Chapter 9: Getting Product from Warehouse to Customer

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After your container has arrived and been unloaded, what is your next action? We discuss your logistical choices, using technology to optimize the processes, and the importance of aligning customer expectations to logical reality.

At the 2007 eBay Developer’s Conference in Boston, the following data was presented[1]. When buyers were asked “What one thing would you suggest eBay focus on,” look at what was number one:

Solving the shipping concerns, and not over-pricing for shipping, will take you a long way.

After your container has arrived and been unloaded, now what? Sell a product, of course!

Once the order is confirmed:

Figure out which carrier is going to transport the item
Place the order with that carrier
Send a “release from inventory” order to your warehouse
Inform the customer when they should expect delivery, and
Inform the customer on how to track the product en route.

Selecting The Carrier

You cannot use UPS or FedEx Express (which is different than FedEx Freight). Great! That’s the point. As I mentioned earlier, because your product exceeds these carriers’ weight and/or size restrictions, you have a barrier to entry which keeps out some of your competition—at least for now.

In selecting the carrier, I recommend that you set up business accounts with both FedEx Freight and either Yellow or similar trucking / freight company. By setting up accounts, you can get discounts and set up a nice, easy process for your employees to follow.

You should ask for a 52% discount off of the shipper’s rack rates. No kidding! If they won’t give this discount to you, look for help through an industry organization. Mentioned earlier in the context of getting a merchant account, industry organizations such as the National Association of Music Merchants[2] have pre-negotiated shipping discounts with freight companies.

UPS Quick 31% Savings

For a quick 31% off UPS for packages processed on eBay, see www.savewithups.com/ebay.

FreightQuote – Shipping Arbitrage

A viable alternative is to outsource each quote, in order to get the best possible rate. I shipped 300 lbs of speakers once using www.freightquote.com, and had a good experience.

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The process is pretty simple: enter the pickup and delivery information, product details, and then you are given a few options to choose from. The options include vendors you may have a preference for or against, but also different delivery timeframes, insurance coverages, and so on. I like the homogeneous features of www.freightquote.com, www.highwayfreight.com, and www.integres.com. Finally, make sure you check out www.redroller.com, which claims to be fully integrated with eBay. This is a dog-eat-dog business, so the market leader today can be gone tomorrow.

Placing the Order with the Carrier

Most carriers still like faxes. In order for you to fax in your shipment order from Maui, you need either a standard fax or multi-function device—or remote fax capability from your PC. Therefore, I highly recommend eFax. You can convert most any file type (like Microsoft Word) into a fax and send that fax remotely. You can also receive faxes directly into your e-mail inbox—another prerequisite to working remotely. eFax also lets you choose between a toll-free fax number and a specific area code. If you want a Las Vegas area code, eFax can get you a fax number starting with the 702 area code. In fact, if you’re selling cases of Chilean wine, you can even get the appropriate international fax number! Good for certain cases of company branding, the faxes are still routed to your inbox—wherever you are. See www.efax.com and order the Messenger Plus service—a deal at less than $20 per month.

When you place the order with the carrier, make sure you have the appropriate insurance amount. Also, you must indicate that the delivery requires lift-gate service. The lift-gate is a ramp at the back of the truck that can be raised during unloading and loading. Tell your freight company whether you need lift-gate service at the customer destination only or at your warehouse as well. Lift-gate service tends to cost about $50 on each end. These big trucks are going to pull-up in front of the house or apartment and unload the container in the driveway, garage, or parking lot—and the customer is not usually equipped to unload something heavy out of the back of a tall truck. It is the customer’s responsibility to deal with the product from that point. To better illustrate what this looks like, see the following:

< iUniverse: these are all photos from the original….freight truck arrives photo>

These photos illustrate the process as seen by the customer.

Send a Release from Inventory

Your warehouse vendor is not going to release your product without proper authorization. This authorization generally takes the form of a fax from you or your authorized representative. Each warehouse has its own format requirements for the release, but you will generally say something like the following:

“Please release inventory item # 123456, serial # abc789, from our inventory. FedEx Freight has confirmed pickup for the morning of 02/23/05. FedEx Freight will have lift-gate service, but may require assistance. If you have any questions, please contact Victoria Smith at 714.555.1212.”

