July 28, 2014, 11:44 AM

How a Canadian e-retailer offers free shipping on $20 orders

A close partnership with Canada Post allows customers of Best Buy Canada to get free shipping on orders of $20 or more.

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At Future Shop and Best Buy Canada, customers spending $20 or more can get free shipping—an expensive proposition, says Stephen Gordon, director of logistics at Best Buy Canada Ltd. retail chains Future Shop and Best Buy.

Canada Post,  the country’s national postal service, and Ingram Micro Logistics, the retailer’s logistics provider,  are collaborating to help the merchant continue to offer free shipping on orders of $20 or more. Ingram Micro Logistics, a division of computer hardware and software distributor Ingram Micro Inc., provides customer service and fulfillment services to online retailers.

The retailer works closely with Canada Post and Ingram Micro to keep costs under control. For example, the retailer shares shipping volume forecasts to help Canada Post and Ingram Micro better prepare necessary levels of warehousing and trucking resources.

Ingram Micro warehouses the retailer’s e-commerce inventory. As orders come into Future Shop and Best Buy Canada’s online order management systems, they’re automatically forwarded to Ingram Micro’s warehouse management system and Ingram Micro prepares them for shipping by Canada Post. With advanced notice of expected shipping volumes, both Ingram Micro and Canada Post can better schedule the right amount of warehouse workers and delivery trucks to expedite order processing and deliveries, Gordon says. “We know by the hour our number of orders,” he says. Best Buy Canada ships 90% of its online orders through Canada Post.

The Canadian retailer relies on this coordination for orders placed multiple ways, including orders placed in stores at kiosks for products not immediately available. Although the retailer operates its own distribution centers for its stores, it still uses Ingram Micro’s warehouse management technology integrated with Canada Post to coordinate orders for delivery.

The retailer’s work with Canada Post and Ingram Micro, he adds, has helped make delivery times more consistent, he adds. Customers now often get next-day delivery at no extra fee in major metropolitan areas including Toronto, Montreal and Vancouver, when ordering online as late as 6 p.m., compared with average delivery times of three to four days a few years ago. “Because of our improved time to delivery, the customer has confidence in using endless aisle and other programs,” Gordon says.

Canada Post launched same-day delivery last fall at Future Shop and Best Buy stores in the Toronto metropolitan area, offering delivery between 6 p.m. and 9 p.m. for orders placed by noon. Customers pay about 40% more than the cost of standard delivery.

“It wasn’t a massive amount of volume, but the customers who used it were happy with it,” Gordon says. “It helped make the holidays a tremendous success.”

The retailer was still operating that program this spring, and was considering offering it in Vancouver, British Columbia. It’s another part of Best Buy’s efforts to increase its level of service to customers—while relying on Canada Post and Ingram Micro to come through with new and unusual services.

Another example of that occurred during last year’s holiday shopping season, when Ingram Micro arranged for some warehouse employees who don’t celebrate Christmas to process online orders and load trucks on Dec. 25 so that Canada Post could make deliveries on Dec. 27 for popular extended-holiday-season shopping.

“Canada Post has evolved from a mail carrier to an e-commerce player,” Gordon says. “And they have to keep pushing forward.”

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