Today I’m answering a question from the Indie Retail facebook group (join here), about setting one of your most important terms and conditions: your carriage paid level.
This is from Lucy:
“I’m having a difficult time determining what my carriage paid level should be. I sell fair-trade tote bags and did some research with different carriers but, ultimately, I still don’t have the faintest idea of what would be a decent amount. I always think whatever amount I have in my head will be too high and scare buyers away. Any thoughts?”
Sorry. That was me slamming on the breaks.
Oh dear. I’m sure that mochaccino stain will come right out.
I’ve brought us to a shuddering standstill because, before we go any further, we need to talk about carriage paid. Starting with what, by the twelve moons of Grabthar, it actually is.
Thankfully, there’s a very simple answer.
“Carriage paid” means free shipping – as in the carriage of goods from your studio to our store is waived.
You see, when a retailer buys your work we usually have to shell out for the shipping costs too. We do not like to do this.
In the pantheon of things retailers hate, paying for shipping is right up there with some wazzock barrelling into the shop with a sloshing cup of coffee, a sticky toddler and a huge dog on a tiny leash, thirty seconds before closing time on Christmas Eve.
Paying for shipping is a total drag for shopkeepers. It feels like we’re throwing money away. Suppliers know this so they invented a solution.
Your carriage paid level is the amount a retailer has to spend for you to cover the shipping costs instead of them.
It’s basically a way of saying:
“Look, if you spend X on my stuff, I’ll take care of the delivery charges.”
Because we hate paying for shipping so much, this is of great interest to shopkeepers.
Along with your minimum order (which is the smallest amount a store has to spend if they want to do business with you,) it’s the first thing any potential stockist wants to know. And as you’ll see, if you set it in the right place, your carriage paid level can mean you receive bigger wholesale orders.
So, carriage paid = free shipping to retailers within your country.
International orders are a whole other kettle of ferrets. Okay?
Now that’s settled, let’s talk about how you actually figure it out. There are four rules of thumb.
1. Your carriage paid level should be significantly higher than your minimum order.
To retailers, free shipping is a huge, juicy, permanently available incentive. It encourages us to spend more money on your work because it’s a built-in special offer that we can always take advantage of.
Generally speaking, though, you shouldn’t make that too easy for us.
As we talked about a moment ago, your carriage paid level is way of smoothing the path for your retailers – you’re making an annoying-but-necessary cost disappear.
The cost is still there, though – it’s just that you’re paying for it instead of them. In return, therefore, it’s perfectly reasonable for you to ask for a bigger commitment from the store. If you’re shouldering the burden of delivery costs, then they have to order enough stuff to make it worth your while.
So if your minimum order is £100, you might be looking to set your carriage paid level in the region of, say, £200 or even £300.
2. Your carriage paid level should reflect the average wholesale price of your items.
If your items have an average wholesale price of £5, offering free shipping at £1000 is unlikely to win you many admirers. If I spent that much, I’d tie up a crazy amount of money in stock that won’t fit on my shelves, and I’d have to fill my house, garage and garden shed with your products just to reach it.
Indie retailers, who are often buying for only one or two outlets, may not be dizzy with excitement at that prospect.
The opposite also applies. If your ceramic vases have a wholesale price of £100, you probably don’t want to set your carriage paid level at £200
That would allow stores to get free shipping even if they only buy two items. A collection that small may not be enough to make an impact on the shop floor, and you’re stuck with the cost of shipping something valuable and fragile for not much of a return.
So consider how much a retailer would have to spend to get a comprehensive selection of your work, in reasonable but not overwhelming quantities, and use that figure as a guide.
3. Your carriage paid level should reflect your profit margin.
Your carriage paid level should allow you to absorb the cost of delivery without it cancelling out all your profit.
To work this out, pretend you’re a shopkeeper and make up some imaginary orders. Calculate the size, weight and number of boxes you’d require to ship that size of order, including the cost of any special packing materials that might be necessary.
Then shop around for a deal. Visit lots of carriers’ websites and find out how much delivery would be using a next day service, or a three day service, or whatever other options are appropriate.
Also look for solutions that might be hiding in plain sight. If you share a studio with another artist, for example, maybe you can snag a good shipping package together and split the cost?
Once you’ve done your homework, go back to your sums and find the sweet spot that allows you to make a healthy profit from the order, while still being able to cover the shipping.
4. Your carriage paid level shouldn’t make retailers faint or flee.
The final rule of thumb is to do with accessibility. Let me throw some figures at you. Among the big suppliers we work with at my store, £350 is a common carriage paid level for homeware.
£150 is a common carriage paid level for greetings cards. £300 is a common carriage paid level for jewellery. £500 is a common carriage paid level for clothing.
When first setting their carriage paid levels, I find artists tend to go either eye-wateringly high or way too low.
If you set your carriage paid level way too high, indie retailers simply won’t go for it and you might lose out on sales.
And if you set it too low, we might start to wonder whether you really know what you’re doing and you might also lose out on sales. As with so much in wholesale, setting your carriage paid level is a balancing act. You need to protect yourself while simultaneously keeping an eye on what works for your stockists.
One last thing to think about.
Your carriage paid level isn’t something to set and forget.
Revising your carriage paid level (and minimum order) from time to time is a smart idea. You can make permanent changes once a year, perhaps, or you can run occasional offers where shipping is free even for smaller orders for a limited time.
Carriage paid is a huge deal to retailers, in every sense, and it’s an important bargaining chip for suppliers.
Are you making the most of it?
PS – Your carriage paid level belongs on your line sheet or in your catalogue. And making changes to it is a lovely opportunity to snag some new orders. Find scripts for that here.
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