Need some feedback on Pelican business stuff...

[Wayne 962]

Hi all. I've been having many internal debates here with people regarding our shipping policies and costs. We *will* be changing them in the future - just would like some additional input on the subject. We do get about 40 surveys a day from people that we have good feedback on, but only occasionally do they want to have a dialogue back and forth on issues. You guys here on the forums are much more talkative.

Anyways, as many of you know, we use a big mixture of drop-shippers (warehouses that stock parts around the country), we stock a large number of products in Los Angeles, and we also special-order parts that are not-heavy movers (like 1972 Sportomatic transmission parts). As such, we are often able to negotiate shipping terms with some of our suppliers to direct-ship on our accounts, etc., which allows us to offer FREE shipping at times under certain common instances. However, with Los Angeles stocked parts, since many of them are special order and/or the pricing is competitive with our other competitors (i.e. we don't build the shipping cost into the price of the part), then we don't currently offer free shipping for anything shipped out of Los Angeles. The numbers are so huge, that If I did give away free shipping out of LA without raising prices, Pelican would lose money and the business would no longer be sustainable in the long run.

So, what happens (and is happening more and more), is that our FREE shipping program is eating up more and more costs, and it's being "subsidized" by our shipping via other methods (International and out of Los Angeles). Our customers are not blind to this, and this is a common complaint. Fixing it means dismantling the FREE shipping program - there is no other way to accomplish this (unless I just raise prices across the board).

10 or so years ago when we started our FREE shipping program, the economics were different. Nowadays, the costs for shipping have almost doubled, yet our FREE shipping minimums have stayed the same. If you do the math on that, it means that a net positive flow to the bottomline has become a huge drain. Plus, it sounds like our customers aren't really happy with having to pay for shipping out of Los Angeles (regardless if they get FREE shipping on most of the parts).

So, the idea is that we are looking to eliminate the FREE shipping program, and replace it with a "reasonable" shipping program or "discounted" shipping program. Example - on a $100 order, the shipping charge would be $5 or something like that. A charge that is commensurate with what the costs of providing the service is, but without the "heh, I feel ripped off right now". Our current shipping calculators are not well optimized to ensure a "happy customer feeling" with respect to shipping. Implementing this system will eliminate / even out the current model of one method of shipping subsidizing the "FREE SHIPPING" concept. Our goal is to not make more money on shipping, but instead to make the shipping charges equitable, reasonable, and somewhat more reflective of the actual costs. I'm not terribly interested in the game of raising all of my prices to pay for FREE shipping for US customers either (one proposal), as that would continue the pattern of International customers subsidizing domestic shipping.

I'm looking for constructive thoughts and feedback on the issue. Your input is appreciated. Keep in mind that since this thread might contain semi-sensitive business information, I will keep this topic up probably for a few days, and then it will disappear into the archives.

Thanks in advance!

-Wayne

[porwolf]

As for me, I am not overly concerned with "free shipping" as long as I am convinced that the least expensive shipping method are offered as part of the program. Time is often not important to me. I strongly suggest to keep or offer USPS priority Mail as an option. It seems to be often the least expensive shipping method, especially for smaller parts. And free Saturday delivery is part of their program..

[evan9eleven]

Hi Wayne!

Short answer from my point of view: as a business owner I understand that times change and you must adjust with them. I don't personally benefit from your free shipping program as I am overseas-- I just got a box from you today and that was $100 in shipping and took 10 days express. I'd naturally welcome a system that was more balanced for everyone, and one that ensures the long-term viability of Pelican.

I have bigger issues with the function of the online catalog, but I'll email you about that some other time.

[bpu699]

I don't mind paying seperately for shipping, as long as its reasonable.

Your "free shipping" advertisment has sometimes confused me in the past. Some times I put stuff in the cart, assuming shipping will be free, then it rings up that its not. So, I cancel the order until I have more stuff to order at once.

The "free shipping" may not be helping you. There are too many caveats. Its only free "some" of the time.

What really is hurting you, is when you put in a bunch of orders, and find out you will be charged shipping twice as it comes from 2 seperate locations. That should never happen. Its not the customers fault that you are shipping from 2 wharehouses.

Consider offering multiple flat shipping charges. Nice round numbers.

1) Small bits? Fits in a smaller box? 5$
2) Bigger stuff? 10$
3) Heavy/bigger yet? 15$
4) >500? FREE

I wouldn't go higher than that. Any other amount has to be built into the price. And please find a way not to charge for shipping twice, if its from 2 locations...

I appreciate the fact that you offer the service you do, and the website. Yo have to make money! But some of the ways you have been charging for shipping may be turning people off.
u
Good luck!

Bo

[peppy]

This might help me, since I would try my best to hit the $75 limit. I have parts that I have lost in my garage that I bought that I didn't need at the moment, but I wanted the free shipping.

Shipping charges have gotten very expensive, I was wondering how Pelican could absorb that.

Maybe ease us into it with a few specials.

[Wayne 962]

Originally Posted by porwolf

As for me, I am not overly concerned with "free shipping" as long as I am convinced that the least expensive shipping method are offered as part of the program. Time is often not important to me. I strongly suggest to keep or offer USPS priority Mail as an option. It seems to be often the least expensive shipping method, especially for smaller parts. And free Saturday delivery is part of their program..

