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Shipping and Handling Essentials

The basics of setting up a shipping system for your business
August 6, 2003
URL: http://www.entrepreneur.com/article/63854

You've got your inventory squared away. Now you need to think about how you're going to get it to your customers. Fulfillment--speeding that package from your garage or warehouse to your customer's door--is perhaps the single most important thing you can do in your operation aside from effective marketing. Failure to provide prompt fulfillment will result in more complaints, cancellations, refusals of c.o.d. payments and nightmares than just about anything else in the mail order entrepreneur's world.

So exactly how will you get those packages to your customers? You've seen the TV commercials. Your main choices are the U.S. Postal Service (USPS), United Parcel Service (UPS) and FedEx. Most mail order mavens use UPS for packages because it's generally cheaper than FedEx, faster than the post office, and has better tracking capabilities for those nightmarish lost items than the post office. It pays to comparison shop. Both FedEx and UPS offer various discounts when you set up an account, so be sure to ask--and don't forget to negotiate!

Take a look at your loss ratio when deciding whether to spend a little and ship U.S. Post or spend more and ship UPS, advises Tony Romano of All USA, an Illinois-based call center and fulfillment service. If the product you're sending costs less than $50, go ahead and ship first-class or priority mail. If it's more than $50, spend the extra dollars to send it UPS and get tracking capability.

For those packages that don't necessarily require tracking, it's smart business to offer your customers a choice of shipping services. You can tell them, for instance, that you can have their package out to them by U.S. priority mail with an expected--but not guaranteed--delivery time of three business days. Then you can offer second-day service by UPS or overnight by FedEx at an extra cost. Give the customer options. This way people know you're working with them, in terms of both price and speed. What a great company!

Out of Your Hands
Understanding how the relationship between your business and shipping companies affects customers will go a long way toward keeping your shipping operations on an even keel. In short, your customers will hold you responsible for any delay in receiving their merchandise, even if the delay is caused by the shipping company. So be prepared to be sympathetic to complaining customers--and stern with the USPS, UPS and FedEx.

"One of the difficult things about a mail order business," says Caryn O., a textiles merchandiser who runs her business in Georgia, "is that you can work your tail off, but once you give [the merchandise] to a shipping company, it's out of your hands. For instance, we use UPS a lot. You have done everything, you take an order, you get it out, it's great, everything's fine. And then UPS loses it or takes extra time getting it there. You can have a very distraught, unhappy customer when you've done nothing wrong.

"You have to understand that the shipping company is almost a part of your company," says Caryn. "It's an extension, and even though you're not related, your customer doesn't see it that way. All they know is that they don't have their package. They don't care when you got it out. They want to know where it is now.

"You have to stay on top of things like that," Caryn says. "We're constantly in very close contact with UPS. If UPS causes a problem for our member, we make UPS call and apologize. We fight for our members and do everything we can to make it up to them and make them happy."

Pass The Popcorn
There's a method to everything, including packing and shipping. Here's a list of smart tips for shippers to help you help yourself and your customers.

Bulk Mail
Bulk mail is one of those interesting things in life that can be either a boon or a bust, depending on how much mail you're sending out, how fast you want it to get there and how much work of the tedious variety you're willing to put in.

The obvious advantage of bulk mail is cost savings. Where a first-class stamp for a 1-ounce letter goes for 37 cents, the same letter sent bulk rate is significantly less. This sounds great. But--and here we get to a whole list of buts:

The more pieces you send, the more cost-effective bulk mail becomes. Some mail order software programs will handle the sorting for you, which makes this even more appealing.

Endless Permutations
Not all bulk mail fits neatly into the 1-ounce-envelope price category. The U.S. Postal Service has an entire 100-plus-page Quick Service Guide devoted to endless permutations of mail sizes, weights and categories, each with its own rules and regulations. And although the post office seems to have made a genuine effort to make this book user-friendly, it's not. There's a major learning curve, here. Of course, the folks down at your local bulk mail center are usually very friendly and will guide you through anything you need to know, but it's not as simple as licking a stamp and sticking it on your letter.

One issue to consider is the time factor. If you're anxious to get those letters to your customers, you might not want to go bulk mail. Bulk items can take up to two weeks for delivery, while first-class letters get the first-class treatment--usually two to four days for delivery.

You should also be aware that bulk rate letters are less likely to be opened by potential customers than first-class, stamped ones because they're perceived as junk mail. This is not to say that all bulk rate items get tossed--they don't. If your presentation is clever and well-conceived, you'll probably reach your target customers anyway.

What's the bottom line? How you handle your mailings is completely up to you. You decide which are the biggest issues--cost, labor, time or customer perception--and what benefits you're actually gaining. Don't forget that you can outsource your bulk mailings to a lettershop, fulfillment center or printing house. You won't need a permit, and you won't need to spend time sorting and resorting. Be sure to check out these alternatives before making a final decision.

Have Your Cake
If you want a discount mailing rate, but you need the speed of first-class mail, you can more or less have your cake and eat it, too, by sending your pieces first-class pre-sort. The cost per piece is higher and you must presort the same as you do for bulk mail. You must also purchase a first-class permit at an annual fee of $150. And where you need only mail 200 pieces to take advantage of the bulk mail rate, with first-class presort you have to send a minimum of 500 pieces.

If you like, you can buy both a bulk mail permit and a first-class permit and have the option of using either method at any time. For more information on business mailing options, visit "Business Mail 101" on the USPS Web site.

Source: How to Start a Mail Order Business