AKAMAI MONEY

By Deb Adamson
Advertiser Staff Writer

Q. I've been wondering for quite some time why there are huge differences in shipping costs to Hawai'i. It varies so widely that I cannot understand how they determine these shipping costs. I think it would help shoppers if we knew.

A. Shipping charges to Hawai'i can vary because some retailers make a profit on shipping and handling, said Kurt Barnard, president of the Barnard Retail Consulting Group in Upper Montclair, N.J. The differences in shipping costs can be startling. To illustrate this, I went shopping for a diamond bracelet on the Web and found three similar $299 diamond bracelets on sale through J.C. Penney, Target and Amazon.com. The shipping charges ranged from $5 to an eye-popping $60.

J.C. Penney charged the most of the three. The retailer said it assesses shipping and handling rates according to the price of the product. For items costing $200 to $300, you pay shipping and handling of $60. If you order second-day air delivery by UPS, the cost climbs to $200.

J.C. Penney spokesman Quinton Crenshaw said the retailer charges a standard shipping rate based on price to simplify the shipping process. It might charge extra for heavy or bulky items such as furniture.

Amazon.com charged $16 to ship the bracelet to Honolulu, while Target added just $5, the same as to other states. For second-day air the cost was $15 at Target. Amazon.com didn't offer this option for the bracelet.

If a retailer ships by Priority Mail through the U.S. Postal Service, delivering to Hawai'i shouldn't cost extra, since USPS rates are the same nationwide. A one-pound package mailed from Los Angeles to Honolulu would cost $3.85

Priority Mail, the same as to New York or Chicago.

If the retailer uses Federal Express, the cost is also generally the same to Honolulu as to other U.S. cities. A one-pound package with a declared value of $300 costs about $35 to ship from Los Angeles to Honolulu using Priority Overnight. It's the same to New York or Chicago.

The only difference in cost is if the retailer chooses to ship by land. In this case, the cost would be higher for Hawai'i consumers, who would have to choose air delivery.

Ralph Weller has studied the issue of shipping and handling costs. Weller owns an online retail business based in Oceanside, Calif., that sells military goggles and sunglasses. He began investigating shipping and handling charges after wondering how his competitors were able to make money even though they priced products below cost. In some cases, they made their profits through shipping and handling charges, he said.

Weller says one Web site he investigated charged at least $25 for two-day FedEx shipping. But the fine print said customers should allow five to seven days for delivery. The Web site saves money by shipping the product by FedEx Ground, which takes four days coast-to-coast.

Another thing consumers must watch out for is money-back guarantees that do not include the shipping and handling charges. Audri Lanford, founder of Internet Scambusters in Boone, N.C., said some companies will cover their expenses for the product in shipping and handling fees. That way, they can refund the price of the item and still cover their costs or even make a profit.

Barnard said such tricks may fade away as the online marketplace gets increasingly competitive. Consumers like low-cost or free shipping and will patronize stores that offer it. Earlier this year, Amazon.com said fourth-quarter 2003 sales rose by 36 percent in part because of a free shipping promotion.

Got a consumer or personal finance question? Write to Deborah Adamson at dadamson@honoluluadvertiser.com or call 525-8088.