Package makes perfect: Brown paper packages tied up with string? When it comes to shipping, e-tailers are learning that presentation is the key to becoming the consumer's favorite thing - Logistics - Company Profile - Industry Overview

Chief Executive, The, March, 2002 by Jane Hodges

More complex than shipping pricing, however, is ensuring that ChefShop's bottles of oils and vinegars, cellophane bags of spices and snacks, and other delicate packages arrive intact. Case in point: Pink Champagne Biscuits from France, an $8 sweet cracker eaten with champagne.

Bergman says that the biscuits, sold in loosely tied cellophane bags, are so delicate and breakable that they're difficult to package, yet in heavy demand.

Like Blue Nile, ChefShop packages boxes within boxes -- it uses 12 different box sizes -- and lines them with biodegradable peanuts or bubble wrap. Indeed, ChefShop is getting so good at its game the company has begun talking with its partners about private-labeling products in ChefShop.com packaging. "If the demand is there," Bergman says, "we'll find a way to package it."

Sole Searching

When Nordstrom, the century-old department store, established Nordstrom.com in 1998, it was well aware of the challenges the online division would face -- including developing its own shipping processes.

What evolved is a "tiered" order fulfillment system, according to Paul Onnen, CTO of Nordstrom.com, that operates independently yet connects with Nordstrom, Inc.'s system, especially for returns. (Items purchased online may be returned to Nordstrom stores.) In addition, the online and catalog divisions share a pick-pack-and-ship facility in Cedar Rapids, Iowa.

But Nordstrom.com found its niche when managers realized they could leverage existing relationships with shoe vendors by letting customers order shoes not stocked in Nordstrom stores -- say, in an unusual design or size. To that end, the company developed its drop-shipping program, by which online shoppers can peruse 30 million pairs of shoes on Nordstrom shoes.com, but the merchandise is shipped directly from the individual vendor, not Nordstrom.

"We still brand the experience," Onnen says. Customers' shoe orders appear as a Nordstrom purchase. Nordstrom.com provides the receipt, tracking and in-store or mail-in return options, care of the drop-shipper.

Nordstrom pays its vendor-partners a slightly higher fee to ship directly -- a practice that's justified, Onnen believes, because carrying unique lines and sizes reinforces the company's service-oriented shopping philosophy, as well as reducing inventory.

"For most of our vendors, we make up the majority of their online sales," Onnen says. And if sending Nordstrom Tyvek bags and packing boxes to a shoe vendor is what it takes to participate in the New Economy, Nordstrom is willing to do it.

Contact

Blue Nile www.bluenile.com

ChefShop www.chefshop.com

Nordstrom www.nordstrom.com

Jane Hodges. ("Package Makes Perfect")

Jane Hodges is a freelance writer based in Seattle. Her work has appeared in Chief Executive, Business 2.0, The New York Times and Fortune.

RELATED ARTICLE: Many Happy Returns

Making outbound package delivery efficient and attractive to consumers is difficult. But making returns easy for online consumers is even harder. "Returns are costly," says David Schatsky, research director for Jupiter Media Metrix. "It costs three to four times as much to process a return as it does to handle an outbound order." Forrester Research predicts that by 2003, retailers will spend $9 billion to process $11.5 billion in returned merchandise bought online. Companies that don't figure out how to make returns efficient risk losing money -- and loyal customers. Predictably, a handful of service firms have begun contracting with e-tailers to simplify returns. Here's a look at how these companies work.