Have you ever wondered how a package ordered online makes it directly to your front door, often in just a few short days?
Because we ship thousands of packages a month, we can talk openly about what it takes for a small business, working hard to do things the right way, to ship out thousands of packages a month.
"Fulfilment" is a word we often associate with the pursuit of happiness, but in the world of online shopping, it means something entirely different. As a logistical concept, fulfilment is defined as “the steps a company takes between receiving a new order and placing that order into the customer’s hands.”
For a small company like Keap, fulfilling a candle for our customers means the following steps:
- Processing Orders: Once an order is placed online, it enters our shipping queue — a list of orders we need to ship. We often have hundreds of orders waiting to ship, so we must decide what types of orders to work on next by smartly batching together similar orders.
- Pick, Pack and Ship: Once we have determined a list of shipments to work on, we can ”pick, pack and ship.” This means we first gather the candles necessary to ship out the current batch of shipments (we pick them). Then, we prepare each shipment, lovingly, making sure to include the correct items and any special requests (we pack them). Finally, we apply our shipping labels and gather the packages for our USPS and UPS drivers to pick up (we ship them).
- Mail Carrier: Once we hand off to a mail carrier (the incredibly hard-working Mike from USPS and Chris from UPS), you receive a tracking email and the cross-country logistics begin. Packages are typically taken from local locations to central sorting facilities where a combination of conveyor belts, auto-scanning cameras and eagle-eyed humans help sort all the packages into relevant onward batches. These are then shipped off around the country, going through further stages of sorting and redirecting, until they reach your local post office for delivery the next day.
- Replacements & Returns: Often, our mail carriers may mislay packages (despite their best intentions), or packages may be damaged or stolen in transit. In these cases, we replace these packages, and most of the time, it isn’t possible for us to claim insurance from our mail carrier. If a package gets returned to us, we have to reprocess it back into our inventory via a series of inspection and quality control steps before reaching out to our customers to discuss a replacement shipment.
The Practical Price of Delight
Unsurprisingly, shipping and fulfilment constitute one of the largest expenses for many online businesses (the Cost of Goods Sold). This is certainly true for Keap, where the costs of our shipping materials and postage average ~21% of our monthly sales.
In simple shipping parlance, shipping rates are determined by weight and by zone. As of 2021, USPS Priority mail charges us $7.79 to ship a single candle from Kingston to New York City, while charging $11.69 to ship from Kingston to California. This doesn’t take into account the costs of preparing packages for shipment; the costs of shipping materials like shipping boxes, labels and tape, which runs about $2 per candle; or the price inflation we tend to see over time on all costs.
This is also why we have had to ask customers to cover a $5 shipping cost on any orders under $60. The economics of paying $8-11 shipping on a single candle, alongside further costs such as potential replacements or returns, simply cannot work for any business.
Shipping costs account for 21% of our costs running Keap. Data, 2021 Year-to-Date.
For most companies, the best way to minimize shipping costs is to ship more items at a time. There is a high fixed price for shipping any package, but smaller incremental increases as a package gets heavier. In Keap candle terms, shipping a single candle package to New York costs $7.79 in postage, but shipping four candles costs only $8.31. That is to say, we can ship three more candles for only $0.52 more in postage. This is why we’ve always offered a large, year-round discount on our multi-packs of candles, as we’re able to pass these savings on to our customers.
Towards Our Vision
Alongside the practical steps noted above, many resources go into the process of fulfilling a package — from human care and effort, to the use of fuel in transportation, to the amount of packaging used for shipping. We exist to prioritize connection to the world around us and create net benefit, so we constantly look for ways to make our impact a positive one.
This means paying our team living wages to ensure they thrive inside and outside of work (our current starting wage is $24.50 per hour for full-time Keapees, and $20 for seasonal associates who join us at busy times of year). It means working towards zero waste packaging. And it means considering the impact of the shipping methods we use. This is a long-term journey, and our goals and plans around getting to net benefit are something we will continue to share in years to come.
We hope you appreciate this breakdown of how shipping works, and affects, a small company like Keap. What else would you like to know? Send us a note at TheLab@KeapBK.com and we’ll get back to you.