A discussion draft of the Online Sales Tax Simplification Act of 2016 is expected to be introduced in Congress soon.
A new system determines if an order will fit in a USPS Flat Rate box.
Online retailers that think of creative ways to save shoppers money can make more money. That’s the lesson online T-shirt retailer RibbedTee.com learned last year when it implemented a new system to help shoppers save on shipping fees.
The retailer in March deployed a system from SolvingMaze Ltd. that determines if a customer’s order will fit in one of the U.S. Postal Service’s Flat Rate or Regional Rate boxes. Those parcels ship for a flat fee, based on the box size, regardless of weight up to 70 pounds.
Many e-retailers don’t offer this option because they are uncertain if the content of the order will fit in the limited number of fixed-size cartons provided by the USPS that ship for a lower price than a regular box, says Mike Schwarz, founder and CEO of RibbedTee Designs.
“Any merchant can offer Flat Rate shipping options, but if they cannot fit the merchandise in a USPS Flat or Regional Rate box, they have to use a regular box and pay regular Priority Shipping, which will be more expensive for them,” Schwarz says.
To see if an order will fit in one of the fixed box sizes, RibbedTee sends the contents of the consumer’s shopping cart to the SolvingMaze system, which in 1 to 1.5 seconds determines the USPS Flat and Regional Rate boxes the shipment will fit in. RibbedTee then presents those less expensive shipping options to the shopper.
“By implementing this alone, we can take an order that would have a $17 shipping charge to the consumer, and make it around $11,” Mike says. “Without the technology, we couldn't effectively offer USPS Flat or Regional Rate shipping services because we weren't certain if the content of the order would fit in the fixed-size cartons provided by the USPS.”
RibbedTee.com says revenue grew 31% from February, the month before it launched the service, to April. Transactions also grew 42%. Additionally, sales grew 50% year over year in 2012, in part, because of the new less expensive shipping options, Schwarz says. And, he adds, RibbedTee customers now pay 2% less in shipping fees on average with the new technology.
“We only show shipping options that will work for the contents of the order,” Schwarz says. “We also sort the shipping method results in ascending order from least expensive to most. By doing this, customers generally self-select into the least expensive option. Not only do the customers get the best value this way, when it comes to shipping, we then know exactly what shipping method and container to use. This allows us to streamline our shipping operations some as well.”
SolvingMaze’s fees start at $16.20 per month for retailers that ship up to 5,000 packages per month and increase to $78.73 for as many as 30,000 orders a month, according to the vendor’s web site.
“I spoke to a postmaster who called me inquiring if we knew about Flat Rate and Regional Rate shipping a couple months ago,” Schwarz says. “When I told him what we were doing, he said that nearly every other online merchant he spoke to does not use the boxes for the same reason we did not originally offer them. He said we were light-years ahead of practically every other online merchant he spoke to.”