Getting a Handle on Shipping and Handling

Even before the U.S. Postal Service announced its July 1 rate hike (see story at left), catalogers were groaning under the weight of increased parcel delivery costs. United Parcel Service, Federal Express, and Airborne Express all increased their rates and/or added fuel surcharges during the past six months — and then there was the January USPS rate hike.

To help lighten the load, some catalogers have raised their shipping-and-handling charges. But while passing the increased costs onto customers could help catalogers shoulder the burden in the short term, in the long run marketers may find that S&H increases deter more customers than they can afford to lose.

“We did raise shipping-and-handling modestly, but we’re sensitive to our customers’ issues, so we didn’t want to raise it too much,” says Jules Silbert, executive vice president of New York-based multititle apparel and home goods mailer Brylane, whose catalogs include Lane Bryant, Roaman’s, and Lerner. “The increase varied for each brand, but it was generally less than 5%.”

E.T. Wright, a Chippewa Falls, WI-based multititle shoe cataloger, also raised its S&H charges earlier this year, says senior catalog manager John Kuehl. The per-order S&H charge among its titles, which include Maryland Square and Massey’s, rose from $6.95 to $7.95.

Kuehl is aware that the $1-per-order increase could cost the company sales. “Customers ordering items of a lower price point, such $20-$30, might be less inclined to do so now that the flat rate has gone up to nearly $8.” Next year, he adds, E.T. Wright will likely adopt a sliding-scale S&H charge structure, in which shipping costs depend on either the total weight of an order or, more commonly, the dollar amount of the total order.

Ventura, CA-based outdoor apparel and accessories cataloger/retailer Patagonia has already dropped its flat rate for a sliding scale. “We had a flat shipping rate of $5.25 up until late last year, when we had to adopt the sliding scale in response to the last postal increase,” says Morlee Griswold, director of direct marketing. “Prior to that, our flat rate hadn’t changed in years.” For orders up to $75, Patagonia now charges $5.50 for S&H; for orders of $75.01-$125, it charges $7.50; and for orders of more than $125, it charges $9.50. As a result of the July postal increase, “we’re discussing raising our shipping prices for our fall books,” Griswold says.

While Vineyard Haven, MA-based restaurant/gifts cataloger The Black Dog has yet to raise its shipping and handling rates, it’s planning to do so this fall, though it has yet to figure out by how much. In the meantime, the company reduced the size of its summer book. “Our summer book is usually tabloid-size, and we’ve reduced it to a slim-jim to save on postage,” says Elaine Sullivan, founder/marketing director of The Black Dog, whose annual circulation is about 250,000. “That is a dramatic change for us.”

Holding steady — for now

Columbus, OH-based western apparel cataloger Rod’s Western Palace is trying to stave off making any dramatic changes. “We haven’t changed shipping-and-handling yet,” says president Scott Hartle. “But in January, if there is another hike, we might address it.”

Other catalogers, fearful of losing business in an already sluggish selling environment, are seeking other ways to make up for the increased delivery costs. “We haven’t discussed raising our shipping-and-handling,” says Tom Hines, catalog manager of Madison, WI-based Conney Safety, “because we don’t want to pass our increased costs onto our customers.”

Instead, the industrial safety supplies cataloger is testing different grades of paper in its catalog to determine if it should switch paper grades to save on postage. “We’re testing a small percentage of our mailings with the new paper, and we’re trying to see if a change in paper would allow us to absorb some of the costs,” Hines says. “But as we gather information on the different weights and grades of paper, we have to weigh ink costs and consumption. Certain papers absorb more ink, and petroleum-based ink prices have gone up because fuel prices have gone up.”

A significant number of catalogers will likely end up taking a hit to their bottom line. Kassie Adams, catalog director for the Albany, IN-based Garfield Stuff, says that increasing S&H simply isn’t an option for her company, which sells novelty merchandise related to the “Garfield” comic strip. “We haven’t really discussed raising [shipping] prices, and I don’t anticipate that we will,” she says. “We’re a relatively new catalog that launched in 1997, and we don’t want to do something that will turn new and potential customers away.”

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