When Your Customers StealWritten by Chris Malta
"When Your Customers Steal" You know it’s a slow news day when news programs on TV turn their attention to their favorite new consumer warning “Beware of online businesses!” they cry. “YOU could be SCAMMED on Internet!” Every time I see one of these news stories, I groan, and wonder how many sales my sites just lost. Then there are ads for that new credit card that “protects” consumers against online fraud. They make Internet businesses people look like a bunch of thugs who meet in a sewer all day long to torture innocent consumers. There a lot more honest, hardworking Netrepreneurs out there than scam artists. That doesn’t make for a good news story, though, so we all take lumps for transgressions of a sordid few. You know what I’ve never seen, though? I’ve never seen a headline story about CUSTOMERS who scam Netrepreneurs. I’ve seen stories about thieves robbing convenience stores. I’ve seen exposes featuring practices favored by professional shoplifters. What about “consumers” who target online businesses when they steal? My partners and I market both informational products and brand name merchandise on Internet. And we’ve been taken on both sides of fence. We publish a B2B (business to business) product called The Drop Ship Source Directory. Recently, I received an email from someone who bought our Directory on EBay, and had questions about how they were to receive information updates we send our customers every month. There was only one problem. We don’t SELL our Directory on EBay. I was forced to write back to that person and tell him that he had been scammed. It was obvious to me that someone had purchased our product from us, and was reselling it to others illegally. How this scam artist expected to get away with reselling product, I’ll never know. At that time, it was a download that contained nearly a thousand pages. (Now, it's a much larger online database). There is a copyright notice on EVERY SINGLE PAGE. It’s like me buying Stephen King’s latest book on Amazon, typing it up into electronic form, and then reselling it on EBay. I’d have to be nuts to try something like that! Last year, a site I was working with received an order for some moderately expensive jewelry. Nothing out of ordinary. The credit card processed just fine, with AVS (Automatic Verification System) coming back “green”. This means that online processing system had checked card’s information against on-file address and zip code of its owner, and everything was OK. The Ship-to address was different from card owner’s Bill-to address, but that’s nothing out of ordinary either. LOTS of people buy jewelry and have it sent as a gift to another address. A while later, we received a “chargeback” letter from customer’s bank. A chargeback means that card owner has disputed charge, and we have to show cause why we should not refund money. At about same time, we got a phone call from a police department in West Virginia, asking about that same order.
Should I Offer Free Shipping?Written by Chris Malta
"Should I Offer Free Shipping?" Boy, it's tempting, isn't it! Free Shipping! People will see your proclamation of Freedom from dreaded SHIPPING CHARGE (imagine agonized screaming here), and flock to your site to take advantage of THE INCREDIBLE SAVINGS! (Fanfare, people cheering). Well, it’s true. In my experience, shoppers will check out an offer of free shipping before they commit to your competitor. Yahoo Shopping even lists Free Shipping sites as a category on their home page every once in a while, when they’re promoting their Shopping area. Do those sites get hits? You can bet they do. Are they doing better than you are? Probably not. Internet Shoppers, as a rule, are not dumb. Although Internet Shopper tends to be an instant-gratification junkie (like me), they will check around before pushing that all-important Order button. They’re going to go all way through your order process, until they get FINAL price. Then they’re going to cancel order, and do some checking. What are they going to check before they push your button? The same product on other sites. Now, let’s assume that life is perfect, and you get best possible wholesale price on items being drop-shipped for your site. Naturally, life being perfect, Shopper is going to be comparing prices on other sites that get same great wholesale price that you do. What’s going to happen? Remember, somebody’s got to pay for that shipping. Unless you are personally related to Shipping Fairy, you’re going to have to deal with shipping charges in all their sneaky little forms. Ground shipping, air, motor freight. Residential delivery surcharge. Shipping insurance charge. Signature release charge. They get you coming and going. (Literally!). So what’s going to happen? Your price is going to be higher. It has to be. When you offer free shipping, YOU pay for shipping. So you have to raise your price. You have to include estimated shipping in your item price. (Unless, of course, you want to take a hit below belt…right in profit margin). Ok, ok, I know logic. Maybe your price is higher, but with free shipping your final price will be about same as a site that has a lower price, but charges for shipping, right? Six of one, half a dozen of other. After dust settles, you both make about same profit. So Shopper will buy from you, because you have free shipping.