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 ...
When items are bulky, pricey or fragile, it's great service that lets e-retailers stand out.
To win the loyalty of shoppers, Dazadi Inc. has to do more than offer free shipping across its entire product line. The e-retailer sells such rec room and man cave essentials as 1,110-pound pool tables, 22-foot shuffleboards and $6,000 pinball machines—products that can't just be dropped at a customer's door. "That last mile, if it doesn't work out correctly, can really spoil the experience for customers," says Josh Klaristenfeld, Dazadi's co-founder and executive vice president of operations.
To avoid that, Dazadi.com has expanded its delivery options. Take the combo Ms. Pacman/Galaga stand-up video game that sells for $2,795.49. For $149.95 extra, the customer can have the classic arcade time-and-quarter waster delivered into his room or office.
But what if a consumer wants help with unpacking, assembling, installing and removing debris? Dazadi offers "white glove" service on select items, and reaches out to customers who may benefit from this level of service after they place an order. Klaristenfeld says Dazadi will be adding to its checkout flow details about those service options in the coming months.
Those services not only save Dazadi customers from worrying about damaging their pricey purchases, throwing out their backs and cursing the narrow stairs in their dwellings while hauling up their new toys. Having a range of delivery options boosts Dazadi's customer service, which can bring shoppers back to the e-commerce site when they desire other games to round out their basements, or need smaller items such as cue sticks.
Delivering bulky, pricey, need-it-yesterday or otherwise beyond-the-norm items gives retailers such as Dazadi a way to stand out amid the competition and earn the loyalty of customers in ways that go beyond price and free shipping. And retailers can turn for help to several regional carriers that offer specialized shipping services, and to an emerging coterie of providers of delivery-related services and technology.
Fast trumps free
"Free shipping is not enough for some customers," says Mark Magill, director of business development for shipping provider OnTrac, which serves seven Western states. That's why the vendor provides Sunday pick-up for Monday deliveries and has done a handful of same-day deliveries for one of its e-commerce customers.
In fact, increasing the pace and scope of shipping constitutes a prime focus of many e-commerce operators going into 2013. In early December, for instance, Google Inc. bought BufferBox Inc., a service that lets consumers have their web orders delivered to secured lockers in the Toronto metropolitan area. That deal put Google in the footsteps of Amazon.com Inc. and fulfillment service ShopRunner, each of which has launched similar pickup points. Meanwhile, the U.S. Postal Service is testing same-day delivery of products ordered online, following the lead of Wal-Mart Stores Inc., eBay Inc. and Amazon.
Partly as a response to demand for quicker shipments, along with the overall growth in online retail, delivery and fulfillment providers are moving to increase their own capabilities. For instance, OnTrac, which has annual revenue of about $200 million, has over the past year added 1 million square feet of warehouse space to accommodate that growth—a 70% increase from its previous space, Magill says.
Other fulfillment providers have moved to stake a claim by crafting identities for themselves. New Jersey-based fulfillment, warehouse and customer service firm Dotcom Distribution, for example, boasts that it serves "fastidious clients" such as spa product seller Bliss and preppy apparel e-retailer Vineyard Vines, along with flash-sale web merchant ideeli Inc. and beauty products e-retailer Birchbox. Dotcom's services illustrate how special treatment can start well before an item goes onto a truck.
Take a tie ordered from Vineyard Vines, whose neckties typically sell for around $75 apiece. A tie from that e-retailer must be folded just right before being sandwiched between special paper and placed into a box, says Dotcom Distribution president Maria Haggarty. Likewise, orders from office supplies retailer Poppin, whose site enables consumers to shop by color, must reflect that experience—meaning that, say, blue products go out in a matching blue box. "We deliver brand experiences to retailer's customers," she says.
For Ontario-based Stratus Vineyards, which sells premium wines, specialized delivery and personal service are part of providing the kind of quality experience its mostly affluent customers expect. Wine deliveries from StratusWines.com not only must conform to provincial laws regarding alcohol shipments—specifically, that the consumer who signs for the shipment must be at least 19 years old—they also necessitate careful treatment to ensure the product arrives in perfect condition.
That includes temperature-controlled trucks operated by Toronto-based delivery service The Messengers International—for wine aficionados, excessive heat and cold can foul their drinks—and personal deliveries via Stratus-operated automobiles for preferred customers within 200 kilometers (124 miles) of the winemaker's Niagara-on-the-Lake headquarters, says Suzanne Janke, director of hospitality and retail.
She says that while all customers get handwritten letters of thanks with their orders—one of the benefits to being a relatively small operation—Stratus Vineyards' most loyal customers receive personalized letters written by one of the two employees who normally handle fulfillment. "Wine is a premium product, a very respected product, as opposed to something more generic," she says. "It's not a widget, and it's important to us to make sure that the experience is as exciting as possible."
Online jewelry seller Blue Nile Inc. also deals with premium products. Engagement rings and orders of more than $1,000 are shipped free via FedEx priority overnight; that accounts for about 50% of orders, says Dwight Gaston, the e-retailer's senior vice president of operations. "Above a certain price point, deliveries are shipped using armored car and armed guard," he says. "These are truly extraordinary items and represent less than 1% of our orders."
$200 delivery charges
The best way to build consumer loyalty through special deliveries is to simply do the job right, says Jason Goldberger, executive vice president for Gilt Groupe Inc. who oversees the members-only e-retailer's home and kids products. That involves making a wise choice of shipping carriers and making sure the delivery technology can please customers.