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Ask Mike - April 2008: Offsetting Delivery Costs     Posted by MikeP, 04 Apr 08 ,02:39pm     (8 Replies)

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MikeP

community guide
joined 09/04/07

A few of our sellers have asked about ways to offset the delivery and handling costs to their buyers.


How it works right now:

When a buyer chooses to purchase a piece of content we add two costs, like most e-commerce sites:



1. Delivery Cost - this covers the cost of sending the text message. This cost is not fixed. It varies depending on the buyers operator. Different operators around the world charge different delivery costs.

2. Handling Fee - this covers the cost of the transaction. Again this cost is not fixed and varies depending on the billing method the buyer chooses, billing to operator being the most expensive and PrePay being the cheapest.



A few sellers have suggested it might inspire more purchases if a buyer saw the total and final cost on the content details screen. That way there wouldn't be anything to add.



There are a number of ways we could go about this (thanks to Pixie and murals2go for these):



* Give the seller the option of taking a slightly smaller percentage of each sale to offset the cost of delivery and handling.

* Offset the cost of delivery & handling through targeted advertising on the site.

* The seller could opt to cover the cost of delivery and handling, perhaps via paypal in advance or by subtracting it from their total sales.



We'd love to hear your suggestions on this topic. Would you find it beneficial to your buyers have the final cost displayed at all times? What do you think of the suggestions above, or do you have a better one of your own? We're looking forward to hearing your suggestions.




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#1 Re: Ask Mike - April 2008: Offsetting Delivery Costs     04 Apr 08 ,05:43pm

Seller

Pixie

seller
joined 23/01/08

Hi Mike. Thanks for the discussion! I'd vote for the seller taking a slightly smaller percentage of each sale to offset the cost of delivery and handling. It would be something that happened in the moment of purchase, easier to keep track of, (from the seller's point of view, not sure from the site's point of view.) I don't what the process is for getting targeted advertising, how long it takes to do that, etc. If the percentage was just less for the seller, it seems like something that could be implemented soon if a decision were made to go that route. Also the advertising may make the site less appealing visually, plus encouraging people to click away from it. I really don't know since I haven't done any advertising on a site yet with all that analysis - just my guess as a user like everybody else who's been exposed to a lot of advertising on the internet. Thanks for asking! - Pixie


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#2 Re: Ask Mike - April 2008: Offsetting Delivery Costs     07 Apr 08 ,12:20pm

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MikeP

community guide
joined 09/04/07

Hi Pixie,
Yes I agree with you about the advertising. I don't think we would ever introduce a form of advertising that was too intrusive to the buying or selling experience - it would contradict some of our key values in creating the site.


There does seem to be an interest in having the final cost to the buyer displayed at all times, and a cut in percentage does seem to be the preferred implementation method. There is an issue around different delivery costs for different payment methods - paypal is more expensive than prepay, for example. Perhaps we could display the more expensive price, and say "save money with prepay" or something similar?


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#3 Re: Ask Mike - April 2008: Offsetting Delivery Costs     07 Apr 08 ,03:34pm

Seller

Pixie

seller
joined 23/01/08

Hi Mike. Thanks for the thoughtful reply! For me, I'd rather just have a set price and that's it. Since I'm selling everything for $0.99 USD, not a lot of money, I just think it would be clearer to people to say what the price is and leave it at that. What would happen if the delivery costs just came off the top of whatever was sold and the seller percentage, whatever it may be, was calculated after that? So sometimes the percentage of an item selling for 99 cents would be x percentage off 88 cents for prepay purchase and the same x percentage off 60 cents or whatever it may be after a PayPal purchase? What if prepay could be advertised as a faster, easier way to pay instead of a cheaper way? Or a way to give a voeveo gift card to people, or something like that? Or would it cover PayPal costs if the percentage were just changed to 50% off the item price instead of 70%? Thanks again! Pixie


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#4 Re: Ask Mike - April 2008: Offsetting Delivery Costs     08 Apr 08 ,11:43am

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MikeP

community guide
joined 09/04/07

Hi Pixie,
Yes that's a much better of dealing with the delivery cost than the way I suggested - have it subtracted from the actual price before the 70/30 split.

