The Truth About Shipping and Handling Costs

Did you know that shipping and handling fees are a gold mine for companies?

By Tara Conry — Reader's Digest, Feb 2010

Have you noticed the shipping and handling charges tacked onto all these TV treasures? For many companies, those easily ignored fees are a gold mine. Just ask Buck Smolow, a disgruntled consumer. An infomercial for the Magic Jack, a gadget that promises ultracheap phone service by plugging it into your computer, persuaded him to purchase a pair. He paid $39.95 plus $6.95 shipping and handling for each one, bringing the total to $93.80. “From running my own e-commerce business, I know that sometimes products can’t be shipped together,” he says. His mood changed when the two items arrived in one package, although he’d paid postage for two. Even with the gadgets bundled together, the postage should have been $4.95. The handling, of course, is open to interpretation. When Amazon ships you a couple of books, for instance, it often sends them together, charging one fee for postage and 99 cents per item. Smolow was disappointed with the Magic Jacks, so he returned them. He got a full refund but had to pay to send them back. Magic Jack kept the shipping and handling fees.


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It’s called shipping and handling for a reason, says Steve Dworman, a direct TV marketing expert. Unlike mammoth Amazon, with its own warehouses, call centers, etc., infomercial marketers use shipping and handling fees to hire outside companies to fulfill those needs. “So even when the customer is given a bonus ‘free’ product, the marketer has to pay all these people,” he says. But shouldn’t that cost be part of the price and not a tacked-on surprise? “In an ideal world,” he concedes, “people aren’t supposed to make a profit off shipping and handling.”


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