June 26, 2008, 12:00 AM

Delivery Services

Getting packages to the customer’s door on time

Long a fundamental part of direct-to-consumer retailing, delivery services can make or break a retailer’s relationships with customers. Because regardless of how good and popular a merchant’s products are, delivering them late or in poor condition-or at excessive shipping costs-is sure to strain those relationships and make the customer think of other shopping options.

But now delivery services, and how retailers manage them, are even more crucial to a retailer’s overall performance because of steeply rising fuel costs. “Everybody has the same problem now with the price of fuel,” says Paula Rosenblum, a former retailer who is a managing director of research and advisory firm Retail Systems Research LLC. “You can’t just pass the cost onto the end customer. It’s a real issue.”

Rate shopping

There are several ways merchants can minimize the impact of fuel and overall delivery costs, she adds. For years, retailers have used manual or automated software-based systems to choose the best mix of carrier rates and routes-an alternative to going with one carrier for the volume discounts. The evolution of web-based systems is making such carrier-shopping tools more accessible through web browsers as well as more integrated across a larger number of carriers.

Rising fuel costs are not the only challenge facing shippers, of course, and many of the best practices in handling delivery services can address multiple issues as well as fuel surcharges. For example, as rates by shipping companies continue to rise along with fuel costs, more carriers are basing rates on a combination of package dimensions and weight instead of weight alone.

Retailers are responding to these requirements with systems that can quickly figure overall package dimensions to ensure products are shipped in the least-costly packaging materials, and they are using more flexible packaging like vinyl pouches to avoid more costly boxed dimensions.

Retailers are also finding it pays to be flexible in how they pass shipments on to carriers. By forwarding packages to a local U.S. Post Office for local delivery, for example, shippers can take advantage of rate incentives. Carriers including DHL will pick up packages from a retailer and forward them to the U.S. Postal Service for local delivery. The service covers packages up to 70 pounds, provides online tracking of delivery status, and provides standard delivery within two to four business days.

White-glove treatment

DHL also has been expanding delivery options in a way that eliminates steps in shipping among international markets, providing for faster and less costly overseas deliveries, the company says.

Rising costs don’t mean an overall decline in available delivery services, however. More carriers are offering so-called “white glove” services, for example, that include installation of products like computers or TVs in a buyer’s home and removal of all packaging materials as well as of the old computer or TV if the buyer chooses.

Some carriers are also offering a wider range of delivery windows, delivering on particular days or times of day so a buyer can be at home when a package arrives.

Although fuel and overall delivery costs are rising, retailers can still deliver in ways that build strong customer relationships.

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