Canada Post strikes, UPS & Scythe Shipping

Canada Post on Strike Again?Canada Post is likely going to have a strike / lock-out in July.  Nothing officially confirmed, but it sounds like it’s going to happen. Here’s how we are handling things and how it is going to affect shipping at Starlit Citadel.

Canada Post Strikes / Lockouts

The lockout is currently rumored to happen in July, probably July 1 as the postal workers are looking to vote on the strike on July 2. As such, any Canada Post shipment that is estimated to deliver before June 31, 2016 will be fine (unless you aren’t able to receive the delivery and aren’t able to pick it up before then or the shipment gets delayed).  In other words, we CANNOT guarantee a shipment that is en-route for delivery around June 31, 2016 and later will arrive as it might get stuck in Canada Post’s warehouses.

We will likely turn off Canada Post delivery completely next week as anything ordered after Monday is unlikely to get delivered anyway.

UPS Shipping

We have turned on UPS shipping in Canada in the meantime.  You will notice a huge difference in pricing between UPS & Canada Post due to the difference in our contracts and base costs between the two companies. If you are in the East Coast / Maritimes and a rural location, we recommend using UPS anyway as they will be able to make deliveries to your location during the strike even if you order rihgt now.

Free Shipping Promo of $100 cancelledFree Shipping at $100 Promotion Cancelled

Please note, the Free Shipping promotion at $100 is now cancelled as we are not able to run this promotion while shipping via UPS.  Previous pre-orders that need to ship out during July wills till ship for free.

We have re-instated usual free shipping promotion – that is, shipping is free for orders over $175 (before taxes and after discounts) so you can still receive free shipping on your orders, it’s just going to be at a higher level.

Scythe Shipping

Lastly, for those who have Scythe shipments going out from our facility. We are working as fast as possible to get all shipments to the Maritimes / Quebec / rural East Coast out today. We currently have 7 business days before July 1, so we’re hoping to get as much out as possible in the next 2 days so that all shipments will be on the way to customers and in their hands before the strike happens.  This means that if you are in the West Coast, unless we have processed your orders already, you might not get a processing notice for a few days as we take care of these backers as we have more time to get your shipments out.

Jamey will have a more detailed update for everyone later. Please bear with us as we are working as fast as possible to get as many shipments as possible out to everyone.

Balancing shipments through multiple parties

As many of you know, we’ve started using UPS as a shipping option for international shipments. Part of the reason for this is due to pricing – it’s actually cheaper (marginally) to ship to some countries with UPS with our discounted rates than with Canada Post. A side goal is to reduce our cost of shipping to the US to a more manageable level for large shipments.  While the Small Packets USA costs is extremely reasonable for shipping, it only works for packages up to 2kg.  That means that most of our US orders are for smaller products.

Currently, we are on a tiered discount level with UPS, with shipping costs reducing as we spend more on a rolling basis.  It’s a good system, especially at our current spend levels since it gives us specific goals to shoot for in terms of shipments.

However, to get the most out of it, we need to hit the next tier up. Unfortunately, it’s a chicken and egg scenario – we can’t provide good rates till we ship a lot, but customer’s won’t purchase from us till we get good rates.  So occasionally, we balance out shipments by contacting individual customers who are shipping outside of Canada to see if they’re okay with us shipping via UPS rather than Canada Post.  It’s more work, but the goal of course is to eventually move up the tiers and get a decent (and consistent) shipping rate.

The obvious question is why don’t we move to UPS in Canada? The simple answer is that it’s more expensive to use UPS for most shipments in Canada, even at the best discount rates UPS can provide us.  As such, it makes more sense to keep Canada consistent with Canada Post and move to cheaper rates with them.  Of course, we’re now at a size that moving from one tier to another requires a significantly higher number of shipments.

Kickstarter Fulfillment at Starlit Citadel

We’ve recently been inundated with a slew of Kickstater Fulfillment quote requests, both for the US and Canada due to a post by Jamey Stegmaier.   It’s kind of fun doing these posts, talking to creators and providing what information  and help we can, though I sometimes wonder about the actual profitability of doing so.  It’s one of the reasons why I always disliked doing consulting – the sheer number of times I used to do proposals to actual hiring was on a ratio of 1 to 7. 

It also reflects the cost that has to be built into each quote. If we value our time as say $25 per hour, then each successful quote has to reflect at least $175 of cost that has nothing to do with the actual shipment of the product.  Otherwise, you’re just losing money even offering this business (at least, if you, like us have something more valuable you could be doing with your time).

On the other hand, if you glance at the Kickstarter Price List, the chances of including $175 of actual cost in any single quote is nearly non-existent.  We charge CAD$2.50 for each shipment generally.  In that, we have to take out box cost (on average about $1 we’ll assume), so we actually make $1.50 per shipment.  Most Kickstarters are in the 30 – 50 Canadian backer range, so we’d expect to make…. $75 at most.  In that, we’d have to pay for the time taken to ship these orders out too.

You can see why we’ve never really pushed the entire Kickstarter Fulfillment Service.  It’s great if the Kickstarter’s were in the 100 – 300 backer range, but being Canada, most of the one’s we’ve done have been in the 30 – 50 range at best.

