Home – New Forums Logistics Shipping cost for wholesale & minimum order quantity

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  • #979382
    EmbalmSkincare
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    Good morning everyone,

    I’m currently in the process of setting my website up for wholesale additionally to the regular online shop and trying to work out how to charge the retailers for shipping.

    So far, I have not dealed with a retailer and don’t know whether they’d expect free shipping or not. One thing I couldn’t afford.

    I will need to use Australia Post for the time being. Could someone please tell me if I should charge a flat fee and if so, how much?

    Also, I need to work out my minimum order quantity. I currently have a range of 5 products and wanted to make the minimum order quantity 1 unit (box of 10) of each product. But I think that’s a bit too much.
    Could someone please tell me what you think about minimum order quantity?

    Should I set a minimum order quantity of 3 units?

    Thank you in advance!

    Kind regards,
    Mel

    #1113905
    createdevelop
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    For shipping costs, one thing we do know is that free shipping works very well as a motivator and as a reason that people will buy online. It really comes down to what your competitors are offering, as people will price compare frequently.

    If you do have to charge for shipping, a flat fee works best if you have minimum order quantities. Otherwise, as long as you are up front about your shipping pricing you should be ok.

    Obviously the minimum quantities will depend on the value of your items, and what the industry average is. Having minimums will deter the tire kickers, or the smaller (more painful?) operations.

    #1113906
    Anonymous
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    Hi Mel,

    What kind of retailers are you thinking of?

    I’m not sure about other channels, but in my experience in health food and pharmacy wholesaling, an opening order of 50 skincare products PLUS freight charges would be far too much risk for most retailers to consider – especially from an unknown brand. (If you go into a local retailer near you – even a very large one, you will see that they are rarely carrying that much stock on their shelves, even of the well-known and popular brands).

    I recommend you look at an opening order that is a mixed buy, probably including two of each product (or two of most, but four of the most popular), and get it packaged up in an eye-catching but compact counter unit.

    You are right to be concerned about the freight charge. You may find that some retailers won’t order from you because of it, and others will increase the selling price of your products to cover it. It would be best to do some research in the specific retail channel you’re considering to determine what the industry expectations are and aim to meet them.

    Another option you could consider is finding a distribution agency that retailers in your industry already buy from, and trying to get them to range the product. They will eat into your profit margins, but should also increase the number of units you sell (assuming you give them the marketing support they need). In HF and pharmacy many retailers prefer to buy their stocks of the smaller ranges from the distributors as it removes the freight issue for them.

    Hope that helps,
    Jayne

    #1113907
    MyGreatIdea
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    Hi Mel

    Another incentive to offer retailers is an open return for first orders.

    Since your product is new and they will (rightfully) be wary of overstocking, offer them a return and refund of unsold stock within the first say month, three months, any term you choose, of their first order. But first order only. And only use it if they seem to be baulking at the fact that it’s a new product.

    This will give them a safety net. But you will need to ensure that your marketing will drive customers to their store. Chances are, if you can send enough customers to them, they won’t use the offer of return anyway, even if they do have stock left.

    Just a thought

    Wendy :)

    #1113908
    EmbalmSkincare
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    Thanks so much for your responses!
    Those are great suggestions!

    I never thought of offering a “mixed box of products” but that’s now definitely going up on my website as well.

    As for the shipping, I think I will calculate the cost for the minimum order quantity and use this as a flat fee.

    As for payment terms, I guess it probably won’t work to have the payment due on order???

    Gosh, I’m thinking not to bother for a little while with the wholesale, there’s so much more to consider.

    Thanks again!

    Regards,
    Mel

    #1113909
    daydreamer
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    As mentioned by others, distributors/retailers are unlikely to pay the shipping costs, especially if you are a new, untried brand/product.

    Also, they are likely to expect lots of free samples that they can hand out, so you better have sample sizes of your product. Or offer your full sized product for free.

    Your product is quite expensive, so it is a big leap of faith for a retailer or customer to fork out the money to try it, unless it is comes from a famous or well respected company, or it is recommend by someone trusted, eg. close friends or even celebrities, etc.

    #1113910
    crikeyinternet
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    Hi Mel

    From a technical/website development point of view, you could be using the Auspost PAC API to determine the shipping cost charged buy Auspost, in real time – http://auspost.com.au/devcentre/pacpcs.asp .

    A lot of open source shopping carts will already have a module available to plug this in, you will need to however specify weights for your products for it to work.

    #1113911
    EmbalmSkincare
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    Hi Crikey,

    I have decided to use a flat fee – an average of best and worst case – for the time being.

    Thank you though! I will have a look at the wordpress plugin.

    Regards,
    Mel

    #1113912
    Tall Trees Eco Store
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    Fingerfood, post: 127992 wrote:
    I have decided to use a flat fee – an average of best and worst case – for the time being.

    Hi Fingerfood,

    I buy skin care and other products for my online store and have always paid freight. Most wholesalers will have a min opening order of say $400 (ex gst/freight) with a min re-order amount of say $200 (ex gst/freight). However a majority of the brands I buy are established and trusted. I research the products first looking at customer reviews and other stockists. The only time I’ll buy a new brand is if I’ve been to a trade show and found something I like. Perhaps this is something you could do to gain wholesale interest?

    To put postage/freight costs into perspective. I just purchased a mix buy of 40 bottles of skin care each with a weight of 50 to 150ml and the postage (registered Aust. Post) was $22.50. Personally I think $12 flat fee is too expensive. Generally anything up to a kilogram will be around the $6.60 mark.

    Honestly I think free shipping is the way to go. It’s definitely a great way of getting customers when you’re a startup!

    #1113913
    Shoes2u
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    Hi Fingerfood
    I buy shoes among other things wholesale from a number of suppliers. A lot of them tend to offer free shipping either over a certain monetary amount or set amount of pairs -24 in one case.
    My pet hate is suppliers I have to do payment upfront and pay freight I try and avoid them. So on the flip side of that an offer with pay now and get free shipping or a discount always makes me get my credit card out.
    Shona

    #1113914
    tkc2012
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    This is a great thread. Thanks so much guys. I am in the process of developing a range of products I hope to see stocked in health food stores, green retailers, etc. The information shared here has answered quite a few of my questions.

    #1113915
    EmbalmSkincare
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    Hi everyone,

    Thanks so much for your valuable replies.
    It will definitely help me with my wholesale set up.

    Kind regards,
    Mel

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