Order Fulfillment Cost Can Be A Huge Margin Eater

Order management has long been considered one of the core competencies for Omnichannel success. In today’s competitive retail environment, maintaining a core competency in distributed order management of online, catalog, call center and in-store orders is more important and tougher than ever. Due to pressures associated with rising digital and in-store velocity and variety of orders, the ability to manage costs, visibility and agility of orders enterprise-wide is a daunting task for retailers. Data from EKN’s recent Omnichannel Order Management survey indicates that for every dollar that a customer spends on an order, retailers are spending an extraordinary 18 cents in total order lifecycle cost. 8 in 10 retailers reported an increase in the order management and fulfillment costs compared to last year, with an average year-on-year increase of 5.07%. This number is substantial and a drain on margins that are already slim in the case of many retailers. Order costs are made up of varied direct and indirect labor, equipment, systems, handling and shipping costs. When calculating cost of goods sold, free shipping is usually a big cost burden, and in fact consumers’ expectation of free shipping is the leading or der management-related business challenge for 4 in 10 retailers. Retailers across the board are in agreement that managing order management systems and fulfillment processes has become more multifaceted and complex. On the business side, the need to improve order cycle time (45%), lack of visibility across order functions and processes (44%) and lack of alignment between inventory, order and supply chain operations (41%) are amongst major order management process-related issues retailers are struggling with today. These challenges...

Webinar: Omni-channel Order Management & Fulfillment

Upon recommendation from EKN Research’s 2014 Retail Advisory board, on Tuesday September 23rd at noon EST/9 am PST, EKN Research’s VP & Principal Analyst, Sahir Anand, conducted an exclusive “Top Transformation Drivers for Omni-channel Order Management & Fulfillment” webinar. This webinar revealed new facts from 100 retailers about what they want and expect in an Omni-channel Order to Fulfillment strategy and systems plan. A snapshot of the findings summary from this webinar: For 61% of retailers, online order fulfilment from store is projected to grow the maximum among all the other aspects related to store in the next 2 years Nearly half (47%) of retailers process both Business-to-Consumer (B2C) and Business-to-Business (B2B) Omni-channel/e-commerce orders today Both online and Omni-channel order volume is undoubtedly on the rise. These companies expect 4.5 average revenue increase due to Omni-channel commerce and expect that share of online sales will increase from current 13% to 19.1% by 2016 As a result, a third of retailers say that reducing cost of orders is a top strategic investment priority for them at least for the next 12 months Download Full...