Free Shipping High Price, No Free Shipping Low Price for Tea?

[ALSL]

Hello!

I have a dilemma.

My business will be selling premium loose leaf tea. Now, when you hear premium loose leaf tea, most people automatically assume it's a luxury. However, most people will also have, in their minds, a figure that they'll pay for tea (an EXTREMELY tiny market will have the disposable income to WANT to pay $100+/lb of tea, and catering to that crowd will require expertise belonging to tea experts and sommeliers.)

Here's the rub.

Since we are not an online tea store, we cannot offer the "free shipping above $50" deal (which would make sense for us).

We are basically a one product, Tea of the Month, service.

If we were to compete in price with the giants, Adagio + David'sTea + Teavana, we would have to say no free shipping. On the other hand, if we provide free shipping (or even subsidized shipping, where we would charge a flat rate and just absorb a portion) the profit would be so miniscule that it wouldn't be worth proceeding with the business.

Should we run with high price + free shipping and just see if we catch any traction, or should we go straight to competitive pricing but no free shipping?

Thanks,
ALSL

 

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[SeanKelly]

Although many competitors offer free shipping, I would personally charge for shipping. Your business model is different (Tea of the month) and as you said it just wouldn't work. You've answered your own question. I don't mind paying for shipping and free shipping has never convinced me to buy something.

 

[1step]

Test it and see what people respond best to.. You may find that the best (as far as conversion and margin) combination is to charge a premium high price for the tea and charge for shipping.

We can all guess and a lot of us will have differing opinions, in the end it doesnt matter what we think, test your market and see what they respond best to. At first set up an A to B test with the two options mentioned above then test the winner to C charging premium price and shipping and see what makes the most sense

Just my opinion

 

[ALSL]

Perfect, Thank you!

 

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[bkypes]

In my experience it is best to do free shipping with a higher price. With my brand we have always done free shipping but we have always focused on having a product that increases in value over time. If I'm selling a t-shirt for $35 with free shipping that tells the customer this is a h quality shirt when in fact it's the same as a $28 shirt that you have to pay shipping on. In most consumers they don't figure that they are actually paying $7 for shipping they just see it as buying a higher quality item.

Now as the consumer let's say I want to buy this limited edition t-shirt. It's $28 and I pay $7 for shipping so it's $35. Since the shirt is $28 without shipping that is the shirts actual value. So the shirt sells out and goes up 25% in value then it's worth what I paid, $35. If the shirts price is $35 and goes up even by 15% then it's worth $40.25.

I'm in the clothing business so I did my best to explain it from my point of view and experience with it.

 

[ALSL]

bkypes: I understand that for t-shirts, since clothing's price has a LOT to do with the branding and I've seen t-shirts go up to $60 a shirt. However, what if you were charging $60 for your shirt that is selling for 28 everywhere else? or even 35? That's pretty much the situation we're in right now with our tea. The quality of our tea is amazing, yes, but tea is still seen as a commodity and the price ceiling only goes so high.

So basically, the best answer is still to A/B Test pricing

 

[XOthermic]

Hey man,

Don't compete with these guys on price. Keep your product superior and tailor your marketing as such. Get the crowd of silicon valley execs who want to drink the good tea. Yea it's a commodity but tea is a commodity that we really want to enjoy! I don't give a rat's a$$ about the HFCS in my cereal, poptarts, any other household product, nor do i care about the corn it came from. When it comes to tea and coffee i'm different and don't mind shelling out hard earned cash for some quality stuff.

When it comes to my business. I like to please the people who are going to be passionate about my hard earned time and product. I want those people to come into my store and try my tea and share it with their friends. I don't want those people who are coming in to my store just to look for deals and can care less about my vision. However, there is a balance and some business operate very well on price alone like walmart.

maybe you can

Come up with better names - Infinite Clarity Chamomile

Call out those other companies - Hey $10 tea sounds great but drinking tea that's been radiated and then dried for 3 months in a damp shipping container is crazy. At "yourstorename" we brew tea from fresh leaves picked daily. (idk how tea is made)

Build Your brand - Do shit that other companies aren't doing find out what your main demographic is up to. For me, my business demographic is on instagram all day. So I now go on instagram and post pics of shit they like, i like, hell i even show them some of my product. Everyone likes and it cost nothing but the time of a young college kid who thinks there a Social media Guru.

