Hey gorgeous gals,
I am back again with Part 2 of the Decoding Series on Insta-sellers. If you landed up on this page and have not read part 1, I suggest you read that first to get a bit of perspective on the points already covered. In part 1, I spoke at length about how you may be able to spot a fake Insta-seller from a genuine one. I also discussed what you need to know about your product status, before paying the Insta-seller. Today’s discussion will cover the most important aspect of the whole topic – the Pricing!
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Pricing: One of the biggest concerns people raise (including myself) is the pricing provided by the Insta-seller. We all want makeup but we all aren’t okay with the prices being charged by the Insta-seller. I have actually read comments from people saying – “But it costs only INR 1400, why you are charging INR 1800 for it? I touched upon this briefly in Part 1, but let me elaborate with example for better understanding of this critical topic. So, let us discuss the pricing aspect in detail.
Product Retail Price: This is the retail price of the product which you see on the retailer/brand’s website – and assume to be the price which should be charged to you. However, that is not the case. Let us find out why. Say product price of a Huda Liquid Lipstick on Sephora US site is – $20
State Tax – For any product purchased from US, there is also a tax levied by the State which may vary from 0% – 12% depending on the delivery address and the state it belongs to. Most of the Insta-sellers, ship their products from the retail stores to an US address – be it for a mail forwarding service or that of a family member. Depending on the location of this address, the State taxes get levied. So, if the address is of Texas, the tax would be about 7.5% and if the address is of Delaware, the tax would be 0%. The tax is a percentage of the product price and is charged over and above the retail price mentioned on the website.
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Shipping charges of the retailer: This depends on the retailer in play. For bigger entities like Sephora, Nordstrom, Ulta, etc – they generally have free shipping basis minimum order requirement. However, for most of the popular Indie brands like Kylie Cosmetcis, Juvia’s Palace, Melt cosmetics, etc – there is standard shipping charge (irrespective of size of order) – which can range from $5 – $12. The cost of this charge will be built into the cost of the product charged to you. Assuming it is a new launch and a lot of customers want products from that brand – you will not be the sole bearer of this cost. It would be split over all the clients who have ordered for products from that site/brand, but a certain portion of this will definitely reflect in your price. However, in two scenarios – you may end up bearing a chunk of this shipping cost. The first being, when it is a new launch and the Company allows only 1 or 2 pieces of the product per order. So, the Insta-seller isn’t able to split this cost over too many people. Secondly, if this was a customized order – wherein only you need products from that site – you will bear the full cost of these shipping charges.
Currency exchange charges: This is a charge which many people don’t talk about as much but definitely plays a role – The Bank/Credit card Company charge currency exchange charges to the account holder @ 3.5%. This will also add up somewhere.
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Shipping to India: This is the logistic cost of transferring the product/s from US to India. The Insta-seller may be using a certain courier partner or a mail forwarding service for this purpose. Some Insta-sellers maybe asking a frequently flying friend or family member to carry the products for them. Irrespective, there is a charge for couriering the products from US/UK to India. So, a portion of this charge (split over customers who have ordered the products in that package) will definitely reflect in the cost of the products.
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Customs: The mother of all charges!! For importing products to India, there is a customs charge levied by the Government. Once the package enters India, it is checked by customs, the customs charges are levied before it is handed back to the logistics partner to be delivered to the Insta-seller. This is assuming, no red-flags get raised at customs. By experience, this charge used to be anything from 20% to 42%. As per the new guidelines, GST of 28% should come into play instead. So, ideally, the customs charge should go down to 28%. However, FedEx was charging a retail partner 58% for India customs – which seems like an addition of 28% to their existing charge of 30% (which Fedex was charging the retail partner till now). So, currently, here is little knowledge as to how this will play out. There are certain ad-hoc scenarios when a package may not be checked by customs or may not incur customs charges. But, the Insta-seller will obviously err on the side of caution and cover their loss by building in this charge into the product charge. The only scenario, this charge may not be payable, is if the package is coming into the Country as part of a person’s luggage. In which scenario – the final cost should ideally not have as much mark up, but there is no way for you to know the operation model of the Insta Insta-seller. Also, most Insta-sellers keep product pricing quite similar to their competition irrespective of how they are getting the products in.
Packaging charges: A Insta-seller needs to package the products you are buying and needs to buy basic supplies to do that – Bubble Wrap, Tissue, cello tape, cardboard boxes, masking tape, etc. All this costs money. So, while these may seem like something on the periphery – this is cost to the Insta-seller. And you have to be cognisant of the fact that the Insta-seller isn’t a huge Company or a big entity. More often than not, these are people working out of home. This is additional cost to business, something they cannot blindly “absorb”. Some Insta-sellers even have branded boxes, etc. All these costs add up!
