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Analyzing Dollars Lost to Improve Net Cash

Posted on April 8, 2009 by Jeff

Managing any area of business invariably means pouring over a myriad of reports. Reports created from queries with sophisticated refinements like sales by criteria, supplier, manufacturer, and date ranges, or downloaded as raw data into excel to be manipulated with “Vlookups” and array formulas, to numbers pinned on Staples yellow note pads.  If yellow note pads are your preference I suggest the five by sevens.  Whether generated monthly, weekly, or daily for performance or projection; the bottom line when reviewing many reports is identifying areas for improvement.

My confession here is that I’ve looked at all the aforementioned reports in both numerical values and colorful charts and at times have been less than clear on how to use them effectively to improve performance and not head into a finger pointing session, particularly when attempting to advance supplier performance. With the current economic environment Cash is King.  Not that it hasn’t always been, but it’s much more pronounced in this climate.  In focusing on driving net cash I was able to find a reporting motivator by combining several individual reports, “Ready to Ship”, “Open Orders”, and “CRAC” (Cancellations and Returns), into one cohesive performance report.

Understanding the Data:


Understanding Cancellation Data

Ready to Ship - Identifies the suppliers communicated inventory as a percentage of total inventory.  (SKUS In Inventory  / Total SKU Offering = % Ready to Ship)  It should be anticipated that these orders would ship within a predetermined timeframe based on warehouse fulfillment rates, let’s say 48 hours from the time in which the order was received.

Ready to Ship Cancellations - Identifies the total dollars cancelled as a percentage of total volume sold ($ Cancelled / $ Sold = Cancellation %). The total lost dollars are included.

Dollars Lost - This is an important piece of information to know if you want to effectively move the conversation into a positive light. Communicating the opportunity of dollars lost positively, without getting into the finger pointing that can happen if the cancellation numbers become the focus of the conversation, should motivate the supplier to make improvements. I frequently hear from suppliers that our extensive product offering negatively impacts their cancellation rate because our business model turns their inventory that they consider C’s and D’s, or items that they normally do not have to replenish as often. This is in fact true but the actual impact is seldom a part of that conversation.  This is where “Dollars Lost” data helps turn the conversation back to performance as we are already only considering “Ready to Ship” inventory. This percentage identifies Cancellations as a percentage of Ready to Ship items ($ Cancelled / % Ready to Ship = Dollars Lost). This is where the customer expectation is no longer being met by the supplier.

Overall - By assigning a simple ranking to where each supplier stands, related to the average, in each of the areas reported, you provide a point of reference for how an individual supplier is performing related to your overall business. Again this helps move the conversation from finger pointing, to a more productive “search for solutions” focus as suppliers see their competitive comparison.

You’ll note I’ve chosen to not focus on open orders or returns in an effort to focus suppliers on those improvements yielding the greatest impact to net cash. Aging open orders naturally turn into cancellations.  These are accounted for in our data after refining return’s into their respective categories.  Once the returns have been categorized into “Don’t Want”, “Damaged”, “Defective”, or “Wrong Product”, the impact to net cash, with improved supplier performance, is relatively insignificant as compared to “Dollars Lost”. Don’t get me wrong, in a perfect scenario those dollars would be nice, but prioritize, prioritize, prioritize.

Opportunities to be communicated:


Understanding Lost Dollars

Cancellation Changes - I’ve provided here the average cancellation % and total dollars cancelled at the bottom of each respective column. Rather than discouraging struggling suppliers by pressing them to perform relative to your top performers; encourage them to drive towards the average cancellation rate, in this case we are using 4%.  In order to show the impact of such an improvement, calculate what their numbers would look like if they did meet our set cancellation goal of 4%.   Not only does the supplier then have a reasonable goal, but the available dollars is also clearly represented. Your impact to average cancellation rate is significant, by focusing on only two of the poorest performers in our example our average cancellation rate moves from 6% to 4.13%.

Long story short, ship what you’ve communicated is in stock + stock more = $$.

