SmugMug Shipping Charges Versus Bay Photo Shipping Charges

Sam · January 3, 2016

AceCo55 · January 3, 2016

Wow - I can't imagine how much time you have spent nutting all this out, but I thank you for the time and effort.

I can't tell you how much your post has gladdened my heart ... it really has made my day!
You have taken the passion and emotion out of what was a very contentious argument, done the background legwork and presented the results.

I have no dog in this fight as Smugmug has no print facility in Australia and the people who would buy a print from me are simply not going to order from a US based print store. Just the way it is and I self-fufill the very odd order I get for prints.

Just wanted to say I am totally impressed with your reaction to the issue, ban and return.
You are clearly a man of some considerable character.
Top marks Sam.

leftquark · January 4, 2016

Sam,
Happy new year and bless your heart! You and I have both taken some time to do similar work. I went through our November orders fulfilled by Bay Photo and took a look at 100 orders. You'd be surprised how long it can take to enter the order into Bay ROES, get the total cost and shipping cost, and then compare it to SmugMug's costs (took about a week to get the data on the 100 orders). First, I took 50 orders at random and compared the SmugMug price, the SmugMug shipping, the Bay Photo price, and the Bay Photo shipping. Next, I took a look at the 50 highest priced orders. My theory was that shipping charges may vary quite differently between these high priced wall art items and the more "normal" sample that came from my random sample of 50. Please note that the total population size is much larger than this, so to do something statistically significant, I need to go through many more orders (but this does give us a snap shot).

A few things of note:
- I used Bay ROES to compare pricing. ROES should always output a better price than their new online ordering system, which gives color corrected prices as well as some stranger shipping prices (as you noted).
- When Color Correction was turned ON, I used Bay ROES normal. When Color Correction was turned OFF, I used Bay ROES economy.
- I added the $6 "Drop-Ship" rate to all of Bay's orders, since every one of these orders was sent directly to the client and not to the photographer, constituting a "Drop-Ship" charge. This Drop-Ship charge often caused Bay Photo's "Free Shipping" (+$6) to come out higher than SmugMug's $4.99 cheapest shipping.

Take-aways:
- On average, over these 100 orders, SmugMug was 2% cheaper than ordering through Bay Photo.
- When looking at the 50 random orders, SmugMug was as high as 10% cheaper.
- When looking at the 50 highest priced orders, Bay Photo's shipping is significantly cheaper (they'll ship 6 huge canvas prints for $1.50 + $6!!!!) and causes the drop from 10% cheaper to 2% cheaper.
- SmugMug prices, per product, match Bay on some, are cheaper on some, and more expensive on some. For most paper prints we're the same. For Canvas Prints, for example, we can be much cheaper. On some MetalPrints, it's cheaper at Bay.

One day I'll keep going through more orders and see how the average plays out, but I thought those were some interesting numbers to see from this small sample size.

In terms of what can be done to offset your own clients shipping charts ... it's a bit of a chicken and the egg situation. On one hand, Amazon is training us to expect cheap shipping and we get turned away when there's high shipping. But we also get turned away when the price of goods is more expensive and go somewhere else. Studies show that the further into the shopping cart a customer gets, the more likely they are to complete the order. That's one reason why shipping charges are almost always at the end of the shopping cart. We try to keep our prices low so that people are more likely to add the product to the cart, and thus more likely to check out and give you a sale.

For example, lets review 2 options:
Option 1 (High Price of Product, Cheap Shipping): item costs $65. Shipping is $5.
Option 2 (Lower Cost of Product, More Expensive Shipping): item costs $40. Shipping is $30

First, a client comes to your SmugMug site and is more likely to add the item to the cart when it's $40 than when it's $65. There is some worry that the shipping price of $30 drives them away, though, in the end it's the same cost.
However, if the # of prints increases, we start to see where Option 2 becomes the clear winning. If the client purchases 3 prints, Option #1 costs them $200 while Option #2 only costs them $150. In fact, the client could get a 4th product + shipping and it would still only be $190 ($10 cheaper than option 1, with an extra item!).

This is a bit of an extreme example, but it does illustrate what happens.

One could offer coupons to all of your customers, to offset some of the shipping charge, however it's a little difficult to know what product they're going to order ahead of time. For example, if they're ordering 4x6's, you might only want to offer them a $5 coupon, but if they're ordering a 20x30 MetalPrint, the coupon would need to be larger.