Clipped and copied into my "Shopping Cart To Do" list - communicate with the customers about Weekend delivery for USPS. I don't think we do that currently inside the cart.

Cool!

-Wayne

[Wayne 962]

Originally Posted by bpu699

What really is hurting you, is when you put in a bunch of orders, and find out you will be charged shipping twice as it comes from 2 seperate locations. That should never happen. Its not the customers fault that you are shipping from 2 wharehouses.

Since we launched our new catalog and new search engine (those previously were the highest complaints), this complaint is now #1. So, yes, you're spot on. Thx,


Wayne

[Wayne 962]

Good feedback, please keep it coming! We are here to serve you guys and to try to give everyone their cake and eat it too!

-Wayne

[McLaren-TAG]

It's not so clear cut Wayne and you've obviously been wrestling with it a while. I don't mind paying 10~20 shipping when I order ten or fifteen things and the cost runs a couple hundred bucks. I'm actually okay with that since IMO, shipping online kind of sorta perceived as "tax" I'd pay to the state if I bought it locally, IF THEY HAD THE PARTS LOCALLY, which 95 times out of 100 they don't.

My pulling the hair out moments are when you have to order a three dollar part and you pay twice that in shipping.

[rwest]

I agree that free shipping on some items and not others kind of annoys me. It also annoys me when shipping is a percentage or based on cost and I order a expensive, small and light item from somewhere and the shipping ends up being about twenty bucks and in reality it probably cost three dollars.

As a person who ships things myself on occasion, I know that it costs a fair amount to ship things. I'm would very happy paying $5-15 for an order. Reasonable costs will not bother reasonable people- unreasonable people you don't want as customers!

[porsche930dude]

I havnt ordered in a while so I dont know how things work these days but I agree you should take advantage of the usps flat rate boxes and envelopes. they are a life saver for me. People get real turned off when they pay big bucks for a big empty box.

[Flat Six]

Originally Posted by bpu699

What really is hurting you, is when you put in a bunch of orders, and find out you will be charged shipping twice as it comes from 2 seperate locations. That should never happen. Its not the customers fault that you are shipping from 2 wharehouses.

Consider offering multiple flat shipping charges. Nice round numbers.

1) Small bits? Fits in a smaller box? 5$
2) Bigger stuff? 10$
3) Heavy/bigger yet? 15$
4) >500? FREE

Wayne:

First, thanks for asking. It's a confident and enlightened business person who truly engages with his customers. Not the first time I've seen you do it, but each and every time you do I think you deserve recognition for doing what so many other service companies fail / are deathly scared to do.

Second, Bo's suggestion above is a good one from my perspective. But I'd add:

a) dealing with small parts/items must be a pain for you; how about treating (and -- more importantly -- identifying in your online catalog) commonly-ordered small parts as add-on items as Amazon does? e.g., free shipping with a minimum order of $x.xx as long as we can toss them in the box at the same time.

b) dealing with multiple warehouses (whether yours or distributors') has to be a PITA, too; you might want to check out how CTD (cheaperthandirt.com) handles calculating shipping for items from multiple warehouses -- they identify which warehouse an item ships from. Buy multiple items from the same warehouse and get charged less for shipping. Buy the same items from different warehouses, it costs you more for s&h. But the consumer makes the choice (and knows the consequences ahead of time).

As you've described, there are really two paths that you can take: continue to keep shipping dirt simple for your customers (and either eat the additional costs or bake them into the per-item pricing), or create more flexible pricing approaches that (more) accurately reflect the actual shipping costs for each order.

In my opinion, companies that will be most successful taking the second path will be those companies that are the most transparent / provide their consumers more information and places greater choice in your customers' hands. As you know this will create some technology and data management challenges but -- in the long run -- will help you run a more efficient and more profitable business.

My $0.02.

Best,

Dale

[Wayne 962]

Originally Posted by rwest

It also annoys me when shipping is a percentage or based on cost and I order a expensive, small and light item from somewhere and the shipping ends up being about twenty bucks and in reality it probably cost three dollars.

Yes, that was another plan suggested. I'm not terribly fond of that one either...

-Wayne

[Wayne 962]

Originally Posted by porsche930dude

I havnt ordered in a while so I dont know how things work these days but I agree you should take advantage of the usps flat rate boxes and envelopes. they are a life saver for me. People get real turned off when they pay big bucks for a big empty box.

Yes, that would be great. The trouble is that the computer doesn't know what will and will not fit in a box. Especially if parts are special-order and not here on the shelf. So, a lot of (smart, computer-based) guessing has to be done in order to use (and quote to our customers) the flat-rate boxes...

-Wayne

[Josh D]

I'm on board with the others here. I don't mind paying reasoneable shipping costs. What I don't like is when shipping equals or exceeds the cost of small parts. I don't always want or need to spend $100 for free shipping. Sometimes I just want a dang Mahle oil filter, but don't want to pay double for it to have it shipped!

