The answer to how to compete with Amazon.com’s shipping prices is simple. Build the cost of shipping into your product pricing and offer “Free Shipping” along with expedited shipping options as additional expenses. Shipping is not Free, not even for Amazon so this is exactly what they are doing today which gives them a a leg up on their advertised prices.
Granted, Amazon sells many millions of products daily so it’s nearly impossible to compete with their total cost of a product (ie. product price + embedded shipping price), however – not everything sold on Amazon is sold or shipped by Amazon. And many products on Amazon must adhere to MAP (Minimal Advertised Price) pricing to avoid a monopoly on selling a given product. If you are able to find the right products that have MAP rules in place by the manufacturer (try to avoid distributors who take a cut and put you at a disadvantage at the start) you will have a fighting chance to compete with the likes of Amazon.
What is the major problem to solve when implementing Free Shipping? If you’re offering Free Shipping that means that the cost of product is the same no matter where you are shipping it to. If you are selling something that weighs 3lbs the cost of shipping can range from approximately $10-$30 depending if you are shipping it from New York to somewhere on the east cost or the west coast of the U.S. If the product costs less than $10 then guess what – you will be lucky to sell 1 product. However, if your product is closer to $100 then shipping starts to be manageable. Assuming that you sell a similar amount of products to every state equally – you could take the average shipping cost and offer the product at it’s original price + 1/2 maximum shipping cost.
Yes this is weird – when shipping something from New York to Florida for $100 you might earn $40 profit, while the same item shipped to California may only earn $25 profit can be very frustrating. The $15 difference comes from 1/2 maximum shipping (ie. 1/2 x $30 costs to ship to California). This all sounds complicated but our tests have increased our sales close to 50%. Think of shipping costs as a hidden cost – nobody like hidden costs and this is one way to minimize lost sales.
If you wan to offer International Shipping then follow us and look forward to an amazing solution that cost us nothing, yet allowed us get our products in the hands of our customers and all we needed to do is ship to a local address, therefore avoiding Customs and additional fees.