Set the Customer Expectations First, Then Inform Them of Status

You are not shipping a FedEx Express envelope that gets there by 10:30 a.m. next day. But this is the very expectation secretly had by many buyers. The reality is that freight companies, and particularly carriers dedicated to a segment (like specialized piano movers), have challenges meeting their delivery commitments. These challenges are not typically within your sphere of control.

Based on these challenges, consider setting the customer expectations a certain way—then exceed that expectation. By analogy, imagine a flight from Chicago to New York that leaves at 9:00 a.m. and arrives at 12:04 p.m.

Northwest Airlines may show the official arrival time at 12:04 p.m., for instance, but knows from thousands of flights that the actual arrival time will be around 11:42 a.m., assuming that the flight left Chicago on-time. Bingo! Since many flights do not leave on time, Northwest has padded their expectation. If the flight leaves 15 minutes late, the plane can still actually arrive in New York early—according to the commitment and customer expectation!

In our case, if the data from the carrier suggests a Thursday delivery, tell the customer delivery will be on Friday. Or, depending on your product, you can pad the delivery schedule even more. One idea is for you to get the expected delivery date from the freight company, say Thursday; and then tell the customer that the product will arrive on Monday (confirming customer’s availability).

Then, tell the freight company to hold delivery until Monday. There is usually not a charge for this short hold period. Once done, you are accounting for inevitable delays on the warehouse to freight company baton pass.

Of course, customers today are expecting tracking numbers, so you need to pass this information on to the customer. If using escrow, the tracking number is also required by the escrow company.

International Shipping

International shipping can certainly be done, and the process seems to get easier every day. If you feel up to the challenge, I can help you. First, let’s make this clarification: Early on in your business life, you can ship internationally; but you still are targeting U.S. customers. After you have built up some profits and experience, then you can start targeting non-U.S. customers. I know one online seller who has done just that—he focuses on France now as his target country.

Getting a large item shipped to a destination outside the U.S. 48 states is not as difficult as you might think. First, read the following suggested text for your international shipping policy:

International shipping is also available. For all destinations outside the 48 contiguous United States, we first crate your item in our Los Angeles warehouse for extra protection (crating fees are included in the shipping quote) and your product is then shipped via common carrier. Common carriers will deliver the item to your home but will not bring the item inside of your home. In Alaska, Hawaii, and Canada, delivery arrangements can sometimes be made directly to your residence. Otherwise, the product is typically shipped to the customs broker nearest you. Because of the language barrier, it is more efficient for you to then arrange for the pickup and local delivery.

Additional duties, taxes, and customs broker’s fees may be applicable for destinations outside of the 48 contiguous United States. For example, most goods imported into Canada are subject to the Canadian Goods & Services Tax (GST), which is currently at 6% and is calculated after any applicable customs duties are applied. Some Canadian Provinces also have a Provincial Sales Tax (PST), which varies by each Province. Other provinces such as, but not limited to, New Brunswick, Nova Scotia, Newfoundland, and Labrador have a flat Harmonized Sales Tax (HST) of 15%, instead of paying the GST or the PST. For complete details on the applicable fees for your delivery area, please consult with your local customs regulation officials.

The common carrier (like Yellow or FedEx Freight) will deliver. The common carrier, with which you have an account, will typically outsource the foreign-soil delivery. The product will be delivered to the buyer’s country border and taken through customs by the buyer’s customs broker. Then, delivery will be completed to the customer’s front door (but not usually inside the customer’s home). Just like the “use taxes” for the United States, you need to push responsibility for taxes, duties, and so on to the customer.

By selling a few items internationally, you will build up valuable experience to apply later.

[1] “Lessons from eBay Buyer Research,” Jeff Resnick of eBay, at the 2007 eBay Developer’s Conference (Boston)

[2] See www.namm.com