[Jrboulder]

For me, pretty much the only parts I buy from Pelican are the free shipping parts. Take brake rotors for example: not only do you offer the lowest price on the internet but they'll be at my house in 2 days and I don't have to pay sales tax or shipping for these big heavy things. Pelican offers a very convenient and usually the most inexpensive way to get common parts for my car. $5 isn't going to break the bank but $25 on a $150 order would probably steer me away.

I don't buy any special order (mainly Genuine Porsche) parts from Pelican anymore. I used to order all of them from Pelican but so many came back as NLA I had to start confirming availability through a dealer, who in turn offers the parts for substantially less along with real-time availability information.

If you give me a reason to go looking for a better way to buy parts then I probably will go looking for a better way to buy parts.

[Wayne 962]

Originally Posted by bpu699

b) dealing with multiple warehouses (whether yours or distributors') has to be a PITA, too; you might want to check out how CTD (cheaperthandirt.com) handles calculating shipping for items from multiple warehouses -- they identify which warehouse an item ships from. Buy multiple items from the same warehouse and get charged less for shipping. Buy the same items from different warehouses, it costs you more for s&h. But the consumer makes the choice (and knows the consequences ahead of time).

You guys here are smart engineering-style types for the most part (working on your car yourself is a BIG filter for this forum). I think that a lot of people here would like this approach. But some don't - some want simplicity. So, it's difficult, which option to show? We've talked indeed about making the checkout "more complicated" with giving the customers final choice. For my own personal preference, I think I would prefer this. But a lot of people I've asked don't seem to agree. Keeping it simple and "reasonable" on the back end (checkout) seems to be a good universal approach, according to the feedback I've gotten...

-Wayne

[bpu699]

Several more thoughts.

Wayne, you used to send out email promotions for 10%/20% off, etc. I haven't gotten one of those in a while. (hint...)

You may get some bang for the buck by doing the same thing but sending out email for "free shipping" instead. Same idea, but costs you less dollar wise. Plus, customers love to get stuff for "free."

Do you want customers to make small orders? (Of course I know you prefer BIG orders, but thats beside the point ). Are small orders profitable or at least break even? There are tons of times I would love to order 20-25$ worth of stuff, but talk myself out of it because of the shipping.

Did you ever think of doing "blow out items"? Stuff you may no longer wish to carry, sold at a heavy discount? Loss leaders? Stuff you buy in bulk and then sell cheap? Eastwood and ******** do this a lot, and I can tell you it makes me click the links (and often order).

What about free shipping if ordered this week! (Correlated with your slow periods, to boost flow through). If you charge for shipping, then you could give it away as a loss leader.

We all appreciate your model of fair prices, quick shipping, and great customer care. Doing more enticements to have people order would help you also. Seems your competitors are pushing this quite a bit.

Bo

[Dave Colangelo]

What about drone delivery?

But on a more serious note, free shipping makes me spend more money and controls my shopping pattern especially here on Pelican. I often need about $80 of parts and thus don't qualify for the free shipping. As such I usually "find" another $20 of parts to order to spend the money and get free shipping. Now I dont know what your profits per part are but does this increase in spending to make the minimum (an increase you may lose) out weigh the shipping issue?

Other places offer free shipping. Now I understand the business issue you are having here but one of the things that keeps me buying from pelican is competitive prices and loyalty. Now $5 is not much and I would not have a problem paying that but if your shipping went up to standard rates you may find your self losing shoppers to sites like amazon where the prices are the same and they are saving on shipping. The recession is far from over and many of us still do what we can to save.

What about offering a year of free shipping for a flat rate (say $99). This essentially boils down to what amazon prime is doing. Just a thought.

Regards
Dave

[Wayne 962]

Originally Posted by Josh D

I'm on board with the others here. I don't mind paying reasoneable shipping costs. What I don't like is when shipping equals or exceeds the cost of small parts. I don't always want or need to spend $100 for free shipping. Sometimes I just want a dang Mahle oil filter, but don't want to pay double for it to have it shipped!

Unfortunately, if someone orders a filter - it's going to cost about $5-$6 to ship it. It's nearly impossible to get around this, unless you're a company like Amazon that decides it's going to lose money on every order just so it can grow and appease shareholders. The reality of this too is that if I look at the processing and handling costs of selling a single oil filter - it's a money loser for me. So, from a business perspective, I almost want to *discourage* small orders like these (possibly by charging a higher shipping amount) and encourage larger, more grouped orders. Of course, this doesn't take into effect the "Customer Perspective" and loyalty part of the equation - knowing that you can get anything anytime from Pelican at a reasonable part (I.E. we subsidize the costs associated with "smalls" in order to keep the customer happy). This is one reason why we use first-class mail right now. We charge $2.95 to ship first-class mail. Most people don't even realize that the padded shipping envelope can cost up to 50 cents of that, and the actual shipping cost paid to USPS is greater than $3. That doesn't even include the picking / packing / label printing cost for that order. I think our average warehouse costs are between $5-$10 per order, last time I looked at them. So, shipping "smalls" is a super-duper big-money loser, unless you factor in the "Customer Appreciation Factor".

-Wayne