Operations & Management: The Perils of Perishables

Selling food via catalog or the Internet is not for the faint of heart. “Besides human organs, we are shipping the most perishable of goods,” says Jo-Von Tucker, president of Chatham, MA-based Clambake Celebrations, which ships live lobsters and seafood dinners to customers nationwide.

To ensure that its lobsters, shellfish, and meals stay fresh in transit for 24 hours, Clambake Celebrations uses containers insulated with 3/4″ of foam and topped with a 3-lb. frozen gel pack. “We can’t use dry ice for shipping, because when it dissipates, it emits a chemical that kills shellfish and lobsters,” explains Tucker. Clambake’s lobsters and shellfish are further protected by a steamer pot.

Omaha Steaks, which sells frozen meats and desserts, does use dry ice — along with a reusable, insulated polystyrene container complete with vacuum seal, to ensure that the contents remain frozen in any climate, says Ron Eike, director of operations for the $284 million marketer.

To make sure its desserts arrive intact, Omaha uses a protective collar to hold the cakes in place within a corrugated box. Similarly, to avoid damage to its English muffins and other baked goods, Lenexa, KS-based Wolferman’s uses boxes made of 50-lb. corrugated cardboard, says vice president of catalog operations Mike Ruchensky.

Packaging food products isn’t cheap. Ruchensky says the per-unit costs of Wolferman’s corrugated boxes are $0.70-$1.10. Polystyrene containers are even more expensive. Wichita, KS-based manufacturer Love Box Co., for instance, charges roughly $2.73 a unit for a 12″ × 12″ × 13″ polystyrene cooler with 1-1/5″-thick walls. Add to that the cost of the coolants, foams, and sealants — not to mention the labor it takes to pack such an elaborate container, and it’s little wonder that Tucker says packaging accounts for one-third of Clambake Celebrations’ product price. “We have to cover the costs of delivery while protecting our margins,” she says.

Delivery dilemmas

Because its products are baked goods that don’t require immediate refrigeration or freezer storage, Wolferman’s standard delivery is via UPS ground, which guarantees delivery in a four- or five-day window.

“Chances are good that a product will arrive fresh on a five- to six-day shipping window,” Ruchensky says, “but on day eight, the customer would probably be getting a moldy muffin.” Ruchensky estimates the total cost of shipping, handling, and packaging materials at about $6.75 a package — depending on the parcel weight and the zone to which it is being shipped.

While nonperishable foods may not require costly expedited shipping, Clambake Celebrations’ seafood does. The cataloger incorporates the cost of Federal Express next-day delivery into its prices and charges an additional $23 for Saturday delivery.

Omaha Steaks uses Fedex and Airborne Express for overnight and special deliveries, but it ships 80% of packages via zone-skipping programs with United Parcel Service and Fedex. Zone skipping lets Omaha Steaks ship directly into postal destination delivery units (DDUs, or local post offices), which cuts the transit time by two days, Eike says. This in turn allows Omaha Steaks to reduce the amount of dry ice it uses in packing frozen products.

Even the most costly packaging and quickest delivery, however, won’t keep perishables from spoiling if the customers aren’t home to receive the goods. For that reason, Clambake Celebrations’ customer service reps — who can also track shipments via carrier Fedex — phone customers to tell them approximately when a product is due to arrive. Fedex gives a four-hour delivery window; if the customer is not home, it’s up to the driver to leave the package at the door or to keep it on the truck and return it to the local Fedex facility.

Omaha Steaks, on the other hand, instructs drivers to leave all packages at the door. The products will “stay frozen several hours after arrival — and sometimes up to two days,” Eike says. For standard delivery, customers receive their packages within seven business days after the cataloger has received the orders. Omaha also offers express delivery for an additional $7 and overnight delivery for $17.

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