 

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[Alana]

Now THIS is a subject I am highly knowledgeable about: Tea. I am a tea-a-holic, and while some folks like buying a fancy bottle of wine, Cuban cigars or truffles to get their gourmet kicks on…I buy tea. I love tea so much that I even have several Camellia sinensis in my garden. Tea is what everyone who knows me best buys me as a present, though most of the tea I consume I purchase on my own.
So that being said, would I buy a “Tea of the Month” IF it didn’t have free shipping. Sure. But I would be buying it because of the exclusivity of the tea. In other words, if this is a typical sencha or an earl grey with bergamot, then I know I can get good quality loose teas like that fairly easily at my local tea hot spots. Part of the fun of buying the tea is smelling it and sampling it. Which means that your tea would have to be unique in quality (either the blend, the rarity, etc).
Back when I started downing the stuff (I was just a kid), quality loose leaf tea was hard to come by. Now it’s everywhere (from Jamba Juice to Teavana to Peet’s Coffee and tea…and those are just the conventional carriers).
You would have to be selling quality, not convenience or price.

 

[InMotion]

Free shipping is difficult to implement and control costs. I agree with Alana, if its a specialty item, free shipping has little value in my mind.

 

[ALSL]

Now THIS is a subject I am highly knowledgeable about: Tea. I am a tea-a-holic, and while some folks like buying a fancy bottle of wine, Cuban cigars or truffles to get their gourmet kicks on…I buy tea. I love tea so much that I even have several Camellia sinensis in my garden. Tea is what everyone who knows me best buys me as a present, though most of the tea I consume I purchase on my own.
So that being said, would I buy a “Tea of the Month” IF it didn’t have free shipping. Sure. But I would be buying it because of the exclusivity of the tea. In other words, if this is a typical sencha or an earl grey with bergamot, then I know I can get good quality loose teas like that fairly easily at my local tea hot spots. Part of the fun of buying the tea is smelling it and sampling it. Which means that your tea would have to be unique in quality (either the blend, the rarity, etc).
Back when I started downing the stuff (I was just a kid), quality loose leaf tea was hard to come by. Now it’s everywhere (from Jamba Juice to Teavana to Peet’s Coffee and tea…and those are just the conventional carriers).
You would have to be selling quality, not convenience or price.

Alana, PERFECT! You're exactly our target market then. We're striving to blend our own premium loose leaf teas and we were worrying that people wouldn't pay the prices we were thinking. However, I believe you may be right. If our tea could only be ordered exclusively through us, and the quality of the tea proved to be as amazing as we claim, then I believe we can have very good customer retention. The biggest obstacle is still just the trust issue. The initial customer acquisition and building of trust is the most important bit.

So I have a question for you: What would help build trust for you when you go to a website for an exclusive, high quality tea of the month? Also, what would YOU pay for 2 oz of it? 4oz? 9 oz? (Those are the quantities we're thinking about providing.)

 

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[Alana]

Even though I currently have 17 different loose leaf teas on my shelf right now, I am pretty picky about what I buy. You’d have to win me over with description first and foremost. Here’s an example:
Genmaicha: Sencha tea with toasted rice creates a nice, vegetable-like roasted flavor
OR
Genmaicha: This is one of Japan’s most unique teas. While this tea has many names (such as ‘popcorn tea’ and ‘brown rice tea’) perhaps it is known best as the ‘people’s tea’. This is because the poor people of Japan would use the rice as a filler to reduce the price of the tea in addition to extending the flavor. Today, we bring this traditional tea to the refined tastes of today’s tea drinkers. We take premium sencha tea and combine organic roasted brown rice for a truly fresh, grassy flavor of green tea that, when brewed, delivers a delicious, mild flavor with a nutty, clean aroma.

See the difference? Pimp out your tea. Tell me how it’s different from all the rest. I want to know if it’s hand rolled, if it’s rare or limited, if it’s only available through your site, fair trade…all that stuff.

As I said before, the big seller for me is being able to smell it/sample it before I buy it. So I would be interested to see if you sold sample sizes (perhaps those you could send for free? Just a tablespoon or however it would take to make one cup?). You should also send samples with any orders that you send off….sometimes people don’t realize what’s out there until they try it. I realize this might not flow with your ‘tea of the month’…but perhaps you have 12 specific teas for that program and then other teas on the side that you can introduce to your customers?

If it was a rare tea or a limited edition tea, I would expect to pay anywhere from 20-40 dollars per 4oz. I know that is not as specific as you’re looking for, but again, a lot goes into what I’m getting. Also, would I be receiving it in a tin or an vacuum bag (I don’t care about containers…I just want the tea) I think you should give the option as to whether a tin/container should come with it).

Also, when it comes to spending big bucks on tea (which again, is going to be tough because it’s a hard market to get into, let alone in this economy), sometimes it helps the buyer make the purchase if he/she knows that part of the money will go to a good cause. That may be another way to set yourself a part from Teavana and Lupicia….have a small part of the sales go to saving the “insert endangered species/culture here.”

Feel free to send me a pm if you want more detail. I use to be a buyer of tea for Peet’s coffee and tea and would do all the sampling….I miss that job (and all the free tea that came with it)…..