Shipping fees boon to catalog business 48% of merchants say they make profit on handling charges

Retail

December 07, 1998|By BOSTON GLOBE

Shoppers who have been skeptical about catalog merchants' shipping and handling charges might be interested in a new survey.

According to a study in the next issue of Catalog Age, a trade publication for the mail-order industry, 48 percent of catalog businesses this year said they made a profit from shipping and handling charges, up from 44 percent the year before. About 41 percent said they broke even, and 11 percent said they lost money.

These findings come as no surprise to many shoppers who say they're drawn to the time-saving advantages of catalog shopping, especially during the hectic holiday season. On a typical $60 order, mail-order companies charge anywhere from $5.50 to $16.95 for shipping and handling.

The catalog industry may feel little pressure to change as more Americans get hooked on the convenience. Catalog sales are projected to total more than $87 billion this year, a 7.7 percent increase over last year, according to the Direct Marketing Association in New York, a mail-order trade group.

The group also reported that more than two-thirds of Americans last year made a purchase by mail, phone or computer.

Some companies are responding to customer complaints. Victoria's Secret, an intimate-apparel shop for women, offers free shipping for orders over $100 until the end of the year. If you order from certain L.L. Bean catalogs, you can get free regular FedEx delivery until the end of the year.

Catalog consultant Jack Schmid of Kansas City, Kan., said the industry is beginning to wake up to the consumer outcry. He said he has found more companies experimenting with early-bird promotions, flat-rate fees and loyalty programs that give breaks on shipping and handling charges.

"They are showing more sensitivity to customers," he said.

Even with some discounts, anyone who wants the convenience of catalog shopping faces hefty shipping and handling fees, usually based on the total bill, and a sales tax that may have to be paid to the state where the item is being sent.

A federal rule requires that companies shipping items out of state must impose that state's sales tax if they have a store or other business presence there. Therefore, Massachusetts residents sending clothing as a gift may lose the state's tax exemption on clothes.

Why can't catalog companies base the shipping fee on weight, as the post office does?

While some do, the growing trend is to assess fees based on the total bill. Bettye Kahn, spokeswoman for Crate & Barrel, based in Wheeling, Ill., said it gets too complicated for businesses to assess each shipping order based on weight.

At Crate & Barrel, the shipping and handling fees range from $5 for a $15 order (a 33 percent fee) to $15 for a $150 order (a 10 percent fee). A more typical $60 order would incur a $10.50 shipping and handling fee -- 17 percent.

"There may be a few people that we treat unfairly so we can treat thousands of people fairly," she said. "Hopefully, it evens out."

Kahn points out that stores such as Crate & Barrel that sell many fragile dishware items are also providing the service of packaging the items safely for delivery. The highest delivery fees appear to be from the food companies. At Harry and David, a specialty food catalog business, a $60 order costs $16.95 to deliver.

But even some firms sending nonfragile items have high fees. At Hingham, Mass.-based Talbots, a women's clothing store, delivery charges are similar to Crate & Barrel. A typical $60 order would cost $10 in shipping and handling.

Betsy Thompson, spokeswoman for Talbots, said she believes they are in the "middle ground" of their competitors and that they also offer such perks as free gift boxes when they deliver.

Even with price breaks, Kathleen Seiders, marketing professor at Babson College near Wellesley, Mass., said the catalog industry will probably flourish because so many people hate shopping.

"People this time of year are looking for ways to not have to deal with the store or deal with the post office," Seiders said.

Pub Date: 12/07/98

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