-By Alka Ahuja

In today's increasingly global world, where consumer needs, desires and appetites have grown far beyond the geographical boundaries of the traditional marketplace, retailers have to look outside their immediate physical neighborhood for both -- suppliers and customers. Shipping inventory -- both into the store and out to customers -- presents its own set of challenges; challenges that could result in higher costs, affecting your bottom line.

Many retailers prefer to ship in merchandise directly in a bid to avoid handling costs on shipments, either relying on the ubiquitous UPS (www.ups.com), USPS (www.usps.com) or even DHL (www.dhl.com) to bring in the goods; while others prefer to go along with what their vendors/suppliers recommend. Several retailers, however, are now relying on shipping/freight agencies that take on the task of forwarding and even storing inventory for them. The most popular of these are CaseStack.com and Shipwire.com.

"There are many shipping companies out there," agrees Erez Weinstein, owner and CEO of Olio & Spices, a purveyor of specialty oils, sauces and spice blends. "Yet these two are the most innovative ones I've discovered. CaseStack is for larger shipments with consolidated LTLs (less-than-truckload loads) and systems that work with the big retailers; while Shipwire is more relevant for small manufacturers and Web sites. The latter gives you total flexibility with the size of warehouse you need -- from 16 square feet to almost unlimited -- and you only pay for what you use."

Shipwire, which has warehouses on the East and West Coasts as well as in Canada, aims to remove the hassle of shipping and storing inventory by taking on those tasks for manufacturers and retailers. Companies can ship products to Shipwire for storage, either using their own or vendors' shipping accounts; or they can have Shipwire arrange the booking, pickup and delivery to the warehouse. End consumers then place orders on the retailers' existing Web sites, which seamlessly tie into Shipwire, as the site is integrated with many popular shopping carts. Shipwire then packs and ships orders directly to customers.

Weinstein, who sources his products globally, currently works with UPS through his own warehouse, and says retailers can use his 40 percent discount with UPS when shipping from him. He plans to start using Shipwire soon, however, as "it enables you to have your products on both coasts and, therefore, shipping is same price throughout the country. This service goes as low as $40 a month."

Scott Silverman, VP and director of specialty foods of the Houston-based supermarket chain Rice Epicurean Markets, also prefers a shipping agency to take care of all his shipping needs. "We get merchandise through different ways; some orders come through distributors -- both local and national -- while others come directly from manufacturers," explains Silverman. "Some orders go directly to our five stores and some go to a central warehouse." Silverman prefers having inventory shipped to the warehouse as not only does it mean having one single invoice rather than five separate ones, but shipping to a central location also translates into savings on freight.

"Most of what I bring into the warehouse, about 99 percent, is less-than-truckload quantity," reveals Silverman. "And for those shipments, I prefer to use a freight broker or logistics agency, call it what you will. Some manufacturers have pre-arranged deals with freight companies that I can't match so I have to use them. For the rest, however, I personally prefer to use CaseStack.com. The advantages of using CaseStack are that I can track my merchandise up to the minute through their system; and they consolidate my shipment, which saves me a good amount of money."

CaseStack.com, an Internet-based transportation, warehousing and fulfillment logistics solutions provider, gives companies a supply chain equal to that of a global conglomerate but without the investment or infrastructure costs. With a network of warehouses around the country and strategic relationships with providers of all transportation modes, it allows retailers to "mass transit" products by combining many separate deliveries heading to the same store or region into one full truckload delivery. This consolidation, claims the company, can save suppliers up to 40 percent off traditional services and lower logistic costs by up to 25 percent.

"On direct orders only, freight runs to 5 to 10 percent of my costs per year," reveals Silverman. "Since I can only beat my manufacturer/supplier down so much on price without making them bleed, I have to look to other areas to save, such as freight. This is a competitive business. With gas prices being what they are, just because you've been shipping things a certain way doesn't mean that's still the best way. You have to keep looking and checking for a cheaper, more cost-effective way of doing things; and that includes shipping," he reasons.