The loss time effect is also a great example of why people like plumbers and consultants all have prices higher than what you’d expect – the extra quotes, the loss / wasted time all have to paid for somehow.  Of course, there’s the other side of the equation – if you increase your quotes too high due to potential lost time, then you will lose out more quotes than you would at ‘rock-bottom’ pricing.  There is always a balance that has to be struck, the question of course, is where.

To help short-circuit the process and reduce the number of quotes, we’ve attached our Policy Pricing List and a little Excel Pricing Estimate Document here:

Kickstarter Fulfillment Policy Price List

Kickstarter Pricing Estimate

Kickstarter – Shipping Challenges

We just completed the second of our Kickstarter fulfilment contracts from SchilMil Games for their game Manifest. I’m not going to comment on the game itself – readers can look it up; since what I wanted to discuss was the actual fulfilment aspect.

As many of you know, we do this as a sideline and help for Kickstarter publishers. It’s not as if we do a lot of them (this is number 2 in nearly a year of offering this service) and we don’t make a lot at all. The goal for us is to help publishers get their games to Canadian backers at a cheaper rate, not really make oodles of money. Since we already have the facility and experience shipping, it’s not really a big thing to add this on. On the other hand, as many publishers know; Amazon Fulfilment can be extremely cheap and is often the better option to go to.

Anyway, for Manifest, what we found is that we probably have to adjust our quoting method. See when we quote an estimated shipping cost we use both the game weight provided to us and an estimate of where games will ship to. This is based off our own shipping patterns in Canada, so a weighting towards BC / AB is added in. In this case, the estimated pricing we provided was $10.50.

What we found was the actual average was $13.25. This came from shipments mostly being sent to Eastern Canada (Ontario / Quebec) and only 1 to Alberta. That caused the weighting and cost to go up substantially. In addition, game weight was a factor. The game itself weighed in at 1.8kg but due to volumetric adjustments, it came to 2.56kg in what was charged.

Overall, we saw a minor loss in the shipping of this Kickstarter; mostly in the processing / salary cost. Overall, it’s a good learning experience as we continue to offer this service. It’s in particular worth noting that we are now able to help with US shipping of Kickstarter games too.

Shipping more, making less

One of the dangers of this business is doing more for less. Unfortunately, it’s an easy thing to do when you are working on thin margins and/or changing how your processes work. Unfortunately, in this case, we made a few mistakes and ended up doing the above – the worst case scenario possible for a business like ours. It’s why we moved Free Shipping to $175 from $150.

The Setting

In January we managed to request a lower rate on our Canada Post shipping.  This was predicated on a certain volume of items shipped, which we expected to hit with a minor increase in our shipments.  At the same time, we noticed a decrease in our shipments to the East Coast due to the increasing competition we saw.  So, to hit both the increased number of shipments we needed and to pass on the savings, we decided to lower our Free Shipping threshold to $150 from the original $175.

What Happened

Well, unfortunately we didn’t hit the shipment numbers that we required, which meant that our rates bumped back up to our old rates.  That meant that for each free shipping order that went out, we were losing more than we were previously.  Combine that with the fact that we did see an increase in free shipping orders, our total losses had increased.

Now, this would have been fine if we saw a significant bump in shipments (thus generating more total revenue even if we made less per order); however this wasn’t the case.  We saw more shipments certainly, but not enough to cover the increased cost of shipping all the free shipping orders.

If you are having trouble imagining it, look at it this way – if we free shipped 10 orders previously and it cost us $15, we lost $150 for the 10 shipments.  Now, if we free shipped 12 orders now at $15, our total loss is now $180.  However, our revenue numbers are $1,750 to $1,800 – a $50 revenue increase.  That’s a net loss in profit, not a net gain.

Thus – more work, less money.  It’s why we shifted back to the $175 free shipping level.  Will we ship less? Probably.  We might even lose a few customers because of this – but the gain in profitability should balance this out.

 

US Shipping – New, Lower Rates

We have worked out a way to ship items to US customers at a reduced rate which ranges from about CAD$9.50 to CAD$21. What we will be doing is exporting the products to the US and then putting the pre-packed orders into the US mail system (FedEx or USPS); which will reduce the overall cost. However, there’s a base cost to doing this (the export fee); so we are going to be limiting exporting to once a week (or more, if we get enough orders flowing in from the USA).

Due to the cost of the export fee; we will not be offering free shipping of any form. If this experiment actually works out well and we get a decent volume of orders, we might revisit our decision, though in the short-term we would prefer to increase our exporting from one to two – three times a week. That means customers get their orders faster and we aren’t sitting on packed boxes for long periods of time.

Ordering will be pretty simple – customers just need to input their address and zip code in the USA and the system will calculate the cheapest shipping option for them. A Canada Post shipping option will also show-up, so that customers who aren’t willing to wait can order direct.

