Pricing vs Shipping

[rpierce000]

Our first shipment is on its way from the wholesalers to my shipper in Japan.

 

We now face a dilemma that I would like you, as a potential customer, to weigh in on.

 

 

We have two choices as to how to price our items against the competition:

 

1) Try to educate them that while our price on something may be slightly higher than theirs, our lowered and speedier shipping makes up for it.

2) Lower our prices and add a per item handling fee to cover it in shipping.

 

For example:

 

A piece of track will sell from our store for $11 and $3 shipping, a total of $14. Our competitor is selling it for $9.80 and $6.80 shipping, a total of $16.80. We are distinctly cheaper, but until they look at shipping, we seem higher. If we lower our price to $9.80 and raise shipping to $4.20, we get the same $14, but match the price.

 

We can try to educate the customers with online pages, information in the items, etc. OR take the shipping route.  The problem with the shipping route is that it breaks down on more expensive, but light items.

 

For example:

 

An engine will sell from our store for $85.99 and $4 shipping, a total of $89.99. Our competitor is selling it for $78.00 and $15 shipping, a total of $93.00. We are distinctly cheaper, but until they look at shipping, we seem higher. If we lower our price to $78.00 and raise shipping to $11.99, we get the same $89.99, but match the price.

 

The problem there is that when you do this for hundreds of dollars, the shipping prices get ridiculous. If I sell five engines for $400, but charge $60 in shipping people will complain.

 

How do you shop? What would be the best way to show that we are at a lower cost in total, especially as you buy more.

 

Thank you in advance for your input, you guys have been invaluable!

[Guest ___]

Price isn't always everything either. Example, I am willing to pay more from HobbySearch than HobbyWalrus for example. HS may charge me $5 more for an engine, and $10 more for EMS. HobbyWalrus may charge me $10 for EMS, but HS charges me more becasue they use a heavier/sturdier box, and use a lot more filling/padding than HobbyWalrus. To me, I'll pay more in shipping to ensure better packing. This is why I would use HS as opposed to let's say PlazaJapan (Plaza is not HobbyWalrus, I only use PJ here becasue of issues I have had with their packout process) where several orders have arrived damaged becasue packing was well insufficient for travel conditions.

[Guest Closed Account 1]

Keep using Feebay to gain exposure in your first year.  Create your own site using ZenCart so that you can afford to be competitive and eat daily.

 

Get a UPS account based on your shipping volumes. The more you ship the cheaper it is. Ship USPS for anything that can fit like small parts in the standard prioity VHS sized little boxes.. That's the cheapest way.

 

Handling fees sound like tax to buyers. Pad just enough to cover credit card fees in shipping. Credit card fees are figured into M.A.P.

 

I'd be happy to patronize your store since I usually buy from Japan. I check several sites before I buy.

[Hobby Dreamer]

Short answer: educate your customer...

 

When we shop we often look at item prices and compare so no one will see your shipping, because they will not get to that stage. This is especially true for bulk items such as track. If you sell at a dollar more for a $10 item and one wants 50 pieces they will see $50 more in final cost from you...

 

As stated, a lot is to be said for communication, speed of shipment, packaging etc..

[cteno4]

shipping is always tough as you get into sooo many if its tuesday situations. hard to get a system smart enough to always make a good guess at shipping that does not overcharge the buyer but always covers your shipping costs.

 

that being said if you think you have a good system for how you will charge for shipping and you think its low, then i would really make that a point on your website. perhaps a small sidebar piece that touts low shipping charges with a link to a page explaining your shipping and comparing it to what the potential cost would be from overseas.

 

also the point that they are buying something that is already been imported to the us and you are shipping directly from you in the US to them will also probably get a group of folks that clearly want to buy american for both philosophical reasons and/or that they fear ordering from offshore (security, shipping issues etc even though those have never been an issue for myself and the vast majority of folks ordering from japan). also giving them a fair price (at times us distributors of japanese trains can really rip off the newbies who dont know what a reasonable prices should be) will also make you look really good and go a long way to folks looking to you when buying.