Hope this information has added onto Sam's findings and is useful!

Sam · January 4, 2016

Arron,

First I would like to comment on your photography. Very nice work. Also I didn't know you lived near me.

That said, I wish to reiterate, I have zero desire to resurrect a contentious thread, but think I see an opportunity to perhaps engage Smugmug with regards to issues their clients are experiencing and find a solution that works for all.

PLEASE>>>>>>>>> don't take this the wrong way!!!!
One comment: Studies show that the further into the shopping cart a customer gets, the more likely they are to complete the order. That's one reason why shipping charges are almost always at the end of the shopping cart. We try to keep our prices low so that people are more likely to add the product to the cart, and thus more likely to check out and give you a sale.

This type of thinking while containing more truth than one might like still is objectionable to me. It is a little slight of hand, and while under this scenario might get that one order what about long term customer satisfaction and building a continuing relationship?

The goal of course is to do both.

Now I want you to take off your SmugMug hat and put on your Arron Meyers Photography hat.

The comment of cheaper product pricing and higher shipping charges do not balance out and are pretty much meaningless when applied to your prints and products, and your photography business.

As an example If one where to order a 24X36 canvas print from your website the cost to your client would be $266.00 (to cheap, my opinion) but the shipping is $30.99.

Now if you were to order this same print from Bay ROSE and ship it to your client your client would see 24X36 Canvas print $266.00 shipping $6.00.

Small differences in the cost of the print won't really affect your selling price nor would your client recognize a lower print price to offset the shipping charges. All they see is the $30.99 shipping.

As we both discovered the costs between ordering from SmugMug or buying from Bay ROSE will be pretty close, but that statement only applies to the SmugMug business owner ordering for themselves. It goes out the window when your clients place an order through SmugMug shopping cart.

They only see the price your charging which is (darn well should be) substantially higher than the your cost.

While you as a SmugMug business owner may see the pricing as a push, your clients most assuredly will not.

Do you see my point here?

How hard would it be for SmugMug to offer an option to business users that would alloy them to offset the shipping charges on the back end and be transparent to our clients?

Sam

leftquark · January 4, 2016

Sam wrote: »

PLEASE>>>>>>>>> don't take this the wrong way!!!!
One comment: Studies show that the further into the shopping cart a customer gets, the more likely they are to complete the order. That's one reason why shipping charges are almost always at the end of the shopping cart. We try to keep our prices low so that people are more likely to add the product to the cart, and thus more likely to check out and give you a sale.

This type of thinking while containing more truth than one might like still is objectionable to me. It is a little slight of hand, and while under this scenario might get that one order what about long term customer satisfaction and building a continuing relationship?

The goal of course is to do both.

Not taken the wrong way at all.

This is the hard part about trying to run an online business, it's very impersonal and hard to build the long continuing relationship. When someone comes from wherever they are on the internet to their site, they're completely anonymous, you (and we) don't know if they're going to come back ever again. There's no way to know if this is a 1 time transaction or has the potential to be continuing. Cheap shipping is one of the reasons why I keep coming back to Amazon, so yes, having both cheap prices and cheap shipping would be the ideal scenario. Companies that offer cheap shipping, however, have an advantage: they have both large volumes and a large number of customers. They can offset the cost of shipping because they're banking on a continuing relationship or a large number of sales to cover the shipping charge (or large margin to be able to do it). Since we don't have those large margins, and we don't know if we'll have the continued relationship/large # of clients, it becomes harder (note: not impossible, just harder).

Sorry, I got side-tracked. My point here was to address some peoples suggestion of "raise the cost of the print, so it does have enough margin to cover shipping." We don't want to do that because of the studies that show cheaper prices initially are beneficial. But you are correct, the goal would be to have both cheap initial prices and cheap shipping.

Sam wrote: »

They only see the price your charging which is (darn well should be) substantially higher than the your cost.

While you as a SmugMug business owner may see the pricing as a push, your clients most assuredly will not.

Do you see my point here?

That is a good point, which I do understand, and we haven't addressed yet. Yes, you are correct, the customer is eating the extra cost here. I'll address it in a bit more detail below, since your question starts to dive into what is involved....

Sam wrote: »

How hard would it be for SmugMug to offer an option to business users that would allow them to offset the shipping charges on the back end and be transparent to our clients?

