Honesty as the Best Shipping Policy

Challenge: How to ship low-cost, high-weight items from the U.S. Northeast to customers all over the country without having customers balk at spending more on shipping than they did on the products themselves.

Solution: Charge customers only what you pay for the actual shipping and handling charges, and make the ordering process transparent enough so customers know it.

The Baker’s Catalogue, based in Norwich, VT, sells flour, yeast, baking utensils, cookbooks, salts, sugars and other baking essentials. Many of its products are in lower price points, such as five-pound bags of bread flour for $3.50 each. Undoubtedly, telling a customer who wants to buy a pound of wheat gluten for $3.95 that you’re going to charge a $10 shipping fee is bound to make him or her think twice about the purchase.

To combat this, The Baker’s Catalogue (owned by 212-year-old King Arthur Flour Co.) charges customers close to what it actually costs to package and ship the product, says P.J. Hamel, the catalog’s senior editor. She offers an example from the company’s Web site: Once the shopping cart is filled, customers can click on a link to see shipping charges for that particular order from major carriers such as FedEx and the U.S. Postal Service. The charges are based on the state to which the package will be sent and the order’s weight. Here’s on example of how the catalog advises Web customers on shipping charges:

Your order is presently under the weight limit of your shipping charge. You may order 3 pounds of additional merchandise while still paying the same shipping charge of $12.34.

The site then offers a link that takes customers to products they can add to their orders without additional shipping charges being tacked on. Result: The cataloger actually has increased its Web-generated average order values by several dollars.

To calculate shipping and packaging charges, the company uses proprietary programs that calculate net freight costs for each carrier, plus a few dollars to cover packaging and additional freight charges (e.g., rural upcharges, address corrections).

According to Hamel, the charges are seasonally monitored to ensure that the freight income the catalog collects from customers is close to its actual outbound shipping and packaging expenses. Catalog officials spot-check sample orders to ensure they aren’t over-charging East Coast customers and under-charging West Coast customers.

“When we started the catalog, we were all neophytes,” says Hamel. “Like most catalogers, we based our shipping charges on order price. But since we were shipping a lot of low-cost, high-weight items, it no longer made sense to charge customers shipping fees based on product price. Customers on the East Coast were asking why our charges were so high. So we decided to go the route we’ve always gone as a business: Tell the truth. Somehow it always seems to work.”