Free Delivery on Orders over€x, how does it pay?

dbrunson

Sorry if this is the wrong forum, but I often order online from Debenhams and avail of the free delivery option for orders over €30, my question is how do the companies involved make a profit?

If there are any couriers reading I would love to know what they would charge as Debenhams deliver anywhere in the country free for any order over €30.

Many thanks

db

the groutch

a big company like that would have a volume-based contract with a courier, so they might pay €5 (not necessarily exact figure) per delivery, regardless of size.
they would set the free delivery option at a point at which the delivery charge doesn't make too big an inroads into their profit margin.

L1011

Delivery cost is built in to their operating margins.

Margin on full price clothes is eyewatering, so a delivery fee out of 30 wouldn't come close to wiping it out.

rubadub

I have never been a fan of the free delivery model. I would like to see upfront costs for everything.

I expect delivery on the €30 item is €5. I would prefer if it was just priced at €25 and be told delivery is €5

I would also like to be able to buy €24 worth of stuff and offer to pay the extra €1 to be able to get a delivery price of €5, some shops have stuff at 99 cent prices on the end so you have to sometimes go well over the limit for free shipping.

Also if I buy €60 worth I would expect a further discount. If they openly said the item was €25 it would cost me €50 for 2 and often the company would pay the same €5 for delivery -unless its very heavy or bulky.

delahuntv

the groutch wrote: »

a big company like that would have a volume-based contract with a courier, so they might pay €5 (not necessarily exact figure) per delivery, regardless of size.
they would set the free delivery option at a point at which the delivery charge doesn't make too big an inroads into their profit margin.

I pay 3.75 for delivery within Ireland, my guess is debenhams will pay €3 - €3.50 max.


Cost of a retail premises (rent, rates, service charge) usually is about 12%-15% of the cost of sales in the fashion/home industry, a warehouse operation would be substantially less, hence the ability to offer free delivery over a set amount.


Example - according to commercial lease register a 2200sq ft store in Liffey valley has rented for €235,000. Service charge for this store is about €25,000, rates for the store is about €45,000. (I used to be involved with a store there, so know service charge and rates) Then add in all the associated costs of extended opening hours, fit out, display lighting etc.

Then take a warehouse - can be located anywhere, with similar stock. Annual costs of 30k would be right and probably give a lot more space. So once sales reach a certain level, profits can be very good, even allowing a 10% "discount" in the form of free delivery.

rubadub

delahuntv wrote: »

I pay 3.75 for delivery within Ireland, my guess is debenhams will pay €3 - €3.50 max.

Do you use the "free delivery" model?

If I owned a business I would not, or I would have additional discounts. I know several people who are lazy about ordering from sites with free delivery. i.e. they might put in an order and get free delivery and not really bother thinking of other things they need.

e.g. there is a bike shop which used to have free delivery on everything. I remember hearing a guy ordering tyres, then thinking "oh I need tubes too" -separate order, then "oh I might as well get punture repair kit" -separate miserable order. This was no bother to him, and no extra cost. But if I was the shop I would be annoyed at all the additional postage costs and admin and packaging.

On some sites like DX.com I put in mulitple orders instead of one, since they have "free delivery". I believe they have several warehouses and if you order multiple items it can cause delays in getting it -since they must package everything together and gather it all first.