Aside from the cost benefits, consolidation helps minimize breakages and damage in transit as products can be shipped in large pallets that are shrink-wrapped. Consolidating shipments also ties in nicely with the "greening of the supply chain" initiative that many companies are adopting by reducing dock congestion and cutting down the number of trucks on the road.

The more traditional option of UPS/USPS/FedEx/DHL still finds many takers among retailers who don't need warehousing services but use the discounts and benefits provided by these shippers to their advantage. "Where I save most is on shipping in-house," says Chris Beykirch, general manager of Logan, Utah-based cookware store Love to Cook! At Kitchen Kneads. "I have arranged great benefits through UPS to ship all shipments in-house with my UPS account number. This has saved me thousands of dollars yearly as vendors are not able to place any handling charges on to my freight costs, and I am charged a wholesale rate from UPS." Beykirch eschews the use of warehousing facilities offered by the other logistics companies. "I am a smaller store," he explains, "and I believe if my inventory is already stored here, I cannot justify the cost of storing it somewhere else to ship."

Retailers such as Beykirch don't condone the practice followed by many vendors, who look at shipping as a profit center. Using UPS and the discounts it offers enables him to get around that. "You need to set up minimum discounts with whoever handles your freight," agrees Silverman. "As in everything else, you don't get unless you ask."

Once you've selected the most cost-effective, timely and convenient way to ship in your inventory, it's time to focus on the other end of the supply chain -- your customer. With online spending expected to jump 17 percent this year, according to an annual survey conducted by Internet analysis firm Forrester Research for Shop.org, the online arm of the National Retail Federation (NRF) trade group, your target customer is probably on the Internet right now, ordering wares from retailers across the country. Getting his/her order across at the right time and in the desired condition is essential to avoid losing their trade.

Here again, specialty food and kitchenware retailers have a number of options to choose from other than the aforementioned traditional choices.

"All of my Web site sales go though a great partnership with cooking.com," says Beykirch. "One hundred percent of all my orders go through them right now. This is great for me as the Web site is an entire different store and requires a dedicated employee. The greatest benefits are that I never have to touch the inventory in any way. The downside is that my margin is much lower."

For Rice Epicurean's Silverman, UPS or FedEx are the shippers of choice. "Most of our customers that ship items from us want them sent to their second homes in Aspen or Cape Cod," explains Silverman.

"We do a lot of shipping because of our Internet site," says Shauna Halawith, owner of kitchen store and cooking school Kitchen Classics in Phoenix, Ariz. "I am currently doing shipping from two Web sites. The Kitchen Classics site is done completely in-house. When an order comes in to us, it goes directly to my Internet person who enters the credit card information by hand, packs the boxes, and makes the UPS or USPS label to ship. This is time-consuming and labor-intensive, but I believe we do save a bit of money by doing the card ourselves. Our other site is AZcooking.com and it is taken care of by our Web host, SplitOne Technologies. The downside to this is that we lose a percentage of the sale to them for the service of running the card through their merchant services. It works out about the same once we reach over $1000 per week in sales because the merchant rate is lower when we use the online service. Keying in the credit card number by hand is the most expensive way to process a card. Having said that, however, there is the advantage of not having to pay an outside service for running the cards."

Halawith doesn't use outside shipping services. "Mostly because I don't like it when my products are shipped that way to me from my vendors," she explains. "It seems it takes longer to work out problems when a shipping agency is used. We require our customers to contact us and get authorization before returning any item. We don't get a lot of returns but when they are not a manufacturer's defect, we deduct 15 percent for restocking. We do not refund shipping costs unless the fault is ours. Since we pack our own products, the breakage is extremely low."

With the increase in fuel costs, many retailers are contemplating increasing their shipping charges. Business, they aver, has definitely slowed down, in part because of the economy and in part due to the cost to ship. In such a scenario, finding the best possible solution to your shipping needs from the plethora of choices out there in the marketplace is of vital importance.


Comments? mmoran@gourmetretailer.com