Shipping: 100% Profit

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I started dabbling in eCommerce in 1997; my first project was with a major department store chain. They had a basic HTML site and their customers were asked to fax orders into a “fulfillment center” (a single person.) This center would find the closest store and call the store’s manager to mail the goods to the individual placing the order. Store managers were encouraged to deliver the merchandise themselves – everything from big items, like beds, to the smaller items including shirts, gifts etc. Their CMO felt this process could leverage their massive store network and offer a personal touch.

The customer was charged a flat shipping fee – the irony was that the store was forced to pay the shipping charges since they were being given the opportunity to move the merchandise. Their billing was a complex system of credits for items purchased, shipping costs, inventory out etc. – it was VERY confusing, even for them, but essentially translated to corporate earning a 100% profit on customer shipping charges.

After the five month project was complete, they had one of the first dynamic ecommerce shopping carts in the industry – their orders picked up dramatically and their one-person fulfillment center quickly grew to fourteen; all the while they ignored their newly built automated fulfillment system due to those 100% profits. As you can guess, the customer complaints finally mounted and they quickly scrambled to convert processes, only to leave many dissatisfied customers in their wake.

Today’s eCommerce landscape is full of automated systems, free or convenience shipping and delivery guarantees – unfortunately many eMarketers cringe at the possibility of losing the couple dollars that could be used to offset shipping costs. My advice is to remove all possible roadblocks that could hinder the customer purchase – if a low, flat rate shipping translates to better sales… that may be your key…