 

i really think the newbie market is probably the most profitable to focus on as you can focus on a more limited stock of basic stuff most newbies want/need and they are the ones that will be much more comfortable starting out buying from the US instead of from japan. also if you can help newbies get started (ie suggestions on track/sets, basic train sets, instructions, how tos, etc) you will also become a trusted source for them as they mature in the hobby and both spread the word to others and always check your availability/prices first before looking to japan as their interests/purchases get more esoteric and hard for you always stock.

 

do you all have a website going yet? best of luck!

 

cheers

 

jeff

[rpierce000]

The site is "up" but far from finished. We are still loading descriptions and images. All of the items are there, but many are missing the descriptions and images so we are not publicizing it yet. You are welcome to look around, I always love feedback.

www.bttrains.com is what we are using as the primary address for now, but we have ten registered URLs that are more like what we sell. We have not yet decided how we will use those, but I think that JAPANESEMODELTRAINS.COM,JAPANESENSCALE.COM,

JAPANESENSCALEMODELS.COM, JAPANESENSCALESHOP.COM, JAPANESENSCALESTORE.COM, and  JAPANESENSCALETRAINS.COM will all get some publicity as well due to their description of what we do. They all lead to bttrains.com.

 

Newbies are a great market IF you can find them. They seem to be very disconnected so we are going to focus on eBay to do that and the main site, where it is cheaper, to sell to the mature market.

 

We are still waiting for our first major stocking order, so please do NOT judge what we have by what is up. We have 200+ pieces of Fine Track and over 70 GreenMax buildings/scenery bits in the first order. I also have a bunch of Kato and Tomix parts coming, pantographs, couplers and motors. I want to be sure that people can get the little bits they need as well. Eventually we will add service of units to the mix, but I want to get the parts department up and running first.

 

I need to assemble our second order soon. Besides more parts what would you like to see in the store? Trains? Track? Scenery? Buildings? Godzilla robots in N that can walk your cities? (Boy, that would be cool!)

[Guest JRF-1935]

Bob

  I have been watching your site and ebay auctions, and what you are buying and relisting, and have you bookmarked you as a favorite seller.  I'm not interested in the MTL or other US products you have listed, but they seem to be fair prices.  Hope you can make some money on these to stay afloat until your venture comes to fruition.  I beleive you are going about this the right way, and the cost to shipping ratio is a good plan.  I see your logic.  I, like the other members of this forum, are always looking for a "good deal" when it comes to buying Japanese trains, and like everyone else - shop around for the best bargain.  As mentioned before, you should drop the "rare" in your listings, unless it is rare.  Maybe you should also experiment with starting an item out at $0.01 or $0.99 to incourage bidding.  Ebayers "love" to bid and I've seen some - no - many items go for ridiculous prices this way.  The buy it now price turns a lot of bidders off  unless it is a "super" deal.  Just a thought.  Good Luck and I hope you can make this work. 

Rich C

[rpierce000]

Thank you for making me a "favorite seller".

 

We mark things as rare if they are sold out on Hobby Search. I realize this is a poor standard, I will work on a better one. A few things, like the MicroAce transparent steamer, are truly rare and we will continue to sell those as such.

 

Auction listings are MUCH more expensive than Buy it now listings, to the lister, and that cost gets passed on to the buyer somewhere or the seller goes out of business. eBay is changing the fee structure in July to charge sellers fees on shipping as well. This is supposed to eliminate dodgers who sell things for $.01 and $10 in shipping. Today they pay little or nothing in eBay fees and eBay wants to snare them. Unfortunately for sellers that do NOT make money on shipping, we will now have to add 16% to those fees to break even. (Yes on smaller items, under $50, the eBay and PayPal fees run 15-16%!)

 

We have been running with the US items because they make us some money. I suspect that as the Japanese business grows we will taper that off except for a few great vendors like InterMountain and Fox Valley.

 

The biggest decision we have to make after pricing is track. We CAN carry Kato track, but the price wars make it impossible to make much money on. We can carry it as a convenience to our customers if they want it. Do you want it?

