Green E-tailer Fertilizes the Bottom Line
Thanks to a data analytics platform, Grove Collaborative's shipping costs wither while fulfillment efficiencies blossom.
Grove Collaborative, an e-commerce company originally launched as ePantry in 2014, serves consumers who care about buying green and sustainable products for their homes, but who also want convenience and accessibility. Growing quickly because of eco-conscious decisions about product and customer demand, the company recently started to nurture its shipping data reporting tools as well.
Online retail will grow 8 to 12 percent in 2017, up to three times higher than the growth rate of the wider industry, predicts a 2017 National Retail Federation forecast. With green products often priced higher than not-so-earth-friendly alternatives, shipping costs can put them out of reach for the average household budget.
As a Certified B Corporation—recognized for its social and environmental impact—Grove Collaborative focuses on quality products, with affordability wrapped into a low- or no-cost shipping program.
"The best natural products should be easiest to acquire," says Roni Rae-Staples, head of fulfillment operations and logistics at Grove Collaborative. "We want to make sure what you put in your home, on your body, and around your family is eco-friendly—it's safe not only for you, but for the environment as well."
Grove Collaborative researches and selects products for its e-commerce site from a number of green product companies, including Seventh Generation, Method, Dr. Bronner's All-One!, and its own signature line of all-natural, U.S.-made products.
Its "Happiness Guarantee" ensures a level of trust and incentive to try new products, allowing customers to return any product for any reason with a pre-paid shipping label included in their order. New customers receive free shipping on their first order, and a flat fee of $2.99 for future orders. VIP members pay a yearly subscription fee and receive free shipping for every order.
The concept is a hit. The company shipped 300,000 packages in 2016 and projects it will deliver more than 750,000 packages in 2017.
"When we first started shipping orders, we worked with FedEx," says Rae-Staples. "As we continued to grow, and shipping volumes increased, we added other carriers into the mix to get better pricing.
"Controlling shipping costs is a big struggle for young companies that don't have robust reporting tools," she says. "Pulling the data from carriers was always a challenge."
Rae-Staples needed to record freight information and cost per shipment in as few man-hours as possible. She previously used a spreadsheet to manage shipping data, but found that more than half of resulting spreadsheets wasted time and were unnecessary to track fulfillment costs.
"As a young company, Grove Collaborative didn't have the bandwidth or the manpower to spend 6 to 10 hours per week trying to get through reporting and consolidate spreadsheets," Rae-Staples says. "That was the tipping point for me."
Rae-Staples started looking at software providers that offered reporting tools, and liked what she saw in California-based supply chain management solutions provider GrandCanals.
She had worked with Kelan Raph, co-founder of GrandCanals, when she was with another company, and knew Raph understood the logistics challenges of an e-commerce startup.
"I wanted to make sure that a new provider would understand our business," says Rae-Staples. "Raph knows that operational people just don't have time. When they log on to a shipping reporting tool, they want to get information as quickly as they can. GrandCanals has a great tool, but it also knows the business."
Rae-Staples had a series of phone calls with GrandCanals representatives, discussing the e-tailer's challenges, what information needed to be accessible, what was useful on its reports, and how to clean up the data. GrandCanal used the answers to get to the sweet spot of Grove Collaborative's needs and tailor the system accordingly.
Grove Collaborative chose Fulfillment Intelligence Cloud, a solution that allows quick access to metrics such as demand density, transit time, average zone, and cost per shipment. "The tool displays a heat map that tells me exactly what my shipping demand is, while a drop-down menu displays average cost per shipment, and what I am spending on ground versus air transportation," says Rae-Staples.
She also used this information while working on a proposal with UPS, trying to determine if the package delivery company would be a good fit for Grove Collaborative. GrandCanals gathered information from the UPS proposal, as well as FedEx and other carriers, and then used data science to translate what the information meant for Grove Collaborative.
Data showed that shipping volumes to the eastern states from its California warehouse had increased significantly. After using modeling to determine the net cost of an East Coast origin, Grove Collaborative opened a second warehouse in Harrisburg, Pennsylvania—reducing shipping costs and meeting the demands of consumers who want fast delivery.
"From the new facility, Grove Collaborative could accomplish shipping in two business days by ground," says Raph. "And once you use ground and not air, you achieve the optimal cost."
With the data analytics program in place, Rae-Staples saw that her company could save 15 to 25 percent on 1- to 2-pound packages simply by switching to priority mail.
"Just looking at that piece of the business made an immediate impact on shipping costs," says Rae-Staples. "I saw the difference on my bottom line."
The tool also revealed an extended area surcharge. "Grove Collaborative had customers who were living in rural areas, and didn't realize it was paying $5 extra to deliver packages to those customers," say Raph. "Rae-Staples was happy to receive all this information in an automated report, rather than having to download spreadsheets and manually manipulate the data to determine weekly shipping costs."
The program also allows Grove Collaborative to look to future plans to better serve Midwest customers, as well as meet demand for shipping to Canada. The e-tailer can use the analytics platform to model costs and transit times, and find the best services for a launch into that country.
"Rae-Staples is hands-on, and if she finds some analysis that the company needs to do a better job of packing cartons to create fewer shipments, or use the right box, she will roll up her sleeves and deliver," notes Raph.
For instance, Grove Collaborative developed a product called Smart Cart. "The company now understands the fulfillment, handling, and shipping costs of all the products within its marketplace," says Raph. "Based on interaction with the customer and the shopping cart, the new feature allows it to offer discounts as an incentive for customers to fill the box."
As a result, Grove Collaborative can optimize its packing to take advantage of fixed shipping costs. For instance, it costs a carrier the same to deliver a 1-pound package to a residence as it does to deliver a 4-pound package.
"There's no cost increase between 1 and 4 pounds," says Raph. "So if a seller can take a larger order but have shipping costs stay the same, then it subsidizes fewer dollars per retail value."
The platform performs the analysis to show actual weight, billable weight, and cost differential for the next extra pound. "Many times the cost of that extra pound is minimal, or free," Raph explains. "So if an e-tailer can sell two 1-pound items, and get twice as much retail value for only a few cents more in costs, that's something that companies such as Grove Collaborative would want to incentivize."
For Rae-Staples, managing shipping costs manually won't cut it anymore.
"All companies have to control their shipping costs," she says. "They want to be as informed as possible, have all the data they need, be able to analyze it, and figure out what drives up shipping costs. Doing that manually takes a lot of time. It is tough, and it's easy to miss things."
Working with carriers also can be overwhelming, but Grove Collaborative has found its groove with GrandCanals.
"Having a partner—a shipping fulfillment company that looks at your costs for you—is helpful," says Rae-Staples. "When you are a young company, you can use those three or 10 hours every week to do something else that provides value."
Customer satisfaction remains Rae-Staples' first priority. "It all boils down to the customer experience—that is the most important part of growth," she says. "You want to save on shipping costs, but you can't sacrifice your customer having a great experience."