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That is a bad pricing strategy. Shipping price doesn't need to be based on actual costs, it could be based on value. Or it could be averaged. Whichever way it'

by bambax 10y ago

That is a bad pricing strategy. Shipping price doesn't need to be based on actual costs, it could be based on value. Or it could be averaged. Whichever way it's calculated, it needs to be based on something the customer cares about. What the customer cares about is shipping time, and maybe packaging / reputation of carrier. What the customer ABSOLUTELY DOES NOT CARE ABOUT is where your warehouse is located.

dawnerd 10y ago
I care where the warehouse is located in a lot of cases. If something ships from a location near me I know I'm getting it within a day. If something ships from the east coast it's going to be a while unless it's via air.
- vidarh 10y ago
  So what you care about is shipping time, and location is a proxy for that if you don't have more trustworthy information.
  - dawnerd 10y ago
    Well yeah, but if the warehouse is on the other side of the country there's a higher chance for delays, especially winter time where bad weather can shut down airports and truck routes. I know I'm in the minority though. End of the day, as long as the item is delivered by the time they promise it doesn't ultimately matter I guess.
saosebastiao 10y ago
For a well capitalized company that can afford to take well-researched risks, you're absolutely right. But shipping costs for some retailers can be $1 at the first percentile and >$100 as low as the 80th percentile. Any shipping pricing strategy that is purely policy or rule based has to have a very well analyzed foundation to it, or you risk wiping out your profitability with even a handful of poorly predicted purchases. Smaller retailers have a hard enough time pricing their products, let alone pricing their products under consideration of all of the possible shipping costs they could possibly face. So in the end they just defer on shipping price by passing it off to the customer.

by bambax 10y ago

dawnerd 10y ago

I care where the warehouse is located in a lot of cases. If something ships from a location near me I know I'm getting it within a day. If something ships from the east coast it's going to be a while unless it's via air.

vidarh 10y ago
So what you care about is shipping time, and location is a proxy for that if you don't have more trustworthy information.
- dawnerd 10y ago
  Well yeah, but if the warehouse is on the other side of the country there's a higher chance for delays, especially winter time where bad weather can shut down airports and truck routes. I know I'm in the minority though. End of the day, as long as the item is delivered by the time they promise it doesn't ultimately matter I guess.

saosebastiao 10y ago

For a well capitalized company that can afford to take well-researched risks, you're absolutely right. But shipping costs for some retailers can be $1 at the first percentile and >$100 as low as the 80th percentile. Any shipping pricing strategy that is purely policy or rule based has to have a very well analyzed foundation to it, or you risk wiping out your profitability with even a handful of poorly predicted purchases. Smaller retailers have a hard enough time pricing their products, let alone pricing their products under consideration of all of the possible shipping costs they could possibly face. So in the end they just defer on shipping price by passing it off to the customer.