The e-retailer reports a $126 million net loss, stemming from a $640 million year-over-year increase in spending in the quarter on technology and content ...
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Most rate information is updated automatically through electronic invoices that integrate through XML with its shipping management system, though the retailer’s shipping managers and accountants also directly input any changes in rate information after noticing discrepancies in business documents or receiving rate updates from carriers.
The music retailer will “penalize” carriers by arbitrarily increasing in its system their published rates to account for lower levels of service so the system will automatically factor those attributes when deciding the best overall mix of shipping service and cost. For example, it may add 25 cents to a carrier’s rate for a certain package size if the carrier doesn’t offer shipping insurance or shipping label-printing services.
When a customer chooses a shipping service by speed of delivery, CDUniverse.com takes about a second to complete a series of processes: her credit card gets authorized, the order management system confirms through an XML communication with the inventory management system the chosen product or products are in stock, and the shipping management system chooses the cheapest delivery option based on the size of the order’s packages, destination and requested time of arrival.
It’s crucial to check the availability of inventory for shipment before choosing the shipment options because the number and size of products available for shipment can make a big difference in available rates from multiple carriers, Monteleone says. “The system picks the best rate for what’s ready to be shipped today,” he explains.
Ground or air?
David’s Bridal, a multi-channel retailer of wedding gowns and accessories, focuses on one carrier, using the web-based WorldShip service from UPS to get the most cost-efficient mix of ground and air shipments for orders shipped from its nearly 300 stores.
The retailer uses a customized WorldShip system that automatically configures a matrix of air and ground shipping options. The system will reveal, for example, opportunities to ship via ground service to get virtually the same delivery window provided by higher-priced air service, says Norman Moore, enterprise strategic account manager at UPS. Since deploying the system in August, he adds, David’s Bridal has been able to save 15% on shipping costs for shipments routed through ground rather than air service.
Growth in the number of web-enabled systems and services is creating other options for retailers. RedRoller.com, for example, was designed to offer small retailers the capability usually only affordable by larger merchants to choose among shipping rates and services from multiple carriers. So far, RedRoller.com connects with four carriers-the U.S. Postal Service, DHL and two regional carriers, Eastern Connection and Overnight Express-but expects to offer additional carriers this year.
When retailers receive an online order, they enter into a RedRoller.com web page the customer’s address and order details, including package size, weight and dimensions, then choose from a list of carriers showing delivery times and rates.
RedRoller.com still is in beta testing and offering its service for free. When it officially launches this spring, it will have a starting monthly subscription fee of about $20, though it has yet to work out further pricing details based on volume of shipments, Taylor says.
Newgistics, which for years has specialized in offering direct retailers a product return service in association with the U.S. Postal Service, now is offering a similar delivery service for standard ground shipments. For the delivery service, the retailer uses Newgistics to ship to a Postal Service facility for final local delivery to the customer; for the returns service, the Postal Service forwards the package from the customer to Newgistics, which handles the long-haul shipment back to the retailer.
The additional shipping services available to retailers still leave merchants with the challenge of seeking out the best combination of service and costs. Even automated systems like Kewill Flagship require retailers to constantly review terms with carriers and review business rules for triggering automated carrier selection, Murray of ShopNBC says.
“There’s more analysis involved,” he says, “but our shipping managers always are finding new ways to get packages to customers more quickly while finding ways to reduce operating expenses. When they find a tool that can do both of these tasks, it’s right up their alley.”
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