 

Charting the Recession Course: Plans, Goals, and Focuses for 2009

Posted on February 3, 2009 by Jeff

We’re months into this economic slowdown which is more accurately now being referred to as a recession. We all knew it was a recession well before any economist was willing to utter the word. Hope for a turnaround before finding ourselves in the midst of a depression has lead to several conversations over the past few weeks that start something like this, “What are you doing in 2009?”

There seems to be three primary interests in asking this question. The first is an attempt to identify the current health of your business. It doesn’t even matter if the individual you’re chatting with is in a remotely similar industry; people are simply looking for any positive sign. The second is to gleam some brilliant idea that they might take back to their company planning meeting. I know I’d love to put the zinger on the table that saves the day.  Finally, to identify a sympathetic ear willing to listen to their ideas for insuring livelihood through 2009, in other words, someone to bounce ideas off of.  No one wants to put the “zinger” on the table that once stated out load is the obvious flop.

So I’ll go first, here are Gordian Project’s 2009 Pillars:

  • Make the customer possible - Making a customer possible involves adding new product to our catalog via new or existing vendors and websites. Additionally, we make a customer possible by more deeply penetrating existing markets. Market penetration begins with our ability to fulfill orders for a given product within our catalog.
  • Capture the customer - Capturing a customer involves connecting a shopper with Gordian Project via all candidate channels, including paid and organic, using all available tools including price, promotions, navigation, etc.
  • Make the customer happy - Making customers happy involves building an efficient, intuitive, engaging, comfortable shopping, purchasing, and post order experience.
  • Make it worth it - Financial performance involves making our efforts in business worth it by creating goals and guidelines that promote growth, discipline, and efficiency. Ultimately “worth it” includes not settling for “viable” or even “on par” but rather outperforming alternative options.
  • Make it a lifestyle - Making Gordian Project a lifestyle involves supporting our more social and interpersonal needs. We strive for an exciting, challenging, innovative workplace that fosters motivated, engaged employees.

Peel off all the layers that develop over time and these 5 pillars define “who we are.” Over 120 potential initiatives were then prioritized in light of these pillars as initiatives to be addressed now, next, and later.


Rich Schmitt in his article “We can survive this economic turmoil” identifies the following focuses for 2009 (The Wholesaler January 2009 Vol.64, NO.1).

  • Right-size your organization
  • Watch the cash
  • Keep selling
  • Keep getting better at what you do
  • Spend more time on pricing

The following blogs also touch on this subject and have provided valuable insights:

So in my effort to find hope in the midst of the pending “economic doom” I would like to know how your business doing, what great ideas do you have, and what do you think of the above?

 

Our UPS “Compass” Experience

Posted on January 7, 2009 by Jeff

Once a quarter I take a few minutes out of my day to read about what UPS is up to in their Compass publication: “The Quarterly for UPS Preferred Customers.” Each volume includes an individual success story that covers what businesses partnering with UPS are doing to integrate solutions for their everyday shipping needs. These articles generally end in quotes similar to Wil Kovacs, “There’s no doubt about it – we couldn’t have done it without UPS” (Vol. 2, NO. 2 | Spring 2008).  I’ve read these articles over the past couple years picking up useful tidbits along the way, all be it as much for a mindless moment in the middle of an otherwise busy day. Never have I felt we had a nugget to contribute along the way until we were recently approached by our account manager Kia. I’m not sure her actual name would make it past the Compass editors, but I wanted to make sure she was given credit for our success story.

To appreciate the nugget you must understand our humble beginnings. With little more than a dream for bringing customers together with everything necessary to realize their home remodeling desires, our negotiating options at UPS’s table were slim. Success hinged on collaboration between multiple shipping points spanning from west to east coasts, each with their own unique fulfillment system. This collaboration was met with a single UPS account number, in concert with UPS WorldShip allowing “installations” of our individual account number across a maximum of 13 separate shipping points. WorldShip provides our supply base the opportunity to ship directly on our account number’s which results in tracking information that seamlessly populates in our system and back to our customers.

