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Aug 12, 2009
Case Study

Date-Specific Delivery Options Cut Costs and Calls: 5 Steps

SUMMARY: Shipping has become reliable enough to pinpoint the exact day when an order will arrive at a customerís door. Letting customers take advantage of this feature might make your fulfillment a little more complicated, but it can also make your customers happier while reducing costs.

See how an online gourmet food retailer cut its call center and re-shipping costs by letting customers pick the exact day they wanted orders to arrive at their house. Now, 70% of orders are shipped through the new system.
CHALLENGE

In late 2007, Spencer Chesman, CEO, igourmet.com, noticed several problems with his companyís shipping process.

Many of the gourmet food retailerís products are cheeses and meats that spoil easily. Customers wanting to ensure theyíd be home to receive their perishable orders flooded the teamís call center to ask when their orders would arrive. And if an order spoiled in transit, Chesmanís team had to pay to ship another order to keep customers happy.

Other customers wanted to make sure that the product would arrive by a certain date.

"Since 30% of our sales are gifts, a lot of people want the gift to arrive on the day of the anniversary or birthday," Chesman says. "Another portion of our sales are for entertaining. They also want their orders on a specific day."

Chesmansí team wanted to decrease calls to the call center and increase customer satisfaction. They needed a new method to schedule shipping and communicate when a product would arrive at a customerís door.

CAMPAIGN

In February 2008, the team launched a system that let customers pick the day their orders would arrive.

Here are the steps the team followed to add the new shipping option:

Step #1. Request time and transit files from shipping companies

Chesmanís team worked with three shipping companies for their orders. They requested the time and transit information from each company for every location they could ship to, based on the point of origin of igourmet.comís warehouse.

Each shipping company provided files organized by zip code that explained how much it would cost and how long it would take to ship to every area they reached. The information was broken out for three options:
o Overnight
o Two-day
o Ground shipping

Step #2. Integrate shipping data with ecommerce system

The team worked with igourmet.comís IT department to integrate a system that served order arrival dates and shipping costs to customers on demand. The system was based on the transit information sent by the shipping companies.

Chesman says this process was complicated, and his team steadily worked through it. The only snag, he recalls, was adjusting the system to work around holidays on which shipping does not occur.

Step #3. Coordinate with fulfillment center

Previously, online orders were shipped as soon as possible -- first come, first served.

Allowing customers to select the day they wanted orders to arrive required the fulfillment center to coordinate with the transit process to schedule deliveries that arrived on the correct day.

The teamís IT department created an automated a system that dictated when the fulfillment center would ship the product based on the arrival date selected by the customer. The date, coupled with the customers location, also determined which shipping company igourmet.com would use.

- At the beginning of a day, the fulfillment team got a report of which products they had to ship that day and through which shipping companies.

- Some orders had placed during the previous evening and were to be shipped as soon as possible.

- Other orders had been placed days in advance, but had to be shipped that day to arrive on time.

Step #4. Modify check-out process

The team added the choice of arrival date to the third step in their existing checkout process.

The new shipping page had the following features:

- A check box to select shipping option:
o Guaranteed delivery on or before the earliest-possible date, OR
o A drop down list with 14 possible shipping dates, with price

- Two radio buttons:
o Deliver package up to 7 days prior to the date selected above
o Deliver package on the exact date selected above

After the back-end system had been built, adding these features to the check-out process seemed much easier in comparison for the IT team to accomplish, Chesman says.

Step #5. Maintain previous shipping option

The team continued to give customers the option to receive orders as fast as possible.

- The teamís policy requires highly perishable products to be shipped overnight. More products are added to the overnight-only list in the summer months.

- Products that are less perishable can be shipped in slower and more affordable methods. However, the overnight shopping option was added to the date-selection for less-perishable items.



RESULTS


Self-service success!

"By letting the customers pick the date, we reduced call volume by about 40%," Chesman says. "We were able to reduce staff at our call center [by about 40%] just by putting in this one little piece of technology."

Even though the team has not promoted the date-specific shipping option, is very popular among their customers.

- 70% of customers select which date they would a product to arrive.

- Only 30% select to receive orders as quickly as possible.

The team is also saving money by having to reship fewer orders that spoiled in transit:

- Reships are down 43%, the result of letting customers choose exactly when their order arrives.

"Reships have certainly not been eliminated, because there are always unforeseen things, such as the shipper dropping it at the wrong house."

Useful links related to this article:

Creative Samples from igourmet
http://www.marketingsherpa.com/cs/igourmet/index.html


Adding Inexpensive Shipping Lifts Conversions, Lowers Costs: 5 Steps
https://www.marketingsherpa.com/barrier.html?ident=3127


igourmet.com
http://igourmet.com/


See Also:

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