General Courier Fees for Online Commerce

[Markd]

Hi all,

Not sure if anyone would have any insights here for me. I'm looking at starting up an online shop in the not too distant future and I've been investigating the logistics and fulfilment side of it. I've noticed that there are alot of smaller/newer companies that are offering free delivery throughout South Africa.

1. How does the make good business sense? Surely on orders under R100 say, that need to be sent from one major center to another, there is 0 profit to me made and potentially a loss?

For fashion companies etc. i suppose the weight is minimal so the charges can at least be fairly predictable.

I'm looking at providing products that could typically weigh in the region of 10-15kg's each.

2. Can anyone provide me with a ballpark figure on the cost to get that (one package) from JHB to CPT for example? via a standard courier. You cant find the rates online. I know that they can vary anywhere from R75-R100 for something thats 1-5kg,s but im not sure about more than that.

Thanks for any insights!

 

[MickZA]

Here in PE I'd be surprised and suspicious to see free delivery from JHB & CPT offered on orders < R2,000, average courier fees from these centres are about R100 to my door.

 

[rrh]

Hi all,

Not sure if anyone would have any insights here for me. I'm looking at starting up an online shop in the not too distant future and I've been investigating the logistics and fulfilment side of it. I've noticed that there are alot of smaller/newer companies that are offering free delivery throughout South Africa.

1. How does the make good business sense? Surely on orders under R100 say, that need to be sent from one major center to another, there is 0 profit to me made and potentially a loss?

For fashion companies etc. i suppose the weight is minimal so the charges can at least be fairly predictable.

I'm looking at providing products that could typically weigh in the region of 10-15kg's each.

2. Can anyone provide me with a ballpark figure on the cost to get that (one package) from JHB to CPT for example? via a standard courier. You cant find the rates online. I know that they can vary anywhere from R75-R100 for something thats 1-5kg,s but im not sure about more than that.

Thanks for any insights!

It would pay you to chat to the owners of YuppieChef.co.za

All of YuppieChef's orders - irrespective of price - are sent via a courier.

That damn site is more addictive than crack cocaine ...

 

[koeksGHT]

Dependents on distance. Intertown from PE to gtown is R40, gtown to cpt is R140.

Ironically i'm adding courier quotes to my site soon so if you had asked later on

 

[mh348]

Hi all,

Not sure if anyone would have any insights here for me. I'm looking at starting up an online shop in the not too distant future and I've been investigating the logistics and fulfilment side of it. I've noticed that there are alot of smaller/newer companies that are offering free delivery throughout South Africa.

1. How does the make good business sense? Surely on orders under R100 say, that need to be sent from one major center to another, there is 0 profit to me made and potentially a loss?

For fashion companies etc. i suppose the weight is minimal so the charges can at least be fairly predictable.

I'm looking at providing products that could typically weigh in the region of 10-15kg's each.

2. Can anyone provide me with a ballpark figure on the cost to get that (one package) from JHB to CPT for example? via a standard courier. You cant find the rates online. I know that they can vary anywhere from R75-R100 for something thats 1-5kg,s but im not sure about more than that.

Thanks for any insights!

IF you referring to companies like Zando / Runaway Sale etc, they have very high Markups so they can cover the courier costs. They also do big volumes with courier companies so they pay lower rates than what we would pay..

Have a look at TheCourierGuy or Fastway as their prices are quite good.

 

[Swa]

Depends on the courier and markup as said. Courier costs are added to the general markups because nobody would be running at a loss. Shops that sell just computer parts will either be expensive or you'll pay for courier fees as markups are rather tight. There are a lot of companies that offer rates of around R55 without it varying too much between centers and some of them aren't too bad. You can also arrange a discount for regular use.

 

[Recruitsmiths]

They also do big volumes with courier companies so they pay lower rates than what we would pay..

This.....^^^

Fought with Dawnwing for years on this issue.....Volumes speak in volumes..

 

[Markd]

Yes I would expect to have a bit of negotiating power if the volumes were massive.

But lets assume the following example:

I'm selling something that weighs 10kg. The price is R500. I have a margin of 20% or R100. I get an amazing courier quote to move it into another province for R90. That leaves me with R10 on that product, despite a reasonable margin and a markup of around 25%. It doesnt seem to really be worthwhile if you're not doing loads of volume. Then you have the awkward sort of proposition that you're an online store that actually only really focuses on a given region.

In reality i probably wouldnt get that courier price anyway, so its nill profit, probably a loss. Yet I know that some of the bigger sites will offer the same product, at the same price, with free delivery. So either they are prepared to make a loss on that one product, or they have an AMAZING courier deal, or the price of delivery is factored in, or all of the above. The thing is i do see smaller players offering free delivery, where I'm sure it cant be sustainable without the volumes. So my wonder was if there was some secret I didnt know about, or if I could expect to see those shops dissapear unless the volumes picked up in a big way.

It makes it difficult to compete if you are a smaller player. Need to then focus on a different offering/usp entirely in order to compete, as far as i can tell.

 

[Swa]

Depends on what you're selling. You didn't mention. Larger companies means larger volumes so they're not only getting discount on courier costs but also on products. They can take a slightly smaller profit margin and still make enough. Besides that a lot of them aren't really that cheap so if you can match the price and get paid for courier then good for you. R90 for courier cost, I don't care where to that is, is excessive though.

 

[SweetFennyAdams]

Fastway Couriers SA are growing rapidly, with 70% of the urban part of the country already covered for door to door service. Our company sends +/- 60 small parcels in their A5 plastic satchels daily at only R39.99 each (anywhere in SA to the door). This company literally put the Australian post office out of business with their good service and low fees. Now they are here in SA and closing down a lot of others companies who cant compete.