Dive Brief:
- Lulu's Fashion Lounge Holdings saw savings in Q1 by diversifying its base of shipping carriers, CFO Tiffany Smith said on an earnings call this month.
- The fashion brand known as Lulus has been pushing to add more carriers in recent quarters to offset rising shipping costs. Although executives didn't specify the savings amount, it saw cost of revenue — which includes all shipping expenses — decrease nearly 16% year over year.
- However, that fell in line with a 17% decrease in total orders placed as the brand focuses more on profitable shoppers rather than “excessive returning and unprofitable customers,” CEO and Director Crystal Landsem said.
Dive Insight:
Like many shippers, Lulus saw fuel surcharges and other shipping fees imposed by carriers pressure its financial performance in 2022 and 2023. To mitigate the heightened costs and potential service issues, the brand began expanding its outbound delivery partner network.
“By partnering with multiple carriers, we’ve been able to leverage a broader range of shipping options, rates and delivery times, further optimizing our costs and continuously seeking ways to improve the customer experience,” Landsem said in an August earnings call.
Further cost optimization will be critical for Lulus after posting a $5.7 million net loss in Q1. While the brand hasn't revealed precise cost benefits from adding carriers, Smith said on a call last May that it projected “seven-figure savings” due to diversification actions implemented in the middle of the quarter.
Increased shipper interest in adding new carriers has led to rapid growth among alternative delivery providers. Carriers outside the U.S. Postal Service, FedEx, UPS and Amazon saw their parcel volume jump 28.5% in 2023, according to the Pitney Bowes Parcel Shipping Index.
Although a soft demand environment has challenged these players, fuel surcharge hikes and more delivery fees from FedEx and UPS present a fresh opportunity for them to attract cost-weary shippers.
