Wade Armstrong

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Amazon Got Me Trouble (But My Business Plan Saved Me)

Posted Wednesday August 15, 2007 in Entrepreneurship

Everyone expects free shipping, thanks to Amazon. Including my company’s customers. I can’t blame them; heck, I expect free shipping myself. But it’s tough when you’re sending 30lb boxes of perishable goods around the country. Shipping costs can be equal to product costs for some East Coast destinations — and this cuts down on my sales. It’s tough, but there is a silver lining. Once again, simply having a business plan has saved me. Well, that and making some phone calls.

Here’s how it breaks down: we pretty much have to deliver via overnight express to locations outside of LA County, in order to get our meals there safely. East of the Mississippi, these costs get quite large. Potential customers are simply turned off by the shipping costs and prefer not to order.

Because I was explicit about my regional sales expectations in my business plan, I know exactly how serious this problem is — it’s inconvenient but not, by any means, disastrous. So I’ve been able to update my projections and know that everything will be okay. It’s a small thing, but, if you haven’t done your planning ahead of time, you may never know when that unexpected problem turns out to be the one that sinks your business.

And there’s a second silver lining: in researching how to get my shipping costs down, [1] I learned that, ground shipping gives us next-day delivery for local customers, at a much reduced cost. So customers within LA County should get much-reduced rates within the next few weeks, as we update our infrastructure to handle the new shipping method. That’s savings that we can pass on 100% to the customer, which is always a good thing. I’ve also discovered that another carrier may offer services more convenient to our customers, at about the same cost, so I’m in the process of switching over there, as well.

I never thought that shipping would be such an exciting part of this company, but it sure has been. One company that has really helped us out is PA & Associates, I’d recommend giving them a call if you need to manage your shipping costs better. Oh, and how’d I find a shipping broker in Baltimore to help out my LA-based business? Why, LinkedIn, of course. So, get a plan, know your costs, manage them, and join LinkedIn. And, when you’re there, say hi!

¹ The way to get shipping costs down, in case you’re wondering, is volume — real savings become available at about $20,000/month in shipping expenses, which is quite achievable for us as our plan goes forward.