For Victoria's Secret, a leading specialty retailer of intimate apparel and beauty products, customer satisfaction in receiving merchandise from its catalogs and Web site is critical to customer loyalty. To ensure a high level of service at low cost, the U.S. Postal Service has been a key service partner with Victoria's Secret since the late 1980s.
"It's a seamless relationship," notes Kurt Kravchuk, director of Parcel Transportation at Victoria's Secret Direct and Limited Logistics Services, Inc. "We ship over eight million packages annually through the U.S. Postal Service in the form of Standard mail, Parcel Post and Priority mail for our domestic operations. Victoria's Secret Direct also utilizes the USPS for certain international shipments such as to Japan and Singapore," he adds. Victoria's Secret works closely with United Parcel Service for similar volumes in the United States utilizing Next Day Air, Second Day Air and Ground services as well as Express services for international orders. The company also maintains a long-term alliance with FedEx for certain international deliveries.
Kravchuk notes the Victoria's Secret arrangement with USPS for domestic shipments works well and involves workshare with a couple of parcel consolidators. This means that packages go farther downstream before being placed at USPS destination bulk mail centers (BMC) and local post offices or destination delivery units. Victoria's Secret saves on transportation/distribution costs while offering relatively low shipping charges to the customer. Kravchuk uses Parcel/Direct as its national consolidator for expertise in consolidations and Global Logistics, a regional specialist in the southeastern United States.
International Service
From the international perspective, a number of new services under the USPS roster of Global Delivery Services have strengthened Victoria's Secret relationship with USPS. In 1996, the company selected USPS for certain portions of its international shipping requirements.
Stephanie Hollis, national account manager with the USPS, notes the Victoria's Secret global alliance was bonded a few years ago when the company formed an International Customized Mailing (ICM) agreement with the USPS. "Victoria's Secret has an ICM agreement, which enables it to control costs, maintain quality service and satisfy its specific global shipping needs," Hollis explains. ICMs are formal agreements the USPS makes with high-volume customers for international services at competitive rates. The agreement covers Global Air Parcel Post and Global Express shipments along with related EDI data file transfers and other value-added services offered by USPS' Global Delivery Services.
The USPS allocates ICMs to customers shipping one million pounds or $2 million worth of international postal volumes annually. Lower volume customers are eligible to receive other discounts such as when they establish an Express Mail Corporate Account to receive per-piece discounts of five percent.
For Victoria's Secret, the ICM means significant discounts on international commercial package volumes that make the USPS an unbeatable cost-service alternative over express carrier counterparts.
During the last several years, Victoria's Secret's international customer base has grown significantly and the company continues to receive orders from Web site and catalog customers globally. "We grew as Victoria's Secret grew. In 1996, it chose us as carrier of choice to Japan. We've retained this business through the market downturn in Japan and have added Singapore," recalls Tom Foley, team leader for international sales at the USPS. The critical nature of adhering to proper customs procedures in both Japan and Singapore has made the USPS a natural partner.
CPAS Customs Clearance
For shipments to these countries, Victoria's Secret participates in USPS' Customs Preadvisory System (CPAS), its proprietary service for customs pre-clearance. "We provide an EDI file each night based on what we're shipping out to Japan and Singapore each day. The USPS accepts these transmissions and provides advance notification to those countries," Kravchuk explains. Shipments to Japan and Singapore are delivered via Global Express Mail service with typical five-day delivery windows.
Because information is transmitted on an automated and consolidated basis via the CPAS system to customs authorities, shippers can save significantly on costs as internal costs are reduced including labor for manual customs entries or other documentation procedures. The USPS estimates some $18 per package can be saved with the typical international customer using CPAS. Other express carriers typically don't have the ability to consolidate customs shipments in this regard, and as a result, customs entries are performed on a package-by-package basis.
Hollis notes that value-added services are included in the ICM agreement with Victoria's Secret. "These include preparation of customs forms and labels for all international shipments. These are built-in customer service features that lead to customer satisfaction," she says.
Considering Victoria's Secret has a global customer base of approximately 12 million with most concentrated in the United States, Kravchuk suggests the international shipping experience is critical to increasing its foreign customer base. Concludes Hollis, "We're working hard with Victoria's Secret to ensure customer satisfaction and to gain more of its business including the United Kingdom and other European destinations."
Victoria's Secret is owned by Intimate Brands and had sales of $3.3 billion in 2000. As of August 4, 2001, Victoria's Secret products are available through 892 lingerie and 472 beauty stores 90 of which are stand-alone the Victoria's Secret Catalog and online at www.victoriassecret.com.
Marcia Jedd is a Minneapolis-based freelance writer specializing in logistics. For more information, visit www.usps.com.
