71lbs.com Gets Sellers Hefty Shipping Refunds
By Julia Wilkinson
Did you know that every year companies forfeit $2 billion in unclaimed shipping refunds? It's because every FedEx and UPS parcel shipment comes with a money-back-guarantee: if an overnight or ground shipment is late, even by 60 seconds, a company should get 100% of its money back. But many merchants aren't aware of the policy, or they simply don't have the resources to devote to monitoring and tracking which shipments qualify for refunds.
But there are services that shippers can use to audit carrier bills, and one such company has created a process for companies to get these refunds automatically. "We created proprietary technology and algorithms to make this tedious and cumbersome process invisible to our customers," said Jose Li, CEO and founder of 71lbs.com. "We do all of that for them."
FedEx and UPS Guarantees
Li explained that both FedEx and UPS have guaranteed time commitments on their overnight and ground shipments. "Overnight shipments are time-definite (i.e., next day 8 am, 10.30 am, 3.30 pm, etc.), and ground shipments are day-definite (i.e. 3-day service from DC to Omaha)," he said. If FedEx or UPS deliver even one minute late on their shipments, the shipper (company) has the right to get 100% of their money back.
More than 80% of 71lbs' customers "were not aware of the guarantee when we talk to them," said Li. "Today, they love the fact that we give them free weekly refunds, and they love 71lbs!"
The company has a simple business model: they share the savings 50/50 with their clients, and there are no other fees. "We have no sign-up fees, and no monthly fees. The only way we make money is if we save the customer money first," explained Li.
Li says his customers provide 71lbs with their FedEx and UPS username and password. "Our system audits their shipments, and we notify them when they have approved refunds," he says.
Li's background is in shipping and logistics and the ecommerce industry, which he's worked in for the last 15 years. "I have worn both shoes, first as a shipper with Jamba Juice, managing their supply chain and logistics; and more recently, worn the carrier's shoes with FedEx," he said. He said he has personally seen how small businesses struggle with limited time, resources, and knowledge of data to get these refunds. "Our mission at 71lbs is to help "democratize" shipping/logistics for SMBs (small businesses)," he said.
"Every shipment has, on average, 17 scans, from origin (pickup) to destination (delivery), provided by the carrier and also most of it tracked on ups.com and fedex.com. If you input any tracking number you can get an idea. We analyze this info to determine late shipments. Customer does nothing but enjoy/collect their refunds."
Li's company currently serves hundreds of customers, and provides tens of thousands of dollars in monthly refunds to them. "Our customer base ranges from small mom/pop businesses to medium-size corporations," he said.
Customers Enjoy Freedom from Details
Randy Holleschau, CEO of Elemental LED, one of 71 lbs' customers, said, "At Elemental LED and Diode LED, we primarily use USPS and UPS shipping services." Although he was very aware of the delivery standards for USPS, UPS, and FedEx "and their respective rates and refund policies," he says "the beautiful part of using 71 lbs is that they handle all the details and provide pure bottom line savings for my organization."
He says his company ships approximately 2,500 packages a month, and his business continues to double in size year over year.
Holleschau adds that he is never happy when third party logistics companies fail to deliver on time, but that is an expected normal part of business and "we work through delivery issues with our clients through our customer service department."
He said his general directive to all his employees is to "make it easy for customers to do business with us," knowing that "if we perform on that level, customers will continue to purchase from us." He said he thinks 71lbs has the same mission.
Small Business Gets Big Refund
Another company that likes the seamlessness of 71lbs is Durham Brands, which ships consumer products (flower hair clips and scrapbooking materials) to most of the big box retailers such as Walmart, Walgreens, CVS, Meijer, Michael's, Associated Foods, and others. "We primarily ship via FedEx ground, although we ship a lot of UPS on collect customer accounts," said Logistics Manager Alex Fuller, adding that they also do a lot of shipping from China. Fuller describes Durham Brands as a small business - "about 30 people, $8 million in annual revenue."
"Our biggest win was a $1200 shipment from China that 71lbs got completely refunded for us," said Fuller. "That was an extra $600 in my company's pocket that we weren't expecting."
Fuller says he's a big fan of 71lbs because "it saves me money without me having to think about it. I just get occasional emails that say "hey, we saved you some money while you were busy with other stuff.""
He found out about 71lbs through an ad on LinkedIn and was intrigued. "I had a few questions and received email answers right away from Jose," says Fuller. "I was worried there would be a monthly fee or some type of catch. Jose understood exactly and assured me that there was no angle, they just get half of whatever they save me, which was fine with me." Fuller wrote a review of 71lbs on his blog, Supply Chain Cowboy.
Li said 71lbs wants to extend into other industries, like telecomm, office supplies, etc. "Yes, we have much bigger plans. We can take this model to freight (truckloads, pallets, etc)...we see endless opportunities in the near future."
About the author:
Julia Wilkinson is the author of "The eBay Price Guide" (No Starch Press, 2006) and "eBay Top 100 Simplified Tips & Tricks" (Wiley, 2004-6). Her free "Yard Salers" newsletter is at available at YardSalers.net where you will also find her latest ebook, Flip It Again.
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