Australia FIS shipping

Aug 15, 2019
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This comes from an Australian writer but it would seem to apply everywhere. The new distributor/retailer of my products requires me to supply Free Into Warehouse and pays on 30 days.
Am I right in thinking:
  1. My expenses in paying for the courier need to be looked at as a manufacturing expense. As such, to maintain my company's ROI my inputs in this regard (shipping cost) would need to be marked up the same way as other inputs like rubber widgets used in manufacture?
  2. If I don't markup the shipping cost my overall ROI will fall significantly.
  3. If I mark up the shipping cost say x3, like my cost of goods which I markup x3 to give a rough guide to selling price, my wholesale price will increase significantly.
  4. The retailer will then add my delivery cost to my supply price and markup my supply price to find their retail price. Thus the total markup on the shipping cost would be something like x 4.
  5. If this retailer paid for shipping their end, the total cost of goods would be significantly lower enabling them to provide the customer with cheaper goods while still maintaining their ROI.
The aim of the retailer/distributor might be to shuffle costs and risks upstream but is this mode of operation lacking in integrity when the retailer is very dominant in the market and the final purchasers are using government money (my tax!) to provide education.


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