It's actually harder than you think, not because we can't implement something like this, but because of the interaction that is left for the Pro. There's an almost infinite number of possibilities on what a client can be ordering and each scenario presents a different situation when running a business for the Pro. How do you decide if you want to eat some or all of the shipping when you don't know what's been ordered and how it will impact your ability to run your business? Let me break it down a bit more...

For me as the Pro Photographer, I'm concerned with making a profit on every sale. A 4x6 print usually has less profit margin than the 24x36 canvas print. Likewise, the shipping costs can vary between the $4.99 shipping for the 4x6 and the $30 for the Canvas. Profit can be anywhere from $0.00 to $thousands (could be higher, but I'll limit it at this for now), and shipping can be anywhere from $4.99 to $100 (domestically).

Without knowing how much my Profit will be for the order, and without knowing how much the shipping will be, how can I decide if I want to eat some or all of the cost? We'd have to start implementing some crazy list of rules that you setup, which is both difficult for us to implement and difficult for a Pro to build. This is why we haven't gone down that road.

Perhaps some examples will help illustrate the point:
A 8x12 MetalPrint costs $27 to print.
Ground shipping is $13.99.
Overnight shipping is $28.99
- If I priced this at $30, I have no profit to eat the shipping.
- Perhaps a more reasonable price for the print would be to mark it up by 50% and price it at $40. Now I have $13 to eat in shipping. Shipping through SM is $13.99 on this, so if a system existed for me to eat the shipping, I'd end up owing SmugMug $0.99 on this order!
- Lets say I know this, so I increase the cost of the print to $50. I'm now making $9.01 on the order, if I cover Ground Shipping. Everyone's happy, I made some money and the client didn't pay shipping.
- The client decides they want it overnighted at $28.99, and if I'm covering shipping, then I now take a $5.99 loss. Not good for me, since I just lost money on the sale!

For this to actually work, I'd have to setup some kind of rule that says "if my Profit is greater than <x>, after the shipping is taken into account, then I'll cover the shipping." It also means that when you set your pricing in your Pricelists, we'd need some way of indicating that your Profit margin is too low to make a profit on, if you want to cover shipping. This starts making Pricelists even more complicated and confusing than they already are.

It also leaves a potentially confusing experience for the client: if I put a certain item into my cart, if you happened to set it with enough margin, I see 1 shipping price, but if I put another item in, which doesn't have that margin, I see a completely different price? Perhaps I set my 8x12 margin large enough, but not my 10x10, and the client finds a 10x10 (which has less square area) costs $13.99 while a 8x12 is free. Weird!

Also, perhaps you're willing to cover Ground Shipping but not overnight shipping. How do we set this up? Is it another setting or rule that would have to be set by the Pro. Not only would it just be "I'll cover shipping if my margin is greater than <x>" but now "only cover <ground AND/BUT NOT 2-day AND/BUT NOT Overnight.>" We'd probably have to set it to cover Domestic shipping only. You wouldn't want $600 of profit to be eaten by shipping a crate to Australia for $500.

This scenario of "let me cover shipping if my margin is greater than <x>" is something that could work, but it leaves a scenario where you could end up loosing money. If we hear that enough Pro's are willing to take this risk, for the benefit of having cheaper shipping, it's obviously something we could do, we just have been in the habit of trying to protect you (our specific customers) from getting in these scenarios. I can hear it now "why would you allow a situation where I lose money on a sale?! I blame SmugMug", and that's where my SmugMug hat comes back on and I get nervous. And that's why we've shifted the shipping cost to the client, because it protects you from losing money on your sale.

Lastly, while it doesn't impact us here in the US (yet), there'd be all sorts of VAT issues that would have to be understood and accounted for, which can be really confusing since VAT rules are still changing and being added faster than we can blink. Not that it makes this undoable, it just makes it more complicated.

All of what I've typed discusses problems but not solutions. So what can be done?
- You could offer coupons that cover the cost of shipping. But you'd have to know what was going to be ordered first.
- We can continue to look into lowering shipping costs. We'll know soon if the transition to FedEx has lowered costs.
- We could implement some system that allows the Pro to cover shipping, though we've been reluctant to do this because it leaves the chance of the Pro losing money.
- Other, always open to suggestions!

AdamNP · January 4, 2016

I won't rehash all of the work Sam and Aaron have done on the example scenarios, it's way more than I ever would have done, lol. I've read what you guys have said for and against this, but I stand by my very first post in the initial thread, before things got heated.