From our inception we’ve enjoyed continued growth. It wasn’t long before we’d maximized our initial account. Additional account numbers were eagerly provided and consolidated to our original primary account number. With the number of shipping points growing, UPS ran into an interesting problem, sourcing. UPS’s visibility showed the volume for each account number’s 13 shipping points as originating from the account number’s physical address; our headquarters in sunny southern California. Now if you did the math you would realize that we had well over 30 shipping locations.  So why does this cause a headache for UPS as well?  A shipping point’s local hub wasn’t prepared for the actual inbound volume, while our southern California hub was over prepared. Meaning that as UPS was capturing our shipping data their system showed that all of the shipments were coming out of a southern California branch, when in actuality that particular branch wasn’t going to see nearly as many shipments as they were expecting based on the data.  On the flip side a UPS branch in Maryland may be struggling to keep up because of the unexpected number of packages to ship.  This not only affected the workers and resources at each individual branch, corporate was also using this data to allocate budgets to branches, again this southern California branch would be over budgeted, and another branch would be under budgeted.  Several additional issues have rose from this early solution.

Enter Kia. Once we addressed our concerns about making any changes to our shipping accounts, i.e. minimal disruption to our supplier’s processes, consolidated electronic billing (4 years better negotiating position), etc., we began creating unique account number’s by shipping point. Mind you someone from our office, that would be me, would find themselves over the course of several days traveling to supplier after supplier insuring a successful account transition; a very real cost burden. The removal of the original account number from WorldShip proved stifling. We had to insure our suppliers didn’t inadvertently ship on old account number’s lingering in WorldShip. You’d think a simple remove option would be present from WorldShip’s Shipper Editor Menu?  Surprisingly it’s not. Kia went back to the drawing board and not only provided a solution for removing lingering account number’s but did so with the help of UPS’s technicians remotely. No longer did I have to travel all over the country to resolve our current problem and implement the solution.  I spent one long day with members of their technical department working from our office remotely to transition our complete supply base over to our new account structure. Baring the normal technical hurdles experienced throughout the course of the day Adam, Enrique, and Scott successfully brought our shipping solution up to par with our current volume, provided UPS the visibility they desperately needed, as well as providing internal efficiencies without a single issue.

My Compass story would end as my email to Kia did, “We have a couple things to complete the transition, but all in all I’d say it was a success.”  A small nugget certainly, but who had the time to blog back then?

 

When the Torch is Passed Take the Initiative and Ask: Guidelines for Requesting Additional Resources

Posted on November 4, 2008 by Jeff

Since my last post, I Stand Corrected: Blogging is More Than Random Thoughts and Voyeurs, I’ve continued to tune in to the content generated by our team. I was recently struck by an entry from Brian entitled, Taking a Step Back: A Business Owner’s Perspective on Letting the Team Take Over.
Brian honestly wrestles with his necessity as a partner to continually pass on the “torch”. He summarizes his conclusion as, “If we’re [leadership] leveraging every resource available to attack the highest priority opportunities in the best way possible, maybe it’s time to let the team carry the torch.” As a manager, a member of the team, I’m both encouraged and challenged by this leadership style.


Everyone Take One Step Back, I’m Taking the Next Bullet

How do you, as a member of the team, in turn encourage and challenge leadership to invest resources to attack the highest priority opportunities within your department?  That’s a question I’ve been wrestling with as it pertains to supply chain.  As I recently worked through this I noted thoughts that I believe are important to consider when making your case.

First, clearly identify what you and your department are actually responsible for.  The lines of responsibility can get cloudy unless there is mutual understanding about the hand off of a project from one department to the next, around the office we’ve begun to understand this as the “Handshake of Responsibility”.  This has been a difficult transition for me. I naturally want to see a project through to “completion”.  I do this partly because I naturally look to retain control, partly because I don’t want others performance or lack of performance to reflect poorly on me, and ultimately I want Gordian Project to be successful. However, this handshake method has been a freeing concept. “Completion” may not necessarily mean seeing a specific project from A to Z, rather my action plan of A to I, with the responsibility clearly being passed at J. This handshake method is about the clearest indicator we’ve had to communicate, “I’ve successfully completed what’s been asked of me.” I’m then freed to focus on other projects and/or processes leadership has asked of me.

