Business

Cutting Costs in Buying.

The first economy effected by the mail-order houses, is the elimination of the middleman. Almost without exception, they buy from the factory and sell to the user. The big houses buy in vast quantities, and for cash. They not infrequently take over the entire product of a factory. They place huge orders with factories during their otherwise slack seasons, cutting costs still more. Where they find that they can more advantageously manufacture the article themselves, they are prepared to do so. The smaller houses, of course, cannot avail themselves of all these ways of reducing costs ; but they all, to a certain extent, employ the same means to the same end.

Operating Economies Developed.

In the operating meth ods also great economies are brought about, especially in the larger mail-order houses, in the handling, packing and shipping of mer chandise. Orders to the mail-order house correspond to customers in the retail store, but the mail-order house has a great economic advantage in that the number of orders (or customers) at any given time of the day can be controlled. Under the schedule system which was originated by Sears, Roebuck and Company of Chicago, the largest of all mail-order houses, and which moves with the smoothness and exactness of a precision instrument, orders are scheduled every ten minutes, the quantity, which varies greatly with the seasons, depending upon the number received during the day. Thus, they have an uninterrupted flow of business which is the same at 8 o'clock in the morning as it is at any other period of the day, and the rush hours and slack periods experienced by retail stores are eliminated. Orders move through the various departments of the house all day long, and in rush seasons far into the night, on this ten minute schedule. An order which is received at, say, 8 o'clock in the morning may be sched uled to be shipped at ten minutes after i o'clock that afternoon. At precisely 'Jo P.M. that merchandise is in the shipping room being packed. A few minutes later it is on its way to the customer along with thousands of other orders scheduled for the same hour and minute. The 1. Io shipments out of the way, the packing room occupies itself with those scheduled for 1.20, but not a 1.20 order is touched until every 1. o order is disposed of. This schedule is feasible only because it is possible to determine at the beginning of the day just how many orders the various merchan dise departments will be called upon to handle. And its perfect operation makes p9ssible the 24-hour service which fills and ships 99 out of every ioo orders within 24 hours after they are received. The even, uninterrupted flow of orders to the merchandise depart ments prevents an overload one hour and a slack time the next. The distribution of these orders is based on the averages which, in this instance, are determined by years of experience.

One single mail-order house, Sears, Roebuck and Company, for example, receives in an average day approximately 4,400lb. of first class mail at all its branches. This more than two tons of

mail per day represents a total of 242,000 letters. Before the mail is taken out of the sacks, it is weighed, and by its weight the company is able to determine with sufficient accuracy for all purposes how many orders have been received. A thousand pounds of mail averages 55,000 letters; out of the 55,000 letters a certain percentage contains orders ; the balance is given up to miscellaneous correspondence. Experience tells also what the percentage of orders received at 9 o'clock is as compared to the total orders that will be received that day. Therefore, by weighing the mail received and deducting miscellaneous correspondence, how many orders will be received that day can very easily be determined. With this knowledge at the beginning of the day and at intervals throughout the day, it is possible to fix shipping times and pass orders along to the various merchandise depart ments at a rate which will keep them running easily and steadily without hitch or break.

The average value of the orders varies with the season, but past experience has given the mail-order house an accurate chart of what this seasonable variation is ; so that not only is the number of orders approximately determined by this process of calculation, but their gross value as well, and the day's total sales can be computed with amazing accuracy before the day is well begun.

Machines and mechanical aids of every possible sort are employed. Man power is eliminated wherever a machine will do the work better and quicker—particularly quicker. Machines open the mail at the rate of 450 letters a minute, at the same time stamping the date on the envelope. Pneumatic tubes, end less belt conveyors, chutes, electric trucks do their part in the distribution of orders to the merchandise departments and in the handling of the merchandise thereafter. Supplementing all this is the high specialization of head and hand work. One corps of employees does nothing but remove letters and orders from envelopes. They pin the cheques and money orders to the order sheets and letters which they accompany. Another group tallies the amounts sent with the orders, notes the amounts on the orders, detaches the remittances to be sent to the cashier's office, and passes the orders to another division. Here the orders are sorted by still other highly expert persons, recorded and finally distributed to the merchandise departments. All work with great rapidity. A mail-order house is divided into many distinct mer chandise departments, such as furniture, piece goods, hardware, phonographs and pianos, hosiery, stoves, etc. These are scattered over many acres of floor space. A single order from a customer may call for merchandise from one or perhaps 20 or more of these departments. The problem then is to bring the merchandise from each of these departments into a certain section of the shipping room at a certain hour and minute in order that they may be packed together, or at least shipped simultaneously.