Multichannel Retailer Has More Efficient Shipping In Its Sights

A retailer specializing in outdoor equipment, Cheaper Than Dirt (CTD) already had a loyal customer base for its catalog sales when it decided to enter the world of e-commerce in 1998. "Despite our research, we didn't foresee the explosive growth created by the Web site," says Susan Johnson, general manager of CTD. Online sales now account for about 50% of the company's almost $15 million in sales. Between its own products and those of a distributor partner, CTD has more than 60,000 available products on its Internet site. That doesn't mean that CTD has abandoned its other sales channels. To make sure that all customers are served, CTD accommodates mail and phone orders in addition to Web orders.

That range of sales channels can make shipping pretty complicated, but the inventory itself presents its own challenges. Since CTD sells ammunition, military surplus, stun guns, and other regulated hunting and shooting supplies, there are certain shipping restrictions. At one time, United Parcel Service (UPS) was CTD's only shipper, but the strike several years ago taught them that putting all of their packages in one big brown truck was a risky proposition. But employing three vendors meant having three separate terminals and three extra employees to run them. Each employee was manually entering the tracking numbers, which affected accuracy as well as labor costs.

In an effort to speed the processing of a growing volume of orders, Cheaper Than Dirt installed Neopost Logistics Systems' ASX software solution. This product is designed to support integration of the shipping stations to an enterprise-wide business information system such as SCM (supply chain management), WHM (warehouse management), or ERP (enterprise resource planning). CTD chose Neopost because it offers a special integration package for its existing MOM (Mail Order Manager) system from Dydacomp Development Corp. CTD became aware of Neopost through a link on the MOM Web site, which also directed them to local sales teams.

Real-Time Reporting Reduces Labor
MOM has a shipping module that allows it to run shipping manifests, but CTD needed to monitor tracking and availability. In addititon to labor wasted on various shipping terminals, CSRs (customer service representatives) were not as productive as they could be because of the amount of time it was taking to track packages. Because tracking numbers were manually entered into MOM every day, they weren't always immediately available. Sometimes they were mis-keyed or not entered at all.

Using the Neopost system, all packages are processed through one terminal which can recognize the various shipper numbers. That means every package is recorded and CTD knows everything that left the building. "If it's not on Neopost, we know for certain that it didn't go out," states Johnson. "If there's any question, we can run a report and see not only that package, but any package that has ever been shipped to that address." CSRs have online connections to shipper sites allowing them to track packages once they have left the building and give immediate feedback.

Johnson says that CTD quickly realized an ROI on the system. which at that time cost $30,000 and includes a complete two-station networked system, scales, printer, and software. Two full-time employees were reassigned from tedious, manual tracking number entry. The number of lost or missing packages was reduced, and the company can now run more orders per day with lower overtime costs. The reduced call time cuts more than labor costs. Because customers call in on a toll-free number, shorter calls mean lower bills, and call-backs are practically eliminated.

All of these benefits were realized with very little user training, says Johnson. She estimates that the average employee required about an hour of instruction and the interface is logical enough for the average computer user to answer his/her own questions. She has also found that the system is fairly safe from user error. "That first day you would have thought we were trying to crash it, but the fail safes prevented any catastrophes."

Best-Rate Feature Increases Accuracy
The success of the Neopost installation has encouraged CTD to consider expanding its capabilities. In the future, links to the shippers' Web sites will appear on CTD's Web site and more customers will be driven to resolve inquiries in that way. CSRs are also currently responsible for determining the shipping method based on weight, size, and legal restrictions. Unfortunately, weight and size aren't always consistent. For example, the addition of packing materials may increase the weight just a few ounces, but enough to exceed the 50-pound flat rate. Items that need extra wrapping or the availability of appropriate size boxes may also affect that decision. By employing Neopost's best-rate feature, that decision can be made at the scales and still include contracted discounts for both residential and commercial shipments.

Besides the expected seasonal shifts, specialty retailers like CTD have to be prepared for unexpected peaks in activity. For example, the Y2K scare prompted a huge increase in orders for MREs (meals ready to eat). That was expected. What caught CTD off guard was that the highest demand came during the summer of 1999, rather than the fall, and it also included ammunition orders. Johnson says that Neopost's automated tracking and shipping functions would have taken much of the pain out of that experience. CTD is currently in the height of the mail order season where as many as 4,000 packages are shipped per day and has not yet come close to the Neopost system's capacity.