Order Fulfillment: Three steps to improve process and profit margins
When many retail executives think about improving the bottom line, they think of different strategies to drive sales. They want to alter price strategies, stock new items, bolster marketing campaigns and improve customer loyalty. However, one of the most effective ways of boosting profit margins is to look at order fulfillment – all the the processes after the sale is made.
Order fulfillment has conventionally been a big challenge for many online retailers. Particularly when merchants sell low-price items or offer services such as free shipping or returns, inefficient order fulfillment processes can be a significant drain on margins. Here are three different ways that online sellers can improve eCommerce operations, particularly when it comes to order management:
1. Organize inventory from the get-go
If retailers operate their own warehouses, organization is the first step to successful order fulfillment.
As Multichannel Merchant noted, retailers should aim to work with suppliers to ensure inventory shipments arrive on time and are organized (including accurate and easily digestible packing and content slips).
If retailers receive a lot of product in an organized fashion, it can take a long time to stock and order it properly, which in turn can create backups when it comes time to checking and fulfilling orders. Working with organized suppliers can improve efficiency.
2. Rethink the use of space
Many retailers get caught up in pursuing more. They want to stock more items and have more permutations of different products so they always have the exact item that people want. However, stocking more inventory can be detrimental to order fulfillment efficiency. More items require a bigger warehouse and adds more clutter that employees need to look through when it comes time to process an order.
Of course, merchants never want to be in a situation where they lose a sale because they don’t have a particular item, but it’s worth considering whether merchants can maintain the same output while operating a leaner warehouse. Regular reviews with real-time information from eCommerce software can help merchants discover if they can still achieve sales goals with less inventory, which can not only lead to faster turnaround for customers but better margins for retailers.
3. Look at packaging
Every online order needs to be shipped in some sort of container.
However, packages can be costly – particularly if retailers are ordering a variety of containers with different dimensions.
“Ordering in large quantities generally allows for packaging discounts,” Multichannel Merchant added. “This means that, by ordering a larger assortment of boxes in smaller quantities, it is important that the cost savings realized through less dunnage and fewer oversize fees outweigh the higher cost you may pay for packaging on a per unit basis.”
Retailers should perform regular analysis of their packaging needs to identify ways to optimize their shipping and order fulfillment efforts.
Order fulfillment can significantly affect profit margins. It’s crucial that online merchants evaluate the different ways they can improve this aspect of their eCommerce operations.