Target and Toys R Us posted overall sales declines during the holidays.
The outdoor sports gear and apparel retailer knows well the value shoppers place on shipping promotions, but it—and its suppliers—also check the effect of those promotions on profit margins.
Altrec.com Inc., an outdoor sports gear and apparel retailer, knows well the value shoppers place on shipping promotions, but it—and its suppliers—also check the effect of those promotions on profit margins.
“After many years, we know that shipping promotions sell better than product price promotions,” says Kevin Bauer, Altrec’s vice president of business development and product marketing.
But shipping promotions must also be affordable to Altrec and the brand suppliers that co-finance the promotions, adds John Hnanicek, the retailer’s vice president of merchandising and chief information officer.
To provide Altrec and its brand suppliers with an up-to-the-minute view of the impact that the cost of shipping promotions has on sales volume and profit margins, the retailer has deployed a web-based shipping management system from Kewill Inc. that provides real-time information on the cost of shipping based on the weight and distance of each order.
By integrating that information with other Altrec data on sales and cost of goods, the retailer produces ongoing reports of overall profit margins and total sales tied to individual shipping promotions. “We’re able to see how our business is shaping up for a particular period, and look at our profitability to see how much of it is being eaten up by shipping costs,” Hnanicek says. “We share that information with our brand partners to let them know what they’re getting for their marketing dollars.”
The Kewill system also provides details on shipping costs that enable Altrec to maintain a high level of customer service at minimal cost. “If guaranteed shipping within two days is in our promotion, we don’t necessarily need to pay for two-day shipping,” says Bauer. “Our Kewill shipping software may indicate that, for some shipping zones, we can get a package to a customer within two days with standard ground shipping.”
“The real-time understanding of this kind of information is huge,” Hnanicek says. “The system paid for itself very quickly.”
Altrec.com is No. 404 in the Internet Retailer Top 500 Guide. Kewill Inc. is the U.S. unit of U.K.-based Kewill plc.