International parcel delivery - need help!

Doeboy

I'm at the point of no return in a new business venture. The final piece of the puzzle was shipping and I've hit a brick wall I'm struggling to get over. I desperately need help

I'm not going into to much detail here because my competition may well be reading this but My business involves sending products internationally.

My Product Price ranges between £12 and £30 with a total parcel weight of between 500g -2kg

My competitor is charging just over £3 to send a small parcel 500-750g to the United states. £5.50 to Australia and between £5-7 for the rest of the world.

I had assumed they had a high volume deal with Royal Mail who they state on their website is their delivery partner. RM have said to me today they wouldn't be able to deliver for that price at all and to get anywhere near it would need daft volumes of 100s of parcels per day. They have said he couldn't be using them.

I cannot find any delivery service that can get anywhere near that. This doesn't add up. The best Royal Mail could do with low volume was £9.30 to the usa. if I charge just£3 to compete with them then I would not only have to use all of my profit I would have to add another £1.

I'm stumped. Does anyone have any ideas how they could be doing this so cheap? I'm wondering if they are perhaps supplementing the £3 with 2 pounds of their own profit but even then that is almost half the price of normal tariff

Any ideas?

InsideInsurance

Same way that some people dont charge anything for world wide delivery, they are absorbing the delivery cost in the item price.

Is inevitably a balancing act between wanting low priced items which rank well in comparison sites etc but also having reasonably strong marketing message of free P&P and/ or avoiding annoying customer at the checkout stage with a high price P&P.

IronWolf

Maybe this competitor has storage abroad and ships items in bulk then dispatches locally? I recently bought something from a US site and it ended up being posted from Germany.

Doeboy

I'm confident it has to be one or the other. Either they ship large consignments to the States and ship national from there or they are absorbing the cost of shipping into the overall price they are charging, eitherway it must be taking almost all of their profit.

From speaking to RM they're adamant they can't get anywhere near the price these guys are shipping for. Even if my competitor were to absorb another £3 that's almost half the profit. To put it another way if one package got 'lost' then you'd have to ship another 5-6 to break even on that loss. There comes a point in business when cheap it too cheap but ofcourse that's the nature of retail when everyone offers the same goods. You're left with price and service as a differentiator.

Thanks for your input. I'll keep looking- where there's a will there's a way!

InsideInsurance

If you are that curious why not order from them, being sent to a friend or family member or such if needs be and see how they are sending it?

Perhaps they are shifting more volume than you realise enabling them to at least partially drive down both wholesale price and shipping. Certainly some businesses must be running on razor thin margins and rely on volume to make their profit.

Icequeen99

What II said - do you know anyone in the US? Could you order the item and have it delivered to them. That should confirm whether they are actually paying what they charge for the postage.

IQ

martindow

Icequeen99 wrote: »

What II said - do you know anyone in the US? Could you order the item and have it delivered to them. That should confirm whether they are actually paying what they charge for the postage.

IQ

You are unlikely to be able to see a delivery price printed on the shipping label. As has been said volume sellers can get heavily discounted rates.