How Your Business Can Cash In on On-Time Delivery Guarantees

by Dave Clarke on February 13, 2014
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Jose Li picked up a few things during the roughly six years he ran FedEx’s e-commerce division. One thing was that, although shipping giants do a fine job overall, they don’t deliver when promised as often as many people may think.

That got Li (pictured) to thinking: What if there was an easy way to help companies cash in on those on-time-or-your-money-back guarantees? And so Li’s startup, 71 lbs, was born.

The name derives from the point at which FedEx and UPS start charging additional fees for excessive weight, even if it’s just a fraction of a pound. However, shippers can often recover all of that money: If a package arrives late by one minute or more, they’re entitled to a full refund of the shipping charges. So, Li developed an application that automatically audits the delivery service’s records (your shipping account) looking for on-time delivery gaffes that meet the criteria for the guarantee refund.

If 71 lbs collects nothing, you pay nothing for its work. If it secures a refund for you, 71 lbs keeps half. In other words, you receive a 50 percent refund for a package that was delivered to its destination, albeit tardy.

The Fort Lauderdale, Fla.-based operation is funded by venture capitalists, including Pritzker Group, Idea Fund Partners, and Tamiami Angel Funds. The company employs six people and serves about 2,000 customers. “On average, our clients get back about $190 per month,” Li says, a figure which represents 4 to 5 percent of their monthly shipping spend.

Of course, customers could handle the refund process themselves, Li acknowledges. But most don’t have the resources to audit 100 percent of their shipments looking for the roughly 5 percent that didn’t arrive on time, especially given the carriers’ 15-day reporting window. Instead, he says, “Most clients consider this found money.”

What’s next? Li recently started offering automated invoice auditing. “We’ve found that about 8 to 10 percent of invoices contain incorrect charges,” he explains. “We’re looking to help our customers get refunds for those errors, too.”

Dave Clarke is a business writer for Intuit and is passionate about solving small business problems.

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