Second, clearly communicate your competency of the responsibilities owned. The point of communicating known competencies isn’t to be arrogant, but to add awareness of resources that may be available to provide assistance.  Note that no matter the size of your company resources are limited, and knowing the capabilities of the resources can be the difference between making or breaking deadlines. Everything in business is about prioritizing opportunities with resources. If you can’t communicate competency within your area of responsibility you’re unlikely to be resourced. For each area of responsibility look to communicate:

  • Philosophies - I understand why we do what we do.
  • Strategic Goals - I understand where we want to be.
  • Management - I understand how to get there.
  • Processes - I understand what we do.

Then, provide a tangible comprehensive document, hard copy or electronic, that serves as a departmental manual.  Something that allows the executive leadership to understand all that makes your department tick along with providing the processes so your team understands how to make it tick. Clearly state needed resources as this is where the rubber meets the road, as my grandfather would say. Asking for resources assumes you’ve “clearly identified what you’re actually responsible for and clearly communicated your competency of responsibilities”. Understanding what leadership looking for when prioritizing resources can help management determine where and when the next set of resources will be applied.  I would bet that the following factors play a part in their decision:

  • Strategic Goals - With an understanding of limited resources, limit the strategic goals to those prioritized as the immediate keys to moving your department forward.  Keep each area of responsibility separate in the philosophical vision.
  • Resources - Identify specific required resources for realizing your stated strategic goals. Consider as many factors as possible: budget, time, personnel, physical goods, other department’s resourcing, reports, benchmarking, etc. and limit them to the actual need for realizing opportunity.
  • Incentives - Provide leadership with reasoning for resourcing your strategic goals. Don’t make them wonder why they should provide the requested resources; spell it out. What are the opportunities and efficiencies you’re going to specifically bring to your department with the provided resources. Go the extra mile and connect your department’s potential successes to the larger company vision.
  • Timeline - Should the resources be provided; simply asking for resources demands performance. Set a realistic completion date, company visionaries will appreciate a target for rallying the whole of their business initiatives around. Timelines also set an expectation for response from your leadership.

Talk about calling yourself out; everyone take one step back, I’m taking the next bullet Smile.

In truth, having an understanding of where you are, where you’re going, and how to communicate the process of arriving, will encourage and allow your team to step up and perform.  It also provides the confidence to be held accountable for that personal performance. Brian, thank you for wrestling honestly with your necessity as a partner to continually pass on the “torch”, and in so doing encouraging others, in similar fashion, to do the same.

I Stand Corrected: Blogging is More Than Random Thoughts and Voyeurs

Posted on September 11, 2008 by Jeff

Several months ago, we, the staff of Gordian Project, set out to author a blog. Not that all of us immediately found the prospect as inviting as others, but we generally engage a team spirit; thus the eCommerce and Entrepreneurship Blog.

I understood the blog’s driving purpose to be sharing our personal experiences within our given area of discipline as it relates to all things eCommerce. After several months of participation, I thought I would review our blog.

Caveat: I’d never read a blog going into this project, nor had I any desire to. The actual thought of sitting around reading peoples random thoughts makes me feel a bit voyeuristic. After reading Wikipedia’s definition of voyeuristic, it certainly isn’t that. Still, to this day, I’ve had no desire to read blogs other than for the purpose of this review.

I’m not sure it counts as “reading” but the one key area I check out on our blog each month is the Authors section of the home page. The key here is to identify how many posts I have in relation to other staff. I’m not sure what about life turns everything into a competition. This post will launch me forward to eight posts, however, I know I’ve written a couple that haven’t yet made it past the cutting room floor so this number isn’t hard and fast. But going with eight puts me in a respectable position.

Vanessa’s an over achiever at 40, but in all fairness she administrates the blog. I doubt any of her posts have hit the cutting room floor. If light reading and interesting tidbits is your thing, Vanessa’s Variety for the Week delivers. She shares what’s going on around other blog spaces, here at the office, and perhaps her life more than any other contributor.

Matt is our Development Manager. We’re among the elders of the office so I’ve truly appreciated our friendship. I don’t read his posts. I don’t understand what he does beyond the fact that I know he can fix or improve just about any internal process. Any time I walk past his desk he has a monitor filled with gibberish. I simply figure I won’t understand his posts either. Nice picture of his son in his most recent post though.

