and be sustainable. Our customer base has experienced this through our new website. This is important and a key component but where the magic really happens is in a platform known as an ERP. Some might say it is Quickbooks on steroids but steroids really only provide a solution for a short-term goal. It is more like Quickbooks on a well-executed life plan of greatness. I could bore you all on explaining an ERP. Here are the benefits. Automation, do more with less, efficiency, visibility of data, manipulation of data. Sound familiar, those buzz words I referred to are a real thing. So let’s come back to Free Shipping really quick. We can just do it faster, more profitable, more accurate and with less people. That basically means less expense, now we can afford to pay for shipping for our customer. Have prices gone up, yeah a little but that it the times we are in. Remember those COGS, our inbound shipping, our payroll, our taxes, yeah all that stuff has gotten more expensive. That is why prices rise a little here and there. We were able to offer free shipping because we are good at what we do and can build it into or COGS. Ok, by know I lost the other half and only 25% that started are still with me. Congratulations, you made it to the best part...People.

Wow, this is where I get emotional because this is where it matters. You can’t do anything without the right people. The buzz that I will gladly bet against is that we will be replaced by robots, not going to happen. Sure some jobs are going to be eliminated or streamlined. Our view is that technology will make our jobs better and more dynamic, it is not going to eliminate the need for good people. Here is where I will let my bias shout large and far. Along with the best system in the business, we have the best people in the business. We just do. A majority of our team has been here for more than 5 years and we have lots of up and comers. We have amazing thinkers, we have spectacular doers and we have a culture that is outstanding. This is truly the recipe for success and is the most difficult ingredient in the whole recipe to buy. It is a recipe in it’s own. In November of 2020 our team starting building out the system that you all saw in Jan 2022. It was hard work. Internally, we called the project “The Other Side”...lol, still so naïve. We thought that 14 months of building the system was going to be move to paradise and the promise land on launch day. Well, what really happened was on launch day we were dropped into the epicenter of a shit storm. What to do? When you have good people, you come together, you prioritize, you focus and you execute. Sound simple, it wasn’t. The big difference on Jan 1, 2022 was now you were all there at the party. We had to make it seem like everything was fine and it sorta, kinda was but it was not the other side we had all anticipated. We would have to wait another 14 months for that day to come. The details of what we did in those 14 months are monotonous, tactical keystrokes that I won’t bore you with details because likely my readership is 10% at this point and I need to wrap it up.



In summary, we made it to the other side. We built the ultimate machine and now we are ready to hit the gas. With automations and efficiencies, we found enough margin to follow suit of the corporate big boys and offer free shipping. To be honest, this will be the smallest of the accomplishments we are set out for. I am a humble guy that loves VW vans. Our business would never be what it is today without the guests at the party and the staff to serve them. Let’s look back on this day as a turning point and let work together to truly make the other side something this community has never seen. We will always have work to do, which for the last buzz word, It is “work in progress” but we can and will continue to grow and serve you.

With lots of gratitude, Mike
_________________
Rocky Mountain Westy Inc.
www.rockymountainwesty.com
970-310-3441
[email protected]

The Splitzgauer build (when I have time to work on it and update the thread)

http://www.thesamba.com/vw/forum/viewtopic.php?t=497133

[Christopher Schimke]

Mike, that was well said. I appreciate every aspect of what you wrote. In this niche environment that we work within, you have obviously done some really great things with your business. Congratulations!
_________________
"Sometimes you have to build a box to think outside of." - Bruce (not Springsteen)

*Custom wheel hardware for Audi/VW, Porsche and Mercedes wheels - Urethane Suspension Bushings*
T3Technique.com or contact me at [email protected]

[Rocky Mountain Westy]

[dobryan]

Mike, awesome explanation. I really appreciate all you and the other vendors do to keep us on the road.
_________________
Dave O
'87 Westy w/ 2002 Subaru EJ25 and Peloquin TBD

"To travel hopefully is a better thing than to arrive." Robert Louis Stevenson

MD>Canada>AK>WA>OR>CA>AZ>UT>WY>SD
https://www.thesamba.com/vw/forum/viewtopic.php?t=620646

Building a bus for travel in Europe (euroBus)
https://www.thesamba.com/vw/forum/viewtopic.php?t=695371

The Western Syncro build
https://www.thesamba.com/vw/forum/viewtopic.php?t=746794

[DanHoug]

thank you, Mike, for taking time to detail your business' progress. we are so grateful for your offerings and service. enthusiast's are the hardest customer to please... we're picky and want things perfect, we want the very best for the absolute bottom price. we think it is easy, that costs never increase, and want a response to a question NOW.

that said, some of us continue to spend stupid amounts of money on a vehicle that hasn't been made in 32 years. we're the alcoholics of the automotive world lining up for happy hour.
_________________
-dan
60% of what you find on the internet is wrong, including this post.

