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 ...
The retailer is promoting cross-border package pick-up points for Canadian shoppers.
Outdoor gear and apparel e-retailer Sierra Trading Post Inc. last year noticed a number of consumers from Canada entering the same U.S. shipping address for their orders. The e-retailer, No. 88 in Internet Retailer’s Top 500 Guide, did a little investigating and found that those consumers were making use of Kinek, a delivery service that lets consumers ship their online orders to participating retail stores in the United States and pick them up at their convenience.
After learning more about the service, Minden Fox, global online marketing manager at Sierra Trading Post, decided to promote it to the e-retailer’s customers in Canada as an alternative to having Sierra Trading Post ship their orders to their doors. Shipping online orders from the United States into Canada typically costs more than shipping to a U.S. address, and consumers in Canada have to pay broker fees and taxes on most purchases coming across the border. SierraTradingPost.com’s shipping rate for Canadian orders, for example, ranges from $34 (C$ 33.45) to $68 (C$66.89), based on the total value of the order. U.S. standard shipping rates range from $5.95 to $16.95.
“If a customer is shipping to a Kinek point in the United States, they can take advantage of our U.S. shipping rates, and that’s a saving for them right there,” Fox says. “We were also hearing complaints from consumers about how they don’t like paying brokerage fees. We figured if we could offer them a service where they took control of taking a package across the border on their own, it could save them a lot of money.”
By law, when Canadian consumers come to the United States and return to Canada within 24 hours they have to declare any purchases valued at $50 or more that they’ve made, and pay applicable taxes on them. But border crossing guards aren’t tax agents and don’t always examine receipts, so it’s not unlikely that some Canadians can avoid paying those taxes. By carrying their purchases across the borders themselves, Canadian consumers also avoid having to pay brokerage fees, which cost at least $8.50 in Canadian dollars per package.
Kinek has about 1,500 pick-up locations, which it calls KinekPoints, in retail stores across the United States, including 23 locations near U.S.-Canada border crossings. Since Sierra Trading Post started promoting the availability of Kinek to its Canadian customers, the number of SierraTradingPost.com orders Canadians are sending to KinekPoints have more than tripled. What’s more, the total sales value of those orders has more than quadrupled, Fox says, which means consumers in Canada are spending more per order than before.
Fox says when customers in Canada access SierraTradingPost.com they see a banner that advertises the Kinek delivery option. SierraTradingPost.com identifies the consumer’s location using the web device’s IP address. The e-retailer also notes the service in e-mail marketing messages to Canadian consumers and occasionally offers Kinek users a promo code for purchases made on SierraTradingPost.com. The retailer also highlights the service’s availability on its Facebook page and Twitter feed.
Consumers have to register with Kinek to use the service. Registration is free and the consumer is assigned a unique ID number. When the consumer places an order with any U.S.-based e-retailer, he lists the shipping address of the KinekPoint he wants to use, and then enters his ID number on the second address line—the line that’s usually used for apartment or unit numbers. When the package arrives at the KinekPoint, the store employee enters the ID number into an administration system provided by Kinek, which then sends an e-mail or text alert to the consumer letting him know it is available for pickup. Retailers hold packages for 30 days.
The customer typically pays a per-package fee to the retailer when he picks up his order, usually $3 or $5 (USD). The retailer pays Kinek $1 per package and keeps the rest. Kinek president and founder Kerry McLellan says the busiest pickup point near the border typically receives about 700 packages a week.
KinekPoints also are available in urban areas across the United States to accept online orders for consumers who find it tough to receive home deliveries. For example, McLellan says one of the busiest pickup points in the network is one in New York’s Bronx borough, where many residents live in apartment buildings without doormen who could accept online orders. That store owner doesn’t charge consumers anything to accept deliveries, but instead uses it as a way to drive store foot traffic, McLellan says. The store still pays Kinek $1 per package. A retailer that acts as a pickup point can include an offer in the e-mail or text notification sent to alert a consumer thather package is waiting.
Fox says SierraTradingPost.com may promote the Kinek’s service to U.S. consumers later this year. McLellan says Kinek will begin establishing pickup points near military bases and college campuses this year.