AdamNP wrote: »

I would frankly rather you guys make up the difference somewhere other than shipping cost as well, whether it's in slightly increased print costs or wherever else. Let's face it, this is the era of free shipping. Amazon started it, and now virtually every online store offers the same. People expect their online purchase to have free shipping at this point. They will accept a small fee, but the sorts of numbers SM puts for shipping will drive off 90% of normal customers. The same customer will think nothing of a few more dollars for the print itself.

I, personally, have MANY times taken a purchase to the final screen, seen the shipping, and closed the window without finishing (and usually went to Amazon, lol). I've even paid a higher price total just for the free shipping. It's stupid, I know, but it's how a lot of people work.

leftquark · January 4, 2016

AdamNP wrote: »

I, personally, have MANY times taken a purchase to the final screen, seen the shipping, and closed the window without finishing (and usually went to Amazon, lol). I've even paid a higher price total just for the free shipping. It's stupid, I know, but it's how a lot of people work.

Yea, this is really tough, because while you might spend more money just to get cheaper shipping, other people look at the final price and go with that, or other people look at the initial price and shop around for the best initial price. Studies have shown that more people go with the later 2 but of course it's just a study and it's just some sample size and things can always change. That's why I like something along Sam's line of thinking, where the photographer can opt into an option, rather than be forced into having higher priced items, would be a better approach.

photoclick · January 4, 2016

Being able to make your own decision about shipping approach is good. I understand what Aaron is saying about the complexity of rules that goes with it. Is there a chance to think about shipping options in a less complicated manner? You fo have so called Boutique Packaging service where a Pro is simply paying an amount (by the credit card) if this option is active. In this case the Pro also can have absolutely no profit, or loss if this option is selected and the pro wants to sell one 4 by 6 for one dollar and pay out of pocket 7 dollars for the Boutique Packaging

Correct? Why not to do the same for shipping? Charge my active and valid credit card (if I have one on file) for the shipping and be done with it. Let me worry about the profit on my order. Would that work?

Even better - expending on the above - let the pro choose percentage of the shipping cost that the Pro wants to subsidize for hte customer's order.

Any thoughts abotu it?

Sam · January 4, 2016

:bash:bash:bash:bash:bash:bash:bash:bash:bash:bash:bash:bash:bash:bash:bash:bash:bash:bash:bash:bash:bash:bash:bash:bash:bash:bash:bash:bash:bash:bash

My comments are not about pro account holders buying product for themselves. :deadhorse:deadhorse

My comments and the concerns you hear voiced are about pro account holders having no other option but to pass along higher shipping charges to their clients. Pro account holder's have no choice. It's their clients who are seeing and complaining about the high shipping charges. That is the complaint. :deadhorse:deadhorse:deadhorse

It doesn't matter that SmugMug offers product for less than Bay Photo. :bash:bash:bash:bash:bash:bash:bash:bash

Pro account holder clients don't see this or benefit from it. :bash:bash:bash:bash:bash:bash:bash:bash

Until SmugMug can understand this there is absolutely no point in discussing solutions to a problem not acknowledged.

After this I give up. I do not have the ability to describe this very simple complaint any better than I have.

Sam:slosh

leftquark · January 4, 2016

Sam, my last post was entirely about clients purchasing items. I'm not sure why you're bashing your head or saying I'm not following. I'm entirely following and addressed your concerns. We haven't talked about SmugMug products vs. Bay products since post #3. What am I missing?

leftquark · January 4, 2016

Sam wrote: »

It's their clients who are seeing and complaining about the high shipping charges. That is the complaint.

Yes, it's the clients who see the higher shipping. But it's you, the Pro's who are complaining about it to us. It's also possible that your client complains to you, and then you complain to us, but if that's the case, then you can offer them a coupon to cover the cost of shipping and you can continue to run your business as you see fit. You have all the tools, in place now, to handle this situation. It's the clients that don't complain to you that you're worried about. When they don't complain and they don't place an order, you lose out. There's nothing you can do because you've lost them and cannot offer them a coupon. Those are the ones you're really complaining about, and that's a complaint from the Pro, not from the client. And as far as I can tell, these are the ones you're trying to discuss here.

leftquark · January 4, 2016

P.S: Sam, since you're in San Jose, perhaps it would be easiest if you came by the office for lunch sometime so we can discuss the concerns in person. Sometimes it's easier to understand each other when we're not waiting hours for a response and can discuss in person! Let me know!

SmugMug Shipping Charges Versus Bay Photo Shipping Charges

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