Holiday shipping costs causing retail changes

Filed under: News |

Doug Clausen, owner of Clausen’s Books, is expecting traffic at his Internet site to rise during the holiday season.

Retailers are keeping a close watch on gas prices as they plan shipping and Internet promotions for the holiday season.
At least one Colorado Springs business is no longer offering free shipping for the holidays, due in large part to higher fuel prices. Smaller businesses are making adjustments in their shipping schedules to accommodate record-level gas prices.
Current USA, a national retail, Internet and catalog business, is addressing the fuel crisis in a number of ways – encouraging customers to use less expensive shipping options, keeping larger inventories at its warehouse and reducing the number of shipments.
“We’re actively watching gas prices,” said Leeann Morey, distribution manager. “This year, we’ve decided to offer a variety of shipping methods and costs – what works for one customer might not work for another.”
Current also is encouraging customers to choose two- to three-day shipping instead of overnight delivery. The company is preparing for a productive Internet and catalog holiday season, expecting customers to shop from home because of higher gasoline prices.
“We think our Internet sales will rise sharply,” Morey said. “We’re expecting people to stay at home, shop from their computers. So our shipping promotions will reflect that. We are planning $2.99 shipping for anyone who spends $40 or more. We really are trying to offer the best possible deal to our customers.”
Higher gas prices translate into higher costs in getting products to the warehouse and to its retail customers, Morey said.
“Our business-to-business customers expect to see a surcharge for fuel,” she said. “But we’re trying to keep those costs down too. We usually keep just enough inventory to meet customers’ immediate needs. Now, we’re consolidating shipments and adding more to the inventory at the warehouses.”
Getting products from the manufacturer to the warehouse is also a problem because of rising energy costs, she said. Current uses independent truck drivers who want large shipments because of high fuel prices.
“When diesel is $3 a gallon for weeks, it can drive the independent truck driver out of business. The drivers will only take large shipments,” Morey said. “We are experiencing an increase in transit times, because of those capacity issues that are directly related to oil prices. It’s simple supply and demand.”
Doug Clausen, owner of Clausen’s Books, is expecting traffic at his Internet site to rise during the holiday season. However, he isn’t raising shipping rates to meet rising energy costs. Clausen operates both a storefront and an Internet site.
“I haven’t raised shipping costs in four years,” he said. “I use the U.S. Post Office, instead of one of the other services, so I haven’t had to raise the rates. I never offer free shipping; it’s too expensive.”
A dealer in rare and used books, Clausen operates a thriving Internet business. He said he has changed the way he does business in much the same way Current USA has.
“Most of the business I get is through our Web site,” he explains. “We sell books that are difficult to find anywhere else. We do so much business that way; I used to make a trip to the post office two or three times a day. But with the higher gas prices, I make fewer trips. It really does save money.”
Other retailers are not offering free shipping for the holidays, citing the expense of sending packages out of state. For Susan Manis, owner of Mt. Tejon Colorado Décor and Gifts, offering free shipping does not increase sales.
Clausen’s and Current USA are bucking a national trend for the holiday season. According to a customer survey by Shop.org, an association for online retailers, free shipping is one of the most popular online holiday promotions.
“Online shoppers are clearly motivated by promotions like free shipping, gifts with purchase and special online offers,” said Scott Silverman, executive director of the association, in a news release. “These promotions will enable customers to save money while helping retailers maximize their holiday sales. And, because companies have planned for them as part of their overall marketing strategy, these promotions will not come at the expense of profits.”
–Amy.Gillentine@csbj.com