You might also notice Zach has 11 posts as of today. I’d read his if you only have a few minutes each day. Scanning through his titles, (that counts as reading I don’t care what anyone says) I find his posts most on topic: They include Website Improvements: Test Basic Usability Before Advancing, Google Sitelinks: Capturing My Proverbial Moby Dick, and Google Search Engine Results Pages Illustrated.

As a partner of Gordian Project I have to say bang up job Brian! I particularly enjoyed your Soft Economy Priorities? Time to Paint Your Parking Spaces; that’s leadership.

I’d like to thank Josh for his most recent post, The iPhone 3G Saved My Life. It truly inspired me to write this post. All this time I’d banged my head against the desk trying to come up with another post showcasing the thrilling world of Supply Chain, when all I needed was an iPhone post. Below, the desk I bang my head on as taken with my iPhone.


Jeff's Desk Taken with iPhone


Over time, you’ll notice that Elizabeth stopped contributing as often. I have mixed emotions on this one. Elizabeth so desired to be a mother and now she is enjoying that gift with her daughter, Kara, as a stay at home mom. Congratulations Liz! However, Elizabeth also worked in Supply Chain and guess what that means, I’ve had to cover Supply Chain blogging without her. Thanks Liz!

I’ve actually loved reading Ellen’s posts for the first time as I prepared for this post. Ellen has taken the reins of a department that everyone loves to hate, HR. She sifts through all the big issues like food programs and political sensitivity. What a fun department to be in. Blog post ideas just shoot across Ellen’s desk, I’m sure. Ellen also manages Accounts Payable but I’ve yet to see a post with any real hard numbers.

Ryan takes his job seriously. He’s building a career, a future. He’s a smart guy who understands this isn’t just a 9 to 5 but an opportunity for him to build a foundation for his future. He’s always learning and looking for how to add value to the company. His posts are read as a “Where’s Ryan?” I just hope he’s not building his resume based on Ryan’s Randomness for the Week of June 20th, 2008.

Tim, as partner, bang up job! Please don’t break your run on providing an image in every post. No one does it better than you.

Our blog was launched just prior to Simon’s moving on to launch his own business. Nice work getting in a post you can use as a business cardSmile.

Before you jump to any conclusions about why Emily posted her first and, to this day, last post May 19th 2008, I dare you to read it (Dealing with Difficult Customers: Best Practices for Addressing Customer Complaints). She is right now over there fighting the good fight. Without her and her team keeping those customers happy there’s no need for this eCommerce and Entrepreneurship blog.

And finally I’d like to say welcome to Arianna. She brings so much to the table: customer service experience, multilingual, eye for detail and now she’s a vital part of Supply Chain. FYI Arianna…I’m going to need at least one post a monthSmile.

So those are my “collective of experiences, thoughts, processes and updates from people that are not only actively working in ecommerce but are also zealous about the industry.”


Identifying and Labeling Inventory at the Product Level

Posted on August 21, 2008 by Jeff

A recent supplier addition provided a strong reminder that the definition of A, B, and C products aren’t always the same from one shipper to the next.

Driving Sales and Meeting Expectations

Generally, and this is what got us in trouble in the first place, manufacturer’s class each unique model number based on some understanding of performance, and the market’s demand for that particular model number. The manufacturer experiences this demand as turns, or total number of units sold in a given period of time.

When adding new product lines, it’s important to clearly communicate reasonable delivery expectations to a potential customer. These expectations can be communicated in a number of ways; in stock, out of stock, quantity on hand, or with lead times to name a few. Customers are then free to make their buying decisions based on their specific project deadlines.

It can be difficult to balance driving sales with communicating availability, especially if the product has an unfavorable lead time.  Don’t shy away from this kind of proactive communication solely for the purpose of increasing sales. Communicated or not, note that every customer has some set expectation for what they consider a reasonable delivery time. Right or wrong if you’re unable to meet this expectation the sale will likely result in a cancellation and likely the subsequent incurred transaction fees. Nothing is gained but a poor customer experience. Framing a customer’s expectation of a reasonable delivery time with availability information serves to curb a potentially out of control cancellation rate.

