Dive Brief:
- Stitch Fix has worked to reduce shipping costs and boost its bottom line by diversifying its carrier base, CFO David Aufderhaar said on the apparel retailer's June 4 earnings call.
- The company’s gross margin improved 280 basis points year over year for the quarter that ended April 27, in part due to better rates from its improved carrier mix. "As a result of these efforts, we expect FY 2024 transportation costs as a percentage of net sales will be lower than any year since FY 2020," Aufderhaar said.
- To what extent Stitch Fix, which ships curated boxes of clothing to customers, has diversified its carrier base is unclear. The company's website says it uses national carriers like FedEx and the U.S. Postal Service, along with regional delivery providers. In June of 2023, that particular page didn't mention regional carriers.
Dive Insight:
Stitch Fix's new delivery providers may not be raking in significant volume from the retailer just yet. The company said in its Q3 financial report that it relies on three major vendors for shipping, the same number it gave last June.
Still, Stitch Fix's push is one of many recent examples of shippers diversifying their carrier mix this year, as companies pursue lower delivery rates and reduced exposure to potential delays from existing providers. Lulu’s Fashion Lounge Holdings has added more carriers as well to offset rising shipping costs.
Additionally, furniture company Lovesac has introduced new local parcel delivery providers in one of its key markets as it looks to tamp down outbound transportation expenses, President and COO Mary Fox said on a June 13 earnings call. The initiative is delivering “lower costs than our national partner" as well as better customer satisfaction and will expand further this year, Fox added.
Duluth Trading Co. also added new carriers to its transportation mix, a move that has reduced its outbound shipping costs since mid-April, SVP and CFO Heena Agrawal said on the workwear retailer's May 30 earnings call.
Smaller, alternative carriers have particularly benefited from retailers' carrier diversification initiatives. Providers that aren’t the USPS, FedEx, UPS and Amazon saw their U.S. parcel volume increase 28.5% in 2023, according to the Pitney Bowes Parcel Shipping Index.
