Yesterday I was reading the customer comment list for Koeze Direct for the week, and came across this comment: "You people make more money off shipping than the product."
Resistance to shipping and handling charges is growing among our customers, and I believe this is widespread. I also find it rather curious, first, because it is a real and valuable service that mail order and web retailers provide, and second because as more retailers move to so-called "free" shipping, transparency in product pricing will decrease, which is never good for consumers.
Just to set the record straight, however, Koeze Direct strives to break even on shipping. We collect more than we pay on some shipments, and less than we pay on others. This is because we charge freight off a simple chart based on value, and the actual cost of a shipment depends on weight, distance, and surcharges (for fuel, residential delivery, etc.). But our charges are usually less than you would pay to ship it yourself.
To give a concrete example: Koeze Direct charges $8.95 to ship a 30 oz. jar of cashews, which packed to ship weighs 6 pounds. Shipping that the cheapest way possible via UPS (basic ground, within a single UPS zone, to a commercial address) costs $7.90. But send it a bit further -- say St. Louis, Missouri -- and make it a residential address -- and the charge is $11.72. And, mind you, in the S+H charges Koeze provides the box and other packing materials, and they get the package into the shipper's hands (perhaps saving you a trip).
Because the products are heavy compared to most others, Koeze doesn't feel that they can make a profit on shipping and handling and stay competitive with folks who sell stuff that weighs less. But many, if not most, shippers do make a profit on their shipping operations. Personally, I don't think that is a bad thing. Lots of businesses provide a combination of products and services, and almost all attempt to make money on both. The example that leaps to mind is getting your car fixed. You pay the hourly service rate, plus the costs of the parts. The auto repair shop makes money on both.
I do think that the emphasis on "free" shipping is a bad thing in the long term for consumers. Free shipping isn't free. Customers are ultimately going to pay for this service, whether they pay in higher merchandise prices, or as an added charge, or in some other way. (As my father always says, "There ain't no free lunch.") What customers lose is the ability to compare prices as carefully when merchandise and services get blended into a single price, as they do with retailers who offer so-called "free" shipping.
The New York Times reports this morning that the FDA will step up enforcement of what it considers to be misleading health claims on the front labels of packaged foods.
Interest in foods designated as natural, organic, healthy, humane, fair trade has grown among consumers. Certifying organizations and marketing programs have grown correspondingly to help manufacturers and marketers position foods in those categories, but consumer understanding of the various designations and their true significance has not kept pace. We saw this in the Peanut Company of America recall, when consumers expressed shock upon learning that organic and kosher certifications were not focused on microbiological safety issues. The industry knew that, but not consumers.
There is certainly a role for regulatory agencies in policing the claims of food manufacturers, but nothing beats an educated consumer on these matters. The difficulty is that few manufacturers or agencies provide much transparency on their certifications, inspections, standards and rules.
Koeze's Cream-Nut Natural and Sweet Ella's Organic peanut butters compete directly with the grind-it-yourself machines in grocery stores and health food stores, and with peanut butter that people grind in their own homes. Often when we are doing a store demo someone will say, "No, thanks, I grind peanut butter myself. It's fresher."
I doubt it. Once peanuts are roasted, they begin to go stale very quickly. How quickly? We won't even store peanuts over a weekend without grinding them into butter and putting them in jars. We rarely even hold them overnight.
Staleness in nuts is the result of two related processes. The first is that the nuts absorb moisture from the air , which makes the nuts soft. The second is oxidation of the oils - otherwise known as rancidity. How quickly nuts become rancid is determined by temperature, moisture content, and the amount of oxygen available. Effective packaging and cool temperature storage can retard but not halt that process in roasted peanuts.
Freshness in peanut butter has nothing to do with how recently the peanuts were ground. It has to do with how recently they were roasted, and how they have been handled since then. Unless your store (or you) are roasting peanuts daily and using them all up each day in the self-grind machine, your peanut butter is not fresher than ours (and, I"ll add, the peanuts that stores start with probably aren't as good to begin with).
Jeffrey Ball's "Power Shift" column in today's Wall Street Journal has a decent piece about the persistence of paper catalogs in the age of the web. The comments about this article are also worth reading.
This brings to mind a question that I'm frequently asked -- why do you send me so many catalogs? There are two answers to this question.
The first answer is that the technology for matching names and addresses is imperfect. That is, if you order from your home and your work address, and give us different versions of your name each time, you will be in our database multiple times. We'll try to prevent that on the front end by using your customer number to match you to our files, but with phone, fax, email, web, and old-fashioned snail mail points of contact, many matches will be missed. On the back end we use sophisticated software to "de-dupe" (remove duplicates) from our database, but it is far from perfect.