The A's, B's and C's of Product Classification

As part of a recent supplier addition, we built our availability logic around the suppliers communicated A, B, and C classifications. At the heart of our logic was this understanding that an “A” product should experience greater turns and therefore be stocked accordingly; subsequently “B’s” then “C’s”. In less than four weeks a high cancellation rate was raising its head. In an attempt to positively impact our cancellation rate, a meeting was calendared to sit down with our supplier’s purchasing department. It was quickly pinpointed that a far more complicated definition of A, B, and C was at play. Things such as anticipated turns and current marketing efforts were skewing the historical data from which their classifications were determined. Stocking hadn’t necessarily caught up to these classification efforts.

It was apparent that a more real-time solution needed to be established for determining unallocated on hand as well as next anticipated unallocated delivery dates. Building availability logic around this data should prove accurate, translating into a more positive customer experience with a decreased cancellation rate.

A Couple Key Take Aways 

  • Consider communicating availability clearly pre-transaction for a better customer experience. 
  • When establishing a new supplier relationship, make sure you’re aware of the internal philosophies that establish classifications from which you’ll build your logic. 
  • Attempt to peal back a layer from classifications by seeking real time unallocated availability. 
  • Always keep an eye on reporting such as cancellation rates. Look for nuances that will help you bring efficiencies to your processes before a potential issue is out of control.

 

UPS Freight: Upping the Ante

Posted on July 8, 2008 by Jeff

Freight companies are in a more heated competition with one another as customers begin to rely on them for timely, traceable deliveries.  UPS Freight is tackling the competition head on. In 2008 they have launched several new tools for freight customers. From integrating LTL shipments in WorldShip to their on-time guarantee, UPS freight is upping the ante for other freight companies.

LTL Shipments in Worldship

One of their new tools is the option to create LTL shipments in WorldShip, and even schedule a pick up.  The main benefit of this tool is time and convenience. Having to go to the UPS website, and enter all the shipping information is a time consuming task. When utilizing WorldShip, you can simply use the Keyed Import to dynamically import all the shipping information.

UPS On-Time Guarantee for LTL Freight Shipments

Another new feature is their on-time guarantee for LTL freight shipments. UPS Freight now gives an on-time guarantee in the 48 contiguous states, that assures your freight shipment will be delivered on time, or you can request the freight charges to be waived.  Jack Holmes, president of UPS freight, says, “It’s the next logical step in making UPS Freight the best in the business”

UPS Cross Border Freight Shipments and UPS Returns

The third feature that UPS Freight is offering is for cross-border freight shipments. They are now offering a comprehensive shipping solution to Canada and Mexico! With that, they have made a dramatic improvement in international returns. UPS Returns is accessible on the internet or through WorldShip, and includes fees for the return transportation, a return shipping label and any applicable duties and/or taxes.

While there are pros and cons with any freight company, it is obvious that UPS Freight is going the extra mile to ensure customer satisfaction. With LTL shipments ranging from a couple hundred to tens of thousands of dollars, the company that offers the most protection of your goods is the best to go with. Easy returns, both domestic and international, WorldShip integration, and an on-time guarantee…that’s pretty customer friendly!

 

 

Showrooms: How Can the Manufacturer Showroom Dollars be Better Spent?

Posted on May 14, 2008 by Jeff

In my last post about showrooms I discussed the question “Who decides what the customer wants to see in a showroom?” We will wrap up this series of showroom questions today, with the last question I proposed, “How can the manufacturer showroom dollars be better spent?”

It’s no secret that manufacturers partner with wholesalers for their showroom space. It’s the details of the incentive programs offered for that space that are written on the backs of napkins, a give and take relationship that is entrenched in the plumbing industry’s brick and mortar traditions.

So how can those incentive program dollars be better spent to reach a national, nay international, market with a complete breadth and depth of product? If you have read my previous posts you may have guessed that I would answer this question with the statement: “partnering with smart eCommerce retailers”.  Smart eCommerce retailers have the ability to showcase an entire product line to a robust demographic.

