It all began on a fateful day sometime in the middle of January when we sat down for our yearly meeting with our shipping partner, FedEx. We were trying to beat them down on their shipping rates by a few pennies in order to improve our margins. In the middle of the coffee and donut fueled discussion, our numbers guy stopped and said, “We switched to FedEx from UPS last year because you were able to give us 3% better rates. However, over the course of this year, we saw our late shipments increase from 4-7% so we were not actually saving money!”
Faced with irrefutable facts, our FedEx rep blinked for a second and slipped up by saying, “But you guys can get a refund for that…” and immediately received a glare from his manager who tried to smooth over the statement with a poorly suppressed cough. Despite his efforts, what we had just heard could not be undone. The rest of the meeting was a question/answer session that enlightened us about the dark secrets of FedEx’s on-time delivery guarantee.
FedEx, the second largest shipping company in the United States, ships around 1.2 billion packages a day. Also, according to public records, they have an on-time performance of 94%. Meaning, FedEx delivers about 72 million late packages in a year, with an average shipping cost of $15. What FedEx owes to its loyal customers is about $1.08 billion. Yeah, that’s right–billion with a B.
The problem however is that Fedex’s policy regarding refunds requires you to undergo a lengthy and irrefutably difficult process in order to get your money back for packages that are delivered late. So if you want to obtain the refund that is rightfully yours–hold onto your seatbelt folks because it may take a while. We do not blame Fedex though for making us jump through hoops. After all it’s our money, not theirs and tt doesn’t hurt them to keep it.
As this refund process became clearer to us, a member of our Logistics team chimed in by saying, “Hey, we’ve been missing out on a lot of money. We should immediately start tracking each package and file claims when needed. I am going to start doing it today”. The statement made sense but it brought forth a chuckle from our Fedex representative and manager. The chuckle and a minute of thought eventually made us realize that our Logistics guy was right but considering our shipping volume, in order to track a package and file a claim every time a shipment was late, we would have to utilize at least one full-time employee. At that point, the savings would be less than what we would have to pay for that employee. Fedex had really thought this through!
We were not ready to give up so easily though. The next voice heard in the meeting was that of our Software Architect. “We should automate the whole process, track a package, know when it’s late and submit refunds, all through code and avoid getting the employee,” he said . This statement made the Fedex representative sit up and take notice. On that note, the meeting was abruptly ended by the veteran Fedex manager, who left us with these wise words before parting ways, “If Fedex wanted to make refunds easy they would have decided to automate it”.
The words of the Fedex manager disheartened many of our team members that were there that day. Fortunately, however, it had the opposite effect on our Software Architect. He left the meeting muttering under his breath, “Wait till I show him how it can be done”.
That day marked the beginning of LateShipment.com’s journey. The project was started as one of the many side projects in our IT Department. After investigating a bit further, the words of the Fedex manager turned out to be totally true. Fedex makes refunds a difficult process not out of oversight, but on purpose. Fedex is not too keen on giving away $1.08 billion all that easily.
We were determined though, to find an efficient solution to getting refunds we so rightfully deserved. Every step the project took was riddled with difficulties and what started out as a two-person pet project soon evolved into a project that consumed the entire IT Department’s focus. Every function that needed to be performed to reach the ever-so-elusive automatic refund was a challenge. Challenges, though, that our capable software engineers were up to conquering every single time.
After several rounds of brawling with the FedEx API, our team was on the verge of giving up. That is, however, until one fine morning our Logistics manager walked into the room with a FedEx invoice that showed a successful refund of $6.32 that had been generated by our automatic system. That invoice brought wider smiles to the faces of our software engineers than their own paychecks. After a long moment of disbelief, the team finally realized they had conquered the Fedex beast. Boy did we have a party that evening!
The system over just the next month saved us more than $4,000 and currently the count stands at about $12,000 and rising. All the money that has been credited back to us was automatically submitted into our account without anybody in the office lifting a finger. Free money is awesome indeed. When these refunds were presented in our quarterly meeting, it raised quite a stir. Our usually poker-faced accountants and management team members were all smiles. Most importantly though, these refunds grasped the attention of our head of Business Department. After taking a look at the numbers that LateShipment.com had generated, he presented us with an idea. In short, he explained how he felt LateShipment.com could potentially be useful to a lot more businesses than just ours alone.
From that point onward, LateShipment.com ceased to exist as just an internal IT project. Every department in our company was committed to the goal of LateShipment.com going into beta testing in just two short months. Website designs were mocked up, marketing plans were drawn, budgets were created, and user interfaces were refined. It was a mad scramble to the finish line.
In the end however, it was all worth it. LateShipment.com has successfully created and is up-and-running. Our team couldn’t be more ecstatic to put money back into customer’s pockets each and every day. By working silently in the background–LateShipment.com does refunds for you, the simple way.