'87 Westy & '89 Westy both 2.1 4spd

Past projects can be found at--
www.thefixitworkshop.com

[Rocky Mountain Westy]

[Mckinleyvillian]

Hey, Mike, thanks for laying it out. I appreciate you for it

peace
steve
_________________
so many roads i know
all i want is one to take me home

85 Vanagon GL 1.9 stick

[Busdepot]

First off I want to say that even as a competitor, I have the utmost respect for Van Café. They are a stand up vendor and well deserving of your business. However, Mike and I have philosophical differences about how best to serve our customers.

What Mike wrote is all well and good, but it has absolutely nothing to do with "free shipping." He cut overhead by steamlining and modernizing. We did exactly the same thing in 2022, when we moved for the first time in 25+ years, from a location we'd long since overgrown to a modern warehouse where everything is in part number order for easy picking. This also gave us enough space to import a lot more parts directly from Europe - 3 full container loads this Spring alone - which reduces costs by cutting out the middleman/importer, reduces backorders, and allows us to stock better quality parts than are available from U.S. sources.

So both we and Van Café reduced our costs. But what does that have to do with "free shipping?" Why not just reduce your PRICES, which is what we did? "Free Shipping" is at best an inefficient and inaccurate way to reduce prices, and at worst a marketing gimmick that does not reduce overall prices.

"Free shipping" may be a buzzword right now, but it's only really "free" in cases where shipping is such a small percentage of the cost of the item that the retailer can literally throw it in. Clothing, for example, which usually has huge markups. Or almost anything from Amazon, who has 1200 warehouses so they can ship locally (and pay pennies on the dollar for shipping). It doesn't translate well to specialty auto parts, which have much lower markups, tend to be heavy in relation to the cost (so shipping costs the retailer a much larger percentage of cost), and often can't be shipped by a local warehouse to save money. Wait, you say, a lot of auto parts don't weigh much. But remember we’re talking a RATIO here of weight versus profit dollars. UPS doesn't care if the item in the box is worth $15 or $150 - they charge the same per pound. A ball joint may not weigh much, but it weighs a lot PER DOLLAR compared to a tee shirt, and the profit margin is 1/4 as high. The retailer can't simply absorb that high a percentage of his profit, so he has to fudge the numbers in some way in order to remain profitable in the long run.

So what "free shipping" means in THIS industry is that you generally ARE paying for shipping, but it's being taken out of your pocket in other ways...

1) Increased markup. Without enough profit margin to absorb shipping costs and stay in business, the retailer's first attack will often be to simply increase markup on their products. $16.95 items become $18.95 items. Heavier items that cost more to ship may go up even more, but often they raise everything a little hoping you won't notice a buck here and two bucks there. Still, at the end of the day YOU paid for shipping, it just got taken out of your pocket in smaller increments.

2) Cut costs and don't pass them on. Instead of reducing prices if your overhead/cost of goods goes down, keep the prices the same, pocket the difference, and call it "free shipping." The customer still paid for shipping because if it hadn't shipped "free" the price would have been lower.

3) Reduce product quality to increase margins. The "free shipping" retailer has a powerful incentive to reduce product quality. If he can get that ball joint in off-brand Chinese for $2 less, that's $2 more that he can apply toward your "free shipping." (To be clear, not pointing at V-C, but speaking generally.) What product are you really getting? Is it a generic "store brand" part? Does the retailer use meaningless terms like "German quality" or "OE quality" on generic no-name Chinese made parts?

4) Exclude heavier or bulkier items, resulting in orders that contain some "free shipping" items and some not ... and then don't give "free shipping" on their order since not everything qualified.

5) Dropship from wholesalers who offer the retailer highly discounted shipping. This is what a lot of general auto parts retailers do (as opposed to classic VW specialists) because the parts are often interchangeable. If someone orders a fuel pump for a 2018 Toyota, almost every wholesaler has the same one, and the retailer can dropship it to the customer from the closest warehouse to him. The retailer never even sees most of the parts he sells. This doesn't translate well to Bus or Vanagon parts because so few U.S. wholesalers carry the best quality parts. If you order brake shoes from me, I _could_ dropship cheap Chinese shoes from a dozen wholesalers' warehouses and they'll foot most of the shipping bill. But I won’t. Because here in my own warehouse, I stock way better quality Italian made brake shoes that I import myself. Do I start selling cheaper parts that I can dropship, or keep selling the good ones? If I'm shipping "free" I have a powerful incentive to sell the ones I can get dropshipped. Secondly, if I dropship many/most/all of my parts and never lay hands on them, I might easily miss quality or fit issues because I never saw the part. At the Depot, we do dropship when it makes sense; for example if you live in California, and we have a wholesaler in California who stocks the identical part we sell, we can get it to you faster. But the nature of Bus/Vanagon/Eurovan/Westy parts is that often the best ones aren't stocked by U.S. wholesalers, and we won't cut corners in order to cover "free" shipping.