Search Engine Optimization

Organic search engine results may not cost marketing dollars in a traditional sense, but the cost of a successful SEO campaign isn’t cheap. A successful SEO campaign at minimum will take manpower, research, link building, and analysis.  I can’t tell you how many times I’ve been asked by potential suppliers why they shouldn’t just throw up a web site on their own. There are certainly plenty of examples of that.

It takes a lot of smart people working 40+ hours a week before you turn the heads of Google, Yahoo, AOL, or MSN. Semoz.org’s Rand Fishkin comments on What Makes SEO & SEM So Damn Hard.

Advertising Campaigns

Ranking well organically on Google, as well as all of the major search engines, can make a significant impact on an advertising campaign, Google specifically commands the most market share of any search engine and therefore can make a huge difference.  Google continues to grow and so do the dollars spent on keyword marketing campaigns. Competition gets nasty when you’re talking about less than 11 advertised spots on the first result page of any given Google search. Actual cost of advertising dollars aside, which is a significant cost, keyword management takes time and resources as well. Just look at the number of blogs on the subject.

But the payoff of smart SEO & SEM is priceless; consider the following screenshot for instance…


Google Search Alsons 635


 

Kudos to our SEO team; 10 of 15 results in the above search direct the customer to PlumberSurplus.com.

For this search on Google, we are the top sponsored link, and the top three Google Product search results, and the top organic result.  The same search returns results for our product on Amazon, AOL Shopping, and multiple comparison shopping engines.

Comparison Engines

Some comparison engines are built around a customers desire to get right to the bottom line: the product they are searching for at the best possible price. Aggressive incentive programs, like offering free shipping, rebates, gift rewards, the entire product offering, etc. assure successful results in the retailer’s ability to provide the product at a reasonable market price. Further, this drives out those competing exclusively on slashing price, in that they may not have all of the items the consumer is looking for or the ability to ship in a fair amount of time with proper packaging, or qualified customer service representatives; allowing those of us with a complete compliment of core competencies to better build the products branding.

Co-Operative Promotions

Who doesn’t like a great deal?  From our experience we know that our customers do.  The cost to the manufacturer to run a traditional promotion goes beyond lower product margins; it can be some of the items that I listed above such as rebates, gift rewards and more. Getting the promotion to the wholesaler with supportive promotional materials is significant. This is not the case for eCommerce, we don’t need physical banners to hang or flyers or handouts, all of our ads can be done electronically, without additional printing or shipping costs. PlumberSurplus.com recently ran a President’s Day Free Shipping co-operative promotion on our Belle Foret offering for one week. This simple promotion saw an increase of 44% in sales over the prior week with no upfront cost.

Link Bait

Incentives go beyond simple dollars in a co-operative business relationship. Simple gestures like providing authorized retailer links from the manufacturer’s web site are invaluable. Jennifer Laycock explains that these links convey a stronger message than “here’s where you can buy our product”.  Rather, it’s a recommendation of the services that follow the click.

Conclusions

The use of the internet is a daily reality for an estimated 301,139,947 end users. Manufacturers across our country spend their day turning out products that are identifiable as A’s, B’s, C’s, and D’s.  In lemans terms their most popular product offering is referred to as their A’s and B’s and so on.  In one Supply Chain Manager’s opinion it’s time for those same manufacturers to look beyond the traditional distribution to market and consider a few select eCommerce napkins.

 

Accessorial Service Charges: The LTL Nightmare

Posted on April 17, 2008 by Jeff

Here’s the scenario…

Customer places an order for a DeWalt DG2900 Heavy-Duty 2900 Watt Gas Generator. The size and weight of the generator require that the order ship LTL or “Less Than Truckload”; LTL is commonly referred to as freight. At the time the order was placed this particular model was out of physical stock. In an attempt to go that extra mile for the customer we shipped the order direct from the manufacturer and third party billed to our LTL account (carrier to remain unnamed).

The order processed and shipped from the manufacturer as expected. However, going that extra mile proved a long walk.