[Guest JRF-1935]

Your welcome.  I'm looking forward to doing business with you.

  I agree the Kato "Ghost' steamer is a rare item.  I don't sell on ebay so I didn't know about the listing fees.  Is it legal to charge fee's on shipping?  Seems to me sellers on ebay are getting screwed by the corporate greed.

  15 to 16% plus whatever commission to ebay for an item sold - How can you make a profit as an honest seller?  Paypal is owned by ebay and they make even more there.  2.5% on currency conversion buying overseas.

  Maybe you should forget ebay for selling, except American items where you can make a profit, and consider opening your own store on the internet to avoid all those fees for the Japanese items only.  Might be more profitable in the long run.  I know I am always looking for a new American store to buy from to save on fees, like Model Train Stuff owned by MB Klein, who has very good prices.

  Kato track right now is as you say, a hard item to make a profit on, as ebay is flooded with it.  I personally don't need any track, but I will put in a minimum bid on some to see if I get lucky.

Rich C

 

 

[cteno4]

i was tempted by the transparent ghost loco! i have a developer newton (ipad's grandfather for you youngins) thats transparent like this and it was really fun!

 

yes ebay costs you money to use, but they are doing a whole lot of lifting for folks. creating and managing a web site is quite a bit of work as well as doing secure transactions, handling credit cards, etc. Also it does a whole lot of marketing for you compared to a web site just floating out there. while for volume sales it starts to take a lot of margin, for few small sales you can get killed with the costs or rolling your own web sites. while many have the talents and skills to roll their own, many dont and even those that do you do have to think about what the investment of your own time is worth in the ROI. like any company, ebay is trying to squeeze out as much profit as the market will bare.

 

paypal fees are pretty reasonable for a merchant account (starting at 2.9%), also no monthly charges (many merchant accounts will suck you dry this way). dealing with ccs directly is best not done if you can help it. some merchant accounts want to rip you a new one if they deal with the secure transactions for you.

 

i agree ebay charging a fee on shipping is not good, but they did it to recoup from those sellers that were selling for a $25 item for $5 and charging $25 in shipping fees when it should have been $5 -- in the old days they did not pay ebay fees on the shipping so they could screw ebay out of a lot of the actual selling cost for fee calculation. i agree this then means everyone then hikes their shipping costs 10% to cover this ebay fee, but its almost impossible for ebay to police the guys trying to get around this with the huge shipping fees (which seems to be slowly going away now).

 

cheers

 

jeff

[rpierce000]

Actually it is amazing how LITTLE a merchant account costs. Try Intuit, they are doing mine. No monthly fee and a lower percentage than PayPal. Having said that, we have only ever processed ONE card and the rest is all PayPal. I guess people vote with their wallets.

 

Sites are a PITA, I agree. eBay is no picnic either, nor is Amazon. What both bring you is traffic and that is hard to put a price on.

 

Thanks for all the input, please keep it coming.

[cteno4]

bob,

 

yes if you shop around merchant accounts can be really reasonable, but many of the older ones folks already have or if they go to some of the 'package' deals get into lots of monthly fees that end up eating you up from the inside. even an accountant friend with a side business recently discovered how many fees they were adding to his old account (bit embarrassing it caught him not keeping an eye on it!)

 

lots of good cheap services out there, just have to find the one that suits your needs. paypal has been really great for small non profits i deal with a lot as its dirt simple, reasonable rates for small volumes and simple checkout basket free that takes about 2 minutes to implement w/ nothing on your server so all the secure stuff is on their end.

 

it sounds like you guys are well set up in keeping the overhead low and thats the best for all around to keep your prices low and your profits as high as possible to make this a go for you guys.

 

hopefully the site will get under control as you grow it and find the systems and processes that work best for your business. usually finds a happy medium, but keep an eye on the time put in there if you are doing it yourself, hidden killer in many small businesses with things like that 'off the books' in the profit analysis.

 

looking forward to the business growing!

 

cheers

 

jeff