6) Add surcharges (not unlike the "convenience fees" added by Ticketmaster or the utility companies). Take the "shipping insurance charge" now added by some retailers. Shipping insurance is very cheap, less than a penny on the dollar, which is why most companies just cover it. So why charge extra for it? Because you're making 50, 100, 500 percent profit on that surcharge, essentially funding some of your "free shipping" without actually calling it shipping. Sure the customer can often remove the surcharge (if they notice it; often it's added to their cart without them asking), but only with a warning that now if their order is lost or damaged they may have to wait weeks or months for a resolution. Isn't it my job as a retailer to get your order to you in one piece? Why should I make my problem your problem?

"Free Shipping" penalizes customers who need the parts faster, or live outside of the "free shipping" area. The "free" shipping only covers the cheapest/slowest method. What if you need the part sooner, or live outside of the continental U.S. where the offer applies? Now you still paid the padded "free shipping" prices (see above) AND still had to pay for shipping.

Higher Sales Tax: Another problem with building the shipping price into the product price is higher sales tax. In most states, shipping is not taxable ... IF it is listed separately. But if it's bundled into the total price, the entire total is taxable.

All of these are arguments for keeping it simple - just giving your customers the best price for the parts, and charging reasonable prices for shipping, rather than pretending that shipping is "free" when it really isn’t. Does this mean "free shipping" on auto parts can never benefit the customer? Sometimes it can. If you order heavy or bulky parts (that are not excluded from the policy) - and check branding/quality carefully if not confident of the vendor - you may find cases where the algorithm they used to keep it profitable didn't work to their advantage and they lost money on your order to your benefit. But it's kind of like playing blackjack at the casino. You will win on some individual hands, but averaged out, the House always wins. Otherwise they'd go out of business. Similarly, the auto parts retailer must find a way, using methods like the above, to ultimately make you pay for the shipping, or they cannot sustain it. You can play the game and see if you win, or just deal with a supplier who doesn't play games to begin with. The choice is yours.

So does that mean the Depot will never offer sitewide "free shipping?" Even after saying all this, I can't answer that. Will I be forced to go against what my gut tells me, and employ a marketing gimmick that I truly believe is not in my customers' best interests overall? If this is where the industry goes, eventually I may be forced to do the same to survive. If it happens, I will throw up in my mouth a little bit, just like I do when a part comes in that is lower quality than before but no one else makes it so I have no options. Ultimately my customers will decide with their wallets, one way or the other. Then again, it could be a moot point. Some retail industry experts say "free shipping" is a fad and its days are already numbered. Time will tell.

Meanwhile, as of today we did REDUCE shipping costs dramatically, by virtue of better deals negotiated with our shipping carriers, so while you won't get free shipping you will get cheaper shipping. And we are testing some new "Buy More, Save More" discounts. One is not as good as SAMBA members already get. As a SAMBA contributor, you already get 5% off orders over $50 (message me for the code if you don’t have it), whereas the new offer to the general public requires a $250 minimum. But the second offer is 10% off a $750 order, down from a previous threshold of $1000. These discounts apply to ALL items to ALL destinations, regardless of what they weigh or what shipping method you use, with the only exceptions being sale items (already reduced) and special-order or made-to-order items.

Ultimately, of course, it's your money and your call. Be an educated consumer. Compare the actual total delivered price, apples-to-apples (like quality) and do what makes sense for you.
_________________
- Ron Salmon
The Bus Depot
www.busdepot.com

[vanagonjr]

I just want to say thanks to both Mike & Ron for what you provide to our community. I buy from both of you and I have had at least one circumstance where each of your companies have gone beyond - even when it was my mistake.

Once I had a complete Subaru WRX intake and FI that Mike needed for a customer, but timing was really bad for me. Mike made it worth my effort!

And once when I was about to take a trip and needed a part at the last moment, I called the Bus Depot and explained the situation and they delivered.

Again - thanks to you both.

John
_________________
John - 86 Wolfsburg Westfalia "Weekender"
Flint reversed 1.8T W/Passat 5-Speed
LiMBO (late model bus club) www.limbobus.org
LiMBO is on Facebook too! https://www.facebook.com/groups/
FAQ thread: http://www.thesamba.com/vw/forum/viewtopic.php?t=525798

[djkeev]

Interesting replies!
Now we need Ken at VanAgain to chime in!

My unrealistic fantasy is that everyone pays the same rate.
If I ship a 2 lb package
If Amazon ships a 2 lb package,
If VanCafe ships a 2 lb package
If Old Navy ships a 2 lb package

We all pay the same rate to given postal zones.
Right now the stupid low negotiated bargain rates are actually being paid by me when I ship something.

I shipped a gifted used trailer hitch awhile back to Minnesota.
I had purchased it new using Amazons "free" shipping a few years back.
It cost me more to ship this used hitch than I paid for it delivered to me originally!
I've all but stopped sending gifts to my family. Shipping often doubles the cost of the gift.
_________________
Stop Dead Photo Links how to post photos

Ghia
http://www.thesamba.com/vw/forum/viewtopic.php?t=392473

Vanagon
http://www.thesamba.com/vw/forum/viewtopic.php?p=6315537#6315537

Beetle
https://www.thesamba.com/vw/forum/viewtopic.php?t=482968&highlight=74+super+vert