New Wholesale Pricing and Shipping

New Wholesale Pricing and Shipping
TL;DR Mark has written some boring business chat about MOQ, delivery charges and experimentation.

I’ve been keeping an eye on the wholesale side of the business. Things like average order quantities, ongoing stock levels, delivery methods and shipping rates. I’ve also been listening to what our stockists are telling me. I let myself be lead a bit by their questions to improve things throughout.

I’ve trialled a few things over the past months. First up, I offered free delivery throughout Aberdeenshire. That made our local stockists happy. Until the time I was spending in the car started eating into the production time. Stockists were waiting upwards of a week for their orders. Lowering wholesale prices a little came next. That delivered a bump in sales which compounded the production problem. Then I added a discount when at least one case of a single sauce was added to an order. That discount was well received but that's when I started running out of sauce regularly. Order quantities increased as I hoped they would. What I failed to see coming was the pressure on me increasing. I also didn't see my available time reducing as much as it did. So much so, that I started failing to service anyone in any acceptable sort of way. I didn’t react quickly enough to fix that. I’ve lost count of the amount of times I’ve had to say “sorry, we’re currently out of that sauce”. And I apologise for that.

I’ve been asked several times what the minimum order quantity for free delivery on wholesale would be. To be honest, I had no idea how it was even possible. Courier/postage charges are a variable amount and a direct cost to us. I didn’t know how we could manage to do it with any sort of guarantee that the business wouldn’t end up losing big.

As a feeler to see how delivery as an invoice line item would be received by our local stockists in particular, I started adding it as an item but discounted it 100% to zero. It raised some questions and concerns…even though it was a zero charge. I clearly had to tread carefully.

Price reductions and discounts went down well with our stockists. Delivery charges not so much.

So I tried a thing.

I did an experiment with our direct website customers. I added a minimum order value to enable free shipping. I wanted to see an increase in average order value so the business could begin to absorb some postage costs. And it worked. People like the idea of free delivery and will adjust their order value to get it*. The experiment proved the concept and the website offer has stayed because it works. There is now a higher average order value and less people are annoyed by postage costs. Everybody wins. I could then, calculate what minimum order quantities for free delivery of wholesale orders would look like.

So I’ve had a think and I’ve done some maths based on me having at least a day a week more in production. I’ve figured out when free postage on wholesale is achievable. Here’s what I’ve come up with:

Wholesale pricing will now be reduced by 7.5% across the board.

This is the single largest discount made to our wholesale pricing in the last two years.

Delivery will now be 100% by courier.

This is broken into two tiers:
  1. Orders below 48 bottles. Delivery cost is determined by the courier at the time of booking.
  2. Orders above 48 bottles. Delivery is free.

I had to find a way to claw back the production time I was losing by driving around Aberdeenshire a day a week. The new pricing and free delivery option will mean I’m less likely to run out of sauce so often. It also means that stockists won’t be waiting ages for me to get to them. With the increase in courier business, I should be able to negotiate better rates and pass those savings along also. Sounds like a good solution**.

I am hopeful that these improvements will make things better for everyone. The business is in a constant state of flux as I find, trial and deploy improvements throughout it. Time will tell if I’ve got the shipping right. As long as I can be a bit more reactive to problems, I can make changes faster in future.

*Of course, this is well known to e-commerce businesses and it’s a well covered topic. But like everything else, you have to find this out for yourself. It’s risky to take someone else’s word for it and hope for the best. This business isn’t a game to me, it’s not a hobby or a side hustle, it’s my only source of income and I love every day I get to run it.

**At least it could be if we could get around the fact that fragile, glass bottles are often not given the care and attention requested of couriers. As courier delivery has increased, so have breakages. That’s something I’m paying careful attention to. Choosing a courier is no longer about who’s cheapest, it’s also now being determined by the amount of breakages experienced. Saving a few quid is pointless if I have to replace whole cases of sauce at the businesses expense. We can talk about the inadequacies of insurance another time.

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