Moreover, when we run the names in our database against suppression lists (such as the DMA's mail perference file) we have to rely on that same software to make a match. So, differences between our data and theirs might lead you to be missed and to receive a catalog you don't want.
Finally, when we rent names we are using that software as well. We don't want to pay to rent your name if we already have it, but if the software doesn't catch the "dupe," we do -- and you get extra catalogs.
The only way the system will work perfectly is if you use EXACTLY the same name, and EXACTLY the same address every time you order anything. Nobody can be expected to do that, but neither can we expect our software to de-dupe perfectly.
The second answer is that even if we only have you only once in our database, we might send you as many four catalogs between September and December. Why? Because it works. Like every competent direct marketer, we carefully study the response from every mailing, and each one has to pay for itself.
The key word here is "response." Catalogs prompt response, and in general they do so in a cost-effective way. If everybody responded from the first catalog you were sent (and provided that source code to us, regardless of how the ordered was placed, so we could track it back to that mailing) then everyone would get just one. But that is not the way most people respond to catalogs, so we keep mailing.
I still believe that we will see the end of print catalogs in my lifetime, and we are actively working to both prepare for that future and to help make it happen. But that day will be closer to 35 years from now than 5.
Despair, Inc. is the company that produces usually clever and sometimes brilliant parodies of the motivational posters from Successories. They also have produced some notable catalog copy over the years, including this from a mailer I received today:
If you received this special early Fall Preview Guide, there's only one explanation. You've earned the privilege. How? By having outspent all those penny-pinching chumps who litter our mailing list like so, uh ... Litter?
Of course, we'll soon be mailing a catalog to them as well, pretending that they're every bit as special as we want you to believe that you are.
I think they meant to say "like so much" at the end of that first sentence, but what better way to set up merchandise that pokes fun at dumb motivational messsages than by poking fun at dumb "you're so special" catalog copy?
More good things in Leelanau County, Michigan. Kilcherman's Christmas Cove Farm grows around 250 varieties of antique apple varieties, and produces fabulous tart cider.
To work up a bit of a thirst for the cider, we had earlier taken a hike at one of the coolest places on the planet, the forested dunes of Houdek Dunes Natural Area, a property owned by the Leelanau Conservancy (of which my wife and I are members).
When he was small, my son, Hugh, used to call this "the desert in the middle of the woods."
This large maple is a particularly interesting tree. The open, spreading shape indicates that it matured before there were other trees around it. I learned to spot features like this from a book called Reading the Forested Landscape by Tom Wessels. If you hike on land that has formerly been farmed or logged (as almost everybody in the East does), this book will increase your understanding of the landscapes you are observing.
I'm visiting my parents this weekend in Leelanau County, Michigan, which is a real hotbed for local food. This morning we swung by my sister's vineyard and wine-tasting room, Gill's Pier:
I then ran over to my Dad's place next door, where he raises Friesian horses. The Koeze family is originally from Friesland, a region of the Netherlands.
A great day, even with the SNOW! Not yet, please, not yet.
I've been a gardener since I was in sixth grade, when I scraped 1200 square feet of grass out of our backyard to put in my first vegetable garden. Inspired by Michael Pollan's The Omnivore's Dilemma, and by my employee Martin Andree's background as a farmer, I've been pursuing more ways to learn about food from the ground up, so to speak.
Beekeeping, which I took up in 2008, is one of my food adventures. I have two hives:
The upper hive I started in 2008, the lower in 2009. This year I harvested about 104 pounds of honey. The hives are essentially put to bed for the winter, but the bees will fly any day the temperature gets to around 50F.
An Associated Press piece came out yesterday that reports that Kroger makes about half of its 14,400 private label products in a network of 40 of its own factories. They have made their own peanut butter for many, many years. I've also been told that they make peanut butter for people other than themselves, including at least one branded product.
This vertical integration is an interesting business model for a major grocer. But for anybody contemplating doing private label work for Kroger, it has to be disconcerting at several levels. They'll insist on coming into your plant -- are they going to school on you, planning to build their own plant, and ultimately intending to compete with you? Are you a potential target for a purchase?
There have been rumors for years that large retailers will induce manufacturers to make large capital investments in order to ramp up to be able to produce large volume private label items. Once the producer is deeply in debt, they pull they work, drive the producer into bankruptcy, and either purchase the plant for pennies on the dollar, or allow a more favored supplier to buy it. (I've heard the same rumors surrounding contract packing done for major branded food manufacturers.)
As my grandfather always said, when the big boys come knocking, keep your thumbs through your belt loops.
Note: I haven't quoted the story or linked to the story because the AP has a new policy of charging by the word for quotations, and they also appear to refuse to provide permalinks. I hope that is working out for them.