Web-only retailers, including Amazon, accounted for 42% of sales of all retailers ranked in the Read Now
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With TrueShip integrated into his Volusion Inc. e-commerce software, David L. Vollmer Jr., president of e-retailer IsolatorFitness.com, says he can process orders placed up to 4:15 p.m. in time for pickup by UPS at 4:30 p.m. The TrueShip software, he says, "pays for itself within the first 10 minutes you use it."
For JackThreads.com, a web retailer of apparel for young men, an audit of six months of shipment data revealed several ways to cut costs. The auditor, LJM Consultants, discovered many invalid addresses, in part because many of JackThreads' customers are college students who move frequently and may not correctly enter dorm addresses. That's a costly problem, because UPS and FedEx charge $11 for each address correction, says Ken Wood, LJM's CEO.
JackThreads solved that problem by installing Satori Software Inc.'s technology that draws on a national database of valid addresses from the Postal Service to clean up JackThread's customer address database, and to correct customers when they enter invalid addresses. The Satori software can cut address corrections by 80%, Wood says. The cost of the software can range from $200 to $800 a month, depending on the modules selected and transaction volume, says Jim Spates, president of Innovative Mailing & Shipping Systems Inc., which helped JackThreads deploy the software.
The audit also helped JackThreads identify a UPS service for shipping lightweight items—such as T-shirts—that cut shipping costs 30% to 40%, says JackThreads' general manager Michael Novotny. That's enabled the e-retailer to cut the shipping fee it charges on T-shirts from about $8 last year to $5.95, helping more than double sales over last summer, Novotny says.
Amazon to the rescue?
For EasyLunchboxes.com Inc., which has been selling food containers and cooler bags online since December 2009 and expects to sell about $1 million this year, shipping salvation started with a call in April 2011. An Amazon representative encouraged founder Kelly Lester to sell on Amazon.com, and within a few months helped her place inventory with Amazon so that the big e-retailer could ship for Lester orders placed on Amazon.com.
That service, called Fulfillment by Amazon, also makes Lester's products eligible for free shipping to customers who spend more than $25 or are members of Amazon Prime, Amazon's two-day shipping program.
Once signed up with FBA, virtually all of Lester's Amazon orders shipped free. "That's what sent sales through the roof," she says. Her sales have doubled each year, and 90% of orders now come through Amazon, she says. She's not alone: Amazon says 89% of FBA sellers report increases in unit sales on Amazon.com, with 64% reporting increases of more than 20%.
Another advantage of FBA, says Lubel of ChannelAdvisor: Since Amazon handles fulfillment and customer service, any complaints about an order don't ding the seller's rating.
For shipping an order placed on Amazon.com, FBA charges $2 plus 37 cents per pound for most items under $300 in value. That can be a cost-effective way to offer free shipping, just as Amazon does on most of its orders.