Estimated Shipping Rate Improvements
February 17, 2017
Have you ever considered how much stuff we all have? Think about it: how many pairs of shoes, shirts, pants, jackets, kitchen appliances and utensils, electronic devices, personal care items, works of art, and pieces of furniture do we own? What about all the things in our garages, storage sheds, basements, closets, attics, and maybe even off-site storage facilities? Most of us have a lot of stuff—especially when compared to our grandparents, for example, when they were our age. A lot of this accumulation of things (wealth) can be attributed to the increased productivity of human activity due to technology. Today, the average person can produce a lot more in a given period of time compared to someone living 100 years ago. Just think about the mobile phone you carry today that has more computing power (and features) than a Cray supercomputer of the early 1990s for a tiny fraction of the cost.
So, what does this have to do with shipping? I’ve been in the ecommerce business since 1996 and despite monumental leaps in technology, the cost of shipping goods has not experienced anywhere near the price-per-performance gains seen in other products and/or services and generally speaking has continually risen year over year. It is no surprise then that our customers, who are shipping relatively heavy goods, are very sensitive to the cost of shipping. For us to be competitive we need to provide great value on books and get them to our customers at the best possible price. This is something we have always striven to do but when it came to our websites, Bookdepot.com and Bookdepot.ca, it sometimes appeared that was not the case. Let’s discuss this by looking at what we have done in the past and what we are presently doing now.
Shipping in the Past (not that long ago):
When you were done putting your order together, you would proceed to the shipping page where an estimated shipping cost would be provided. We offered a disclaimer that this was just an estimate and the final shipping price would be determined once the order was picked and packed. In just about every case, the actual price you paid for shipping was less—sometimes substantially so—than the quote since we didn’t want to quote low and have to go back to you and ask for more money.
The above process worked relatively well for small orders of less than 10 to 15 boxes (depending on where they were being shipped), but if you were ordering a skid’s worth of books the estimated shipping cost was enough to almost make you fall off your chair. Unfortunately for first-time customers, this was probably enough of a deterrent to scare them off from buying from us. Behind the scenes we were estimating the shipping cost based on a per-box rate from our shipping carrier. Each box would be individually weighed, rated, and shipped with its own tracking number. Our shipping department knew for each shipping location there was a break-point where it became more cost effective to ship the order by LTL (less-than-truckload) and would rate-shop the shipment with two to three LTL carriers for the best rate. In most cases, for a medium size to larger order, the actual shipping rate charged would be noticeably less than the website estimate. For example, an estimated shipping cost of $400 to $500 could in reality end up costing $175. While our regular customers understood this, first-time customers clicked away. Generally speaking, it was a poor business practice.
In searching for a solution, we needed a reliable method of estimating shipping for several variables that included weight, number of boxes and skids, presence of a loading dock, location, and delivery time. The goal was to provide the best possible rate without underestimating the shipping cost. Since many of our internet orders are paid for by credit card via a secure and automated processor, we can’t charge more for the order than the original authorization amount.
After some searching and arm twisting, we managed to convince an LTL service provider to give us access to their quoting system. This service provider has access to several trucking companies that offer coverage across North America. Often a trucking company will have more extensive coverage in certain regions of the continent and hence will offer more competitive rates for that area. The quoting system was made available to us via an API (application program interface) that allows us in real-time to pass the shipping information over and receive back the best rates.
For the first few months, we monitored daily what we were quoted from the service provider via the API against what the order actually cost to ship once it was packed and prepped for shipping. Again, the goal was to quote the best rate without overcharging or undercharging. The monitoring period allowed us to fine tune the quoted rates to the point where we are now 95% accurate in ensuring that what you see is what you will pay. In a few circumstances, the estimated shipping rate shown on our website is still higher than what you will actually pay. This is due to the expertise of our shipping department in identifying a carrier with an even lower rate for selected orders.
The results of these efforts can give you the confidence that the rate we quote you is probably the best rate you will ever find. If you are ever unsure about the rate you are being quoted, please contact our Customer Service Department. They will be pleased to work with you and the Shipping Department to make sure you get the best possible rate.