Compass ®

3 ways to 'outship' your competition

Proven – and sometimes unexpected – ways to improve your shipping operation.

Want to look good to your boss and beat your company's competitors? Test-drive these ingenious tips.

Shipping may not be the most glamorous part of a transaction, but it can be a make-or-break for businesses. What you charge, how quickly it arrives and how it looks on arrival all reflect on your brand – and your chances for repeat purchasing.

Here's how to ship more quickly and cost-effectively and look better than your competitors.

1. Boost sales with "free" shipping.
This past holiday season, 56 percent of online transactions included free shipping, according to digital business analytics leader comScore. Free-shipping orders were 30 percent higher in value. And, the free-shipping phenomenon is not limited to online retailers.

One company that put free shipping to the test is SaltWorks, Inc. The manufacturer, distributor and retailer had the whole package: fine sea salt products, a high-quality site and solid traffic, says company president Naomi Novotny. But some customers were put off by shipping costs. So SaltWorks tested free shipping – and it paid off. January 2012 orders were up 1,600 more than the prior year, with the higher sales volume more than covering the cost. "Free shipping dramatically increased our online sales and added to the value that we show our customers," Novotny says.

You don't have to give away the shipping, though. Consider these ideas from a study by Forrester Research and other successful businesses:

  • Create VIP clubs with free shipping for high-value shoppers; offer free shipping only intermittently or only for high-margin products; or set a minimum threshold higher than the average transaction size.
  • Since free shipping drives revenue and loyalty, some businesses allocate shipping to their often-larger marketing budgets, instead of operations.
  • Pad a little extra onto product prices to offset much of the shipping fee.

2. Pack shipments sustainably.
Thoughtful packaging makes a big impression. And sustainable packaging can give you a competitive advantage.

Here are a couple of examples: Wine aficionados ordering from The Chicago Wine Company unpack bottles from a custom mold. The EcoCradle Mushroom packaging is made from agricultural byproducts like plant stalks and seed husks along with mycelium – also known as mushroom roots. The mycelium grows into the needed shape – corner blocks, or coolers – in five to seven days inside a mold. The cost of the sustainable materials is comparable to a petroleum-based equivalent.

Once six- and 12-packs are available, Chicago Wine will promote its use of sustainable packaging, which appeals to its corporate clientele. A recent distribution deal means material cost and weight will soon be in line with conventional packaging.

Another company using sustainable packaging is retailer Crate & Barrel, which sought to extend a focus on sustainable furniture design to packaging. EcoCradle corner blocks cost a bit more than expanded polystyrene (EPS) and about the same as expanded polypropylene (EPP) – both common foam packaging products, says Aaron Rose, senior director, merchandising operations and strategic planning, but the true savings are environmental. "Packaging that is more difficult for a retailer or customer to recycle has an external cost when it hits a landfill," he says.

3. Prepare shipments better.
Shipping is actually a multistep process: selecting the right size box and packaging materials, confirming order accuracy, generating and applying packing slips, sealing, applying labels and so on. It's easy for one poor decision – a box too-small for the weight, for example – to drive up costs. The solution: Post a matrix listing the right combinations for your most popular orders near packing stations – or use optimizing software to automate the package material selection process, cutting shipping, labor and material costs.

    6

    Reader Comments

    Add Your Comment

    Anonymous April 24, 2012
    Anything to beat the comp!
    Reply
    Anonymous April 19, 2012
    In a "business" sense, this is absolutely true! but,in potential "buyer" shopping, I always look for the TOTAL cost to get an item to my door! And, I do find quite a few "free" shipping items that make up the difference by simply (Duh!) upping their items cost. My interest is to get the identical product into my hands for the fewest $$s. Dr Thom L.
    Reply
    Anonymous April 12, 2012
    Can you please be more specific about the "box too small for the weight" that thus costs more? Do you have a matrix already created?
    Reply
    Anonymous March 9, 2012
    Since free shipping drives revenue and loyalty, some businesses allocate shipping to their often-larger marketing budgets, instead of operations. <-----it doesn't matter what line it shows up on...it is still an expense that must be controlled
    Reply
    Anonymous March 1, 2012
    Boost our sales with FREE SHIPPING? While the #1 complaint on our web sites is the UPS shipping charges, offering free shipping to customers is not the answer. Unless, of course, UPS wants to extend FREE SHIPPING to us to offset the expense.
    Reply
    Anonymous February 27, 2012
    This is amazing!
    Reply