Drop Those Rates
Problem: Multititle cataloger Shindigz/Stumps wanted to reduce overall transportation expenses, while retaining flexibility in its product shipping options offered to customers.
Solution: The multichannel merchant put its parcel shipping business up for bid.
Results: A switch in carriers enabled Shindigz/Stumps to reduce its overall transportation costs by 27 percent.
Brad Grimsley knew he needed to make some changes. The vice president of service and fulfillment at Shindigz/Stumps, a South Whitley, Ind.-based party and prom supplies merchant, says he noticed soon after arriving at the company in 2003 that he had an opportunity to reduce shipping expenses.
Meanwhile, the company’s overall order volume for its eight catalog titles had risen 28 percent since 2002, but its average order size was down 14 percent. One other variable: Stumps’ officials wanted to continue offering free shipping (ground only) to customers of certain catalog titles who order a predetermined amount of merchandise. The question was how to do that profitably.
Grimsley took a hard look at his overall transportation costs. “The accessorial fees my then-current parcel carrier was charging me totaled nearly 30 percent of my spending,” he recalls. These included, for example, residential delivery charges, excess package weights, fuel surcharges and additional handling fees.
“It was ridiculous,” he says. “They were even charging me extra fees for handling dangerous goods. We sell prom kits! How dangerous can they be?”
Following was the five-step action plan Grimsley used to reduce Shindigz/Stumps’ shipping costs.
1. Collected Data
Grimsley began by looking at overall shipping data. Shindigz/Stumps typically has two peak seasons: February to May and September to November — seasons that usually are counter-cyclical to other shippers. “That became a negotiating point for us,” he says.
He also looked at returns data, package distribution by shipping zones and states, and package sizes. This information would come in handy when he started bidding out his transportation business.