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Delivery Charges: The last nail in the coffin is the delivery charges charged by the Insta-seller. This is actually a tough one. We are okay with paying INR 3000 for a product but the INR 50 – INR100 of delivery charges are so irritating! I say this one is tough because this at times can make or break the transaction – especially for low cost items. (I will cover this aspect in detail in Part 3). And it is generally there for low cost items. Let me elaborate, firstly, there are three delivery charge models with which Insta-sellers work with:
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All packages will levy a delivery charge – irrespective of the cost. So, whether you buy something worth INR400 or INR4000 – there is a delivery charge of say INR100. Why? As per my conversation with Insta-sellers who use this model, they chose not to build the cost of the shipping to the product price but charge it separately. So, my initial reaction was why bother doing that. Isn’t it easier to tell one amount to the customer and be done with it. The “plus shipping” is so irritating. It’s like paying INR 2100 is ok but paying INR 2000 for the same product + shipping (INR 100) is irritating! Do you feel that way too? So, the Insta-seller explained their logic. When a Insta-seller is charging you INR 2100 – they have still built in the shipping charge ito the product price. And if you are buying just one product – it is okay. However, if you are buying multiple products – you end up paying more with Insta-sellers who have built in delivery charges because you are paying for the delivery charges with each product. Where in the “plus shipping’ scenario – you pay for multiple products but only INR 100 for shipping. Kapish?
All products inclusive of delivery charges: This is an “easier to understand” model. There is one price to take into account. There isn’t any plus. You get the price and take a call whether you want to buy the product or not. However, do keep in mind what we already discussed in the previous point.
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“Free Delivery” over X amount: In this model, the Insta-seller will charge you for delivery charges whether you buy a single product or multiple products, if the total amount is less than X amount. This X amount is generally INR 2000 – INR 2500. Over this amount, delivery is free. Well, the crux of the matter is that when the product is over INR 2K, it seems easier for you to absorb the delivery charges. When you are anyways paying INR 2000 for a palette, you may be okay paying INR 2100 (including shipping). But when you are buying just one product worth INR 400 or INR 600 – the delivery charges (in relative comparison) seem so much higher. It is a basic marketing ploy (just like most online retailers) to make you buy more – in order to save yourself from paying the delivery charges. Do remember, at the end of it – you will be paying these charges one way or the other because the Insta-seller isn’t a huge Company who can absorb this recurring cost under some marketing or customer service budget.
Honestly, it’s only after you receive a shabbily packed, shattered “limited edition” palette, that you realize that it is worth putting in the money to get properly packed stuff.
Profit Margin: This is the profit the Insta-seller intends to make on each product that they procure and sell. Yes, this amount is going to be there because at the end of the day, they are here for the business and not for charity or “love for makeup”! Let’s be real! What is this amount, I really cannot say, would probably depend on Insta-seller to Insta-seller and product to product. Certain products have higher margins than others. (Will touch upon this in Part 3 of the article).
Landing Price: This is the final price the Insta-seller charges you for procuring the product for you. And all the previous 9 headers sit in this charge. So, what you will pay at the end of the day isn’t the $20 conversion, but this price.
Does this seem like a lot? Yes, it is, but what is the option? The options are either you order the products through the brand yourself – which is a pain when you want to order multiple brands, apart from other issues. The second option could be to use mail forwarding services – which come with their own woes – including the fact that you will bear all these costs yourself exclusively. The third option is to request a friend/relative abroad to get the stuff for you – and how often does that happen?
Relativity of Pricing: While we talk about pricing, I would like to put one thought out there which hits me time and again. A number of times, while discussing a new product (which is also available in India) with someone, I hear this feeling that “OMG! I can’t buy this product from India – I’d rather pick from US” OR “It is so expensive to buy from Insta Insta-sellers” I am not denying that buying a product from Installers or from say, Sephora India, is more expensive than buying it from US. My question is… What makes the price on Sephora US more acceptable to us? Meaning, when a palette is say, $40 in US – conversion of about INR 3K (post taxes); has an MRP of INR 3.5K in India – what is it that makes us agreeable to paying 3K but not 3.5K! Yes, I do understand that INR 3.5K is more, but you are missing the point. If you think about it, INR 3K is a lot of money for a piece of makeup. But we are agreeable to it. What we are not agreeable to is the “comparatively” higher cost in the Indian market. If the same palette was INR 4K in US, we would still readily pay 4K there. Isn’t the “price” of the product just in our minds. I am not talking about a product being cheap or expensive; drugstore or high end. I am just talking about our thinking. So, I would say – look at a product and its MRP and decide for yourself – is this worth this amount for you and move on from there and instead of – “…but in US, it is INR 200 less!”
I am going to leave you with this thought to mull over. I will be back soon with Part 3 of the article soon. If you have any questions which have not been answered till now, feel free to pen them down and I will include them in the last and final part of this article.
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