What we didn’t know at the time the order shipped was that the customer’s ship to address was a construction site. You might ask “why not?” Good question! Ask your carrier to present you with their additional fees schedule and they’ll present you with something called “Accessorial Service Charges.” It can be pages long: corrected Bill of Lading, detention of vehicle with power, lift-gate service, and residential delivery just to name a few. Several of these charges are dynamic charges, like “fuel charges”, which are calculated in real time and change regularly. If you attempted to identify every possible scenario at the shopping cart for checkout, shopping cart abandonment would go through the roof, due to excessive over estimates for shipping.  This creates a hole in the system that will continue to siphon funds if not corrected.

One of these Accessorial Service Charges is what’s referred to as “Limited Access Pickup or Delivery.” The additional note is “churches, construction sites, schools, etc.” Who knows what etc. refers to, possibly the driver’s whim? Did you catch construction sites? The long walk begins. At the time of delivery, the driver tacks on a limited access pickup or delivery fee as well as a corrected Bill of Lading fee to be paid at the time of delivery by the consignee or customer. As you might guess the personnel at the delivery site generally have no authority or means for paying these additional fees. The delivery attempt is abandoned by the driver and we are quickly contacted by our customer. I assure you this is NOT the customer experience PlumberSurplus.com is shooting for.

You see, the Bill of Lading that is generated at the time of pickup is the contract between shipper and carrier. Once in transit, all additional responsibility, not identified prior to shipment, is the burden of the consignee or customer. And by the way there is now a “redelivery” fee assessed, because the initial delivery attempt was abandoned. In this case, as the shipper, the only way to remove these charges as a customer burden was to refund the customer’s credit card for those fees. The customer still had to make the extra effort of ensuring funds were physically available at the time of redelivery.

The moral of the story is when you plan to go that extra mile for the customer, make sure you complete the journey. We’ve since done the extra work to amend our LTL contract to include all accessorial services as the burden of the shipper, removing any responsibility of the consignee. There is more work to be done to insure we are covering actual shipping costs at the shopping cart, but the customer experience is now intact.
By the way, by amending your LTL contract to include all accessorial services as the burden of the shipper, you’ll also then save yourself the “corrected Bill of Lading” and “redelivery fees”. Hole PLUGGED!

 

 

Funding a Cooperative Promotion

Posted on April 9, 2008 by Jeff

There’s a saying that pops up around the office from time to time, “You don’t get what you deserve, you get what you negotiate”.  It’s taken from the book written by Chester L. Karrass, which none of us have read.  We originally came across the phrase when fellow blogger, Ellen, told us about how her Grandma taught it to her while she was growing up, and went as far as putting the poster in Ellen’s room.  The teachings paid off, as Ellen now enjoys going to car dealerships and negotiating a car sale, and not buying, just for the fun of it!  I’m not sure we always apply the saying correctly but in the case of our partnership with DeWALT we got more than we negotiated for.

You can read Vanessa’s original post here which highlights the reasoning behind our Google Checkout Sweepstakes and how we accomplished the promotion by partnering with DeWALT.

When I originally approached DeWALT to provide advertising in exchange for product, I simply communicated our planned banner placement. In return for a DeWALT product PlumberSurplus.com would place the following banner on the checkout page during the last quarter of 2007. Not only did DeWALT agree to support the promotion they graciously provided two DeWalt DC011 Heavy-Duty Worksite Radio/Chargers.

 

PlumberSurplus.com Cart Checkout Page

With two DeWALT DC011 worksite radio chargers in hand we ran the Google Checkout Sweepstakes through the first quarter of 2008. In an effort to show our appreciation for DeWALT's generous participation, and to serve the goals of the promotion, we extended the banner placement to a rotating banner on the homepage and several other high traffic areas.

 

 

PlumberSurplus.com Home Page

Believing that communication is important in any co-operative partnership, I emailed DeWALT some data regarding our sales growth.  This growth has sparked the cooperative promotion to continue.  DeWALT has graciously offered us another sweepstakes product in an effort to keep the promotion going. 

Congratulations to our first quarter 2008 winner and good luck to each of you in the next round of our Google Checkout Sweepstakes. DeWALT is happy to announce its continued participation!