Only problem here would be with cheaper content where the delivery cost is comparable to the total content cost. For example, take your item of content Two Medicine Lake, East Glacier, Montana. This content costs $1.25NZD, with delivery by Paypal costing $0.86NZD. That would leave $0.39NZd to divide 70/30! However, I think we could get around this by introducing a higher minimum price for sellers who have opted to absorb the delivery costs, to make sure that they receive a more substantial cut of the overall price. Or perhaps an extra field that automatically adds delivery costs when the seller enters their proposed price, so they can get an idea what the final price and cut will be.


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#5 Re: Ask Mike - April 2008: Offsetting Delivery Costs     08 Apr 08 ,01:59pm

Seller

Pixie

seller
joined 23/01/08

Hi Mike. Thanks for the reply! I'm not sure why Prepay makes costs cheaper. Noticed that you fund Prepay with $5 minimum via Paypal. Don't know if that's a minimum to make things cheaper or what, to pay that way. Q?: Whatever it is that makes Prepay cheaper even though you fund Prepay with Paypal, what if there was one "behind the scenes" Prepay account that all sales from everyone was funneled through whether paid for by Paypal, credit card, whatever and then the actual sale was paid through the single generic Prepay end to wherever it gets paid for delivery? Would that cut down on the Paypal charges that are higher if you fund a purchase directly through Paypal instead of intermediately by funding Prepay first with Paypal and then paying with Prepay? Whatever the costs are, hopefully closer to the cheaper Prepay way than the more expensive direct Paypal way, then that could be taken off the top and the percentage split after that? Of course don't know if any of that would be possible, but it seems like it would be good to take advantage of the cheaper aspects of Prepay delivery if you could if you fund Prepay with Paypal anyway. Again, the major part of what I don't know (which is a lot!) is why funding Prepay with Paypal doesn't incur the same higher fees that paying directly with Paypal does. Thanks again! Pixie


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#6 Re: Ask Mike - April 2008: Offsetting Delivery Costs     08 Apr 08 ,02:14pm

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MikeP

community guide
joined 09/04/07

Hi Pixie,
The higher charge from Paypal is to cover the fees they charge for transactions. This is also the reason for the minimum Prepay top-up amount through Paypal. So unfortunately theres no way around these fees - Paypal is the most secure and accepted payment method on the net, so all of our credit card payments go through them. Prepay is cheaper after the initial top up - as there is no third party, delivery costs are at a minimum - but you still have to go through the initial Paypal topup process, and the associated fees that Paypal charge.



We do advertise Prepay as the simplest, quickest and cheapest purchase method, however. We've recently added a Quickpay function that lets you skip most of the cart process if you've got credit in your Prepay account.



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#7 Re: Ask Mike - April 2008: Offsetting Delivery Costs     08 Apr 08 ,03:16pm

Seller

Pixie

seller
joined 23/01/08

Thanks again Mike! I'm all out of ideas now and look forward to whatever is decided. I just hope I can keep my content at 0.99 as a final price and if it ultimately comes out to 70% of $0.39 NZd or about 22 cents USD, then I guess that's what it is. Hopefully people will pay with Prepay and not Paypal! Because of so much free content of all types available, iTunes setting the $0.99 USD standard of what people are willing and used to paying for a download, I really can't see charging more than that for a wallpaper or ringtone - even screensaver or video. Games are a different story in terms of pricing, but I don't have any experience with games. Thanks again! Pixie


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#8 Re: Ask Mike - April 2008: Offsetting Delivery Costs     08 Apr 08 ,03:27pm

Community Guide

MikeP

community guide
joined 09/04/07

Thanks for that Pixie - your ideas have been really useful. We'll be having a long think about how were going to implement this one in the future.

Anyone else have any thoughts on this subject?


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