We do reserve the right, if we do not hit the minimum volumes that we need to just change the shipping method to good old Canada Post (again, see minimum charge for exporting). Any questions, feel free to ask below

Shipping : An Evolution

Over the years, we’ve evolved how we shipped orders from the store.  I thought it might be amusing to some to see the evolution and changes:

In the Beginning

It was kind of simple in the beginning with one person doing it all.  The order system was pretty simple and all handled by 1 person:

  • Print order out
  • Pull products (which we had only about 400 SKUs or so then!)
  • Pack order
  • Drop off at Canada Post outlet

3rd Party Logistics Company

When that became too much work for 1 part-time person; we looked into and moved to a 3rd party logistics company.  They would store all our products, do all our receiving and then ship them out for us.   Things got complicated then as we would:

  • Receive an order
  • Process order into 3rd Party’s software (essentially creating a 2nd order on their system)

The 3rd party company would then:

  • Print out packing list
  • Pull products from list
  • Package the order
  • Have Canada Post pick-up orders

In-house Shipping Again (1 person)

Unfortunately, we just weren’t big enough to handle the kind of costs the logistics company was charging us.  On an average order; we were getting charged an additional $4.00.  So we brought everything back in-house; with one small change.  We started getting Canada Post to come by to pick-up the orders instead of manually dropping them off.  This 1-person procedure would last for a few years till we had our first full-time hire.

The first 2 person ship procedure

Finally, when we hired someone we started splitting the process a bit; making it a tad more streamlined.  We split the Processing of the Order from the physical Packing, having 2 different personnel working on this.  This gave us a tad more flexibility; which was a nice addition.

However, what we noticed was that our error rate was slowly creeping up.  This came from a few things:

  • less experienced packers
  • much larger stock – SKUs of over 1,500
  • higher volume of orders

All this resulted in us re-thinking what we were doing and bringing in a new process.

Double verification

Instead of having one person just do all the physical shipping, we started splitting the procedure up further.  This resulted in:

Person A:

  • Processes Order
  • Pulls Products for Order

Person B:

  • Double-Checks Pull
  • Packs Order
  • Ships Order

With the actual products being double-checked, we started seeing a slow drop in error rates.  It’s still not perfect yet, since humans do err but more errors are caught in-house than going out.

Next Steps

So what’s next? More automation.  The ideal would be the addition of barcode scanners to the entire process.  Each order that we ship would have a barcode on it; with each product a barcode associated.  We’d then scan the products as we pack, ensuring that the right product (and the right number of products!) went into each order.    That’s a while away though – that will require a huge amount of work including scanning all our products and having a program to do all the above or finding one that does it.  For now, our little 2-person procedure is working out.

FedEx and Free Shipping

As some of you might have heard; we decided to turn off Free Shipping via FedEx completely.  The reason was a simple financial one – it costs too much.   Aftera quick review, we realised that while most of the time it wasn’t bad – the occasional ‘worst case’ scenario could really hurt us.  Specifically, any order that shipped to a rural region across the country ended up costing significantly more than we had planned for.

This is probably due to how FedEx manages rural deliveries – instead of delivering the items themselves; they bring it to their closest location and then puts the item into Canada Posts’ system for delivery.  Obviously, FedEx has to recoup their costs in some way for doing that – and the simplest way is to charge it to us.  It also means that Canada Post is actually going to be cheaper to ship for us.

How much of a savings? In a recent worst case scenario; an order that would have cost us $50 via FedEx to ship cost us $30 via Canada Post.  That’s a savings of over $20 on a $200 order.

I’ve debated getting rid of FedEx entirely; but it’s obviously a shipping method that is liked by some.  As such; we’ve decided to keep it – it’s a great back-up and the additional work it adds to our workflow right now is minimal.   However, we will only ship for free via Canada Post from now on.

Shipping, Order & Return Policies update

We just changed our shipping, order & return policies page.  The main alteration (beyond clarification and design changes) has been to introduce information and explicitly state a new pre-order policy.

Our pre-order policy has been to hold shipping of an order till all products in an order are available to ship unless otherwise requested by a customer.  We are going to continue with this policy at the moment, as customers seem to prefer this method as they may then take advantage of the free shipping policies and ‘banking’ or ‘holding’ various board games for themselves.

However, we have introduced charges for all in-stock games for orders that will not ship for over a month. To clarify, if your order will ship in 2 weeks, you will not be charged until we actually ship the entire order. However, if your order is expected to ship in 6 weeks, we will charge you for any in-stock games that might be on your order.

The reason for this change has been to reduce our holding costs for pre-orders.  When a customer places a $400 order with only one $20 product on pre-order, we are forced to ‘hold’ all $380 of in-stock product aside for him till the order ships.  If this order ships within a month, this is not an issue.  If the pre-order is for 6  months away (its happened), this is a very large quantity of product held aside.  Especially when multiplied over 20-30 customers.

However, I’m not entirely satisfied this is the best option so far.  Other options available at other game stores include:

  • shipping the in-stock product immediately and charging additional shipping for the pre-ordered games when they are available
  • charging for the full amount immediately
  • not taking any pre-orders at all

I’m still considering if there are other options available, and if so, will they meet our business requirements as well as customer service requirements.  If you have any ideas or suggestions, do offer them.  We’d be grateful to hear from you on this.