Cooking.com has sizzled where other dot-com merchants have fizzled. The three-year-old online merchant, which as its name suggests specializes in cooking-related products, watched its sales volume triple from '99 to '00. The company has succeeded to date largely because of some smart strategic decisions that involved logistics.

For starters, the Santa Monica, Calif.-based dot-com brought its distribution operations, which had been outsourced, back in house to ensure high-quality customer service - what it terms a "guest-centric" focus (company executives refer to their customers as "guests"). It has solicited customer feedback to determine which products require extra protective packaging, thus assuring damage-free shipping. It has focused on building sales and distributing products in the U.S. market, avoiding the complications of international shipping. And finally it has trained its distribution personnel to pick items as if they were shopping for a customer. "The distribution operation's mission is lowering costs and maintaining the customer experience," says Bryan Handlen, Cooking.com's vice president of logistics.

Entrepreneurs Dave Hodess and Tracy Randall launched Cooking.com three years ago as an online merchant specializing in culinary products and specialty foods. Today, the e-tailer offers more than 6,000 products from such well-known manufacturers as Calphalon, Cuisinart, KitchenAid, and Krups. Along with kitchenware, it provides recipes and cooking tips on its Web site.

The dot-com's distribution operations are located in Ontario, Calif., not far from the company's Santa Monica offices, and are housed in two buildings that sit next to one another. Together the two facilities total 110,000 square feet. In the non-holiday season, between 25 and 30 employees work in distribution.

When Cooking.com was launched in September 1988, it retained a third-party logistics company to handle order fulfillment and shipping at its distribution center. But a year after its birth, the e-tailer took back control of its distribution operation. "Bringing it in house afforded us a greater degree of control and a greater degree of flexibility," explains Handlen, who worked in the distribution field for nine years prior to joining the dot-com. "The company made the decision that our technology system, our guest assistance experience, and our distribution system would become core competencies."

Today, the company maintains a strong focus on customer service. "We try to instill into our DC employees the idea that they are the ones shopping for the guest," says Handlen. Warehouse workers, for example, re-box about 99 percent of the products Cooking.com distributes. They also often repackage the items to ensure that they are adequately protected during shipping. For example, Handlen notes that it's customary for workers to take a set of glasses and repackage them to make sure that they'll arrive undamaged.

To further eliminate damage in transit, Cooking.com has classified some items as strictly "ship alone" products. Even if a customer orders several items at once, Handlen notes, a large item like a stand mixer will be shipped by itself. "And if we deem shipping a bottle of vinegar with pots and pans may create damage, we'll separate it and ship in two different boxes," he adds. Cooking.com has identified products for its "ship-alone" category based on customer comments about merchandise damaged in shipment. "We regularly evaluate feedback," says Handlen. "We are proactive on the feedback from our guests."

Because of the extra effort it takes with protective packaging and its accurate, real-time records on available inventory (which prevents customers from ordering out-of-stock items), Cooking.com has a very low return rate - between 2 and 3 percent on shipped items. "Our return rate is very good," notes Handlen. "We take a lot of pride in giving our guests what they're looking for."

To minimize costs associated with merchandise returns, the company has changed its shipping policy. The e-tailer used to include a postage-paid return label with everything it sent out. But no longer. "We did an evaluation of our competition and that wasn't something our guests look for," says Handlen. "We will pay for the return if it was caused by something that was our fault. But if the customer doesn't want it, then he or she will pay for the return."

Today, the specialty cyber-merchant fills and ships most of its orders from its warehouse stock, although it does drop-ship some fresh food items - like turkeys at Christmas - direct from suppliers. On a normal day, Cooking.com ships out about 1,000 orders. During the holiday season, however, order volume reaches "thousands a day," according to Handlen. During the work week, the e-tailer makes it a practice to ship all expedited and next-day orders it receives by 9 a.m. Pacific Standard Time that same day. Expedited and next-day orders received after 9 a.m. are sent out the next business day. Economy orders received during the work week are also shipped the next business day.

Unlike some other dot-coms, Cooking.com does not include the cost of shipping in the merchandise's price. The customer pays an additional fee for shipping based on the amount of the order and the level of delivery service requested - i.e. ground, expedited, or next day. However, Cooking.com doesn't specify which parcel carrier it will use on a particular order because that varies according to price. Although the e-tailer has contracts with its carriers, Handlen says, his company uses the program ClipperShip to rate shop and determine the most effective method for shipping. "By rate shopping each of those packages by the weight of the package to the specific destination zone, we are able to ensure the lowest possible cost," he says. "One carrier may have great rates on one- to two-pound packages, for example, but cannot compete on packages that weigh over two pounds."

Up to this point, Cooking.com has focused on serving customers in the United States and avoided selling its products overseas. "Because of the difficulty with customs, we decided to steer clear of it," explains Handlen. "We decided to focus the heart of the business in this country before we venture further out."

But the company has branched out in another way. Although launched as an online retailer, it has since started sending out mail-order catalogs. In other words, while some mail-order merchants have evolved into online retailers, Cooking.com has taken the opposite tack.

The logistics operation has allowed Cooking.com to build a base of satisfied loyal customers, ensuring continued sales growth through repeat business. It's managed to achieve a low rate of returns and keep costs down. "Distribution is critical to our success," says Handlen. "It allowed us to meet customer expectations during the holiday season. Whatever expectations you set, you must exceed them, and we've been able to do that."