What is the true cost of fulfillment and how can you reduce your costs?

Packing orders is fun at first, but as your business grows, order fulfillment can turn into a full-time operation.

A report by Radial earlier this year revealed that the average cost for the company to fulfill an order is staggering at 70 percent of the average order value.  If that statistic resonates with you, then it may be time to revisit your fulfillment process to reduce overheads and bank more profit.

  • Today, more than 55 percent of customers are using multiple channels to shop, yet over 40 percent of retailers describe fulfillment costs as a major challenge impacting their business.
  • 67 percent of CEOs say that costs to fulfill orders have increased over the past several years, with 37 percent citing that inventory order and supply chain operations are not properly aligned and are therefore driving up costs.

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Overcoming fulfillment challenges is more important than ever and reducing the cost is essential to sustaining a profitable business.

In an effort to marry customer expectations with back-end efficiency, retailers have adopted a number of tactics including non-traditional shipping solutions, like “click and collect” and “buy online, ship from store.”

Unfortunately, despite a small reduction of costs by offering collection options, complexities and hidden fees associated with process inefficiencies persist, including:

  • 31 percent of retailers are challenged with split orders, where multiple products in one order must be shipped from different locations
  • 56 percent of retailers say their order management systems need to be able to process at higher volumes and velocity, and to source from a variety of channels
  • 40 percent of retailers have trouble automating order capture and processing, integrating inventory and standardizing order management from different order types across channels

The post-click ecosystem is difficult for even the most successful omnichannel retailers to navigate.  Today, consumers expect limitless selection, next-day delivery, frictionless payments and easy returns.

While all this adds up to a seamless experience for the shopper, retailers are faced with mounting costs.

With more than 35 percent of retailers still in the planning stages of deploying intelligent order technology, the industry is not moving quickly enough to meet demand in today’s fast-paced retail landscape.

Many retailers can’t keep up with the complexities of fulfillment and they need to contract third party services or implement more sophisticated order management, inventory and fulfillment automation software in order to streamline their processes.

In-house fulfillment can be simplified with shipping automation.

StarShipIT is automation software that enables you to offer flexible shipping options for your customer including:

  • Click and collect
  • Ship from store
  • 3 hours delivery
  • Split orders/deliveries
  • Return label generator
  • Branded tracking pages
  • Shipping notifcations via SMS/email (your chance to customise and upsell)
  • StarShipIT’s shipping automation gives your customers access to lower courier rates at checkout – even live rates if you are using Shopify or Magento.

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StarShipIT is a great choice for eCommerce merchants already in business and needing shipping automation software because it supports multiple carriers – bring your existing accounts with you and keep your great rates!

Customers have reported that with StarShipIT,  delivery errors are negligible.  StarShipIT has helped customers reduce shipping admin by half  as well as process orders three times faster, and others can process 15% more orders every day!

To decide if automation software is right for you, calculate the time it takes to process one order, multiply it by the number of orders per day/week and then multiply it by your hourly rate – that is the total cost of fulfillment for you currently, not including the opportunity cost of time spent doing admin when you could be working on new product sourcing, marketing and growing your business.

True cost of fulfillment

Third Party Logistics

Many companies decide to outsource fulfillment.  This can be a time and cost effective approach.  The key challenge will be to find a dependable partner who has a good reputation behind them and can be ‘trusted’ to manage your brand as well as one with quick turnaround and reasonable fees.

After all, if the customer gets the wrong item or it takes longer than expected to get there, they will blame you – the reseller, not the 3PL, as you have taken their hard earned money, not the courier and they won’t ‘see’ the third party responsible for the delivery shambles. On the plus side, you can focus on your business and leave the fulfillment side of things to the experts.

If you would prefer to manage fulfillment in house,  but are in need of automation technology to streamline the process and reduce the amount of time spent on processing orders and getting them out the door, StarshipIT will have you wondering what took you so long to get started.

 

“This is an incredible app, we’ve wasted so much time in the past having to manually enter consignments into StarTrack & Australia Post (cut address info.. paste.. spelling check.. address check.. delayed pause for printout.. repeat), with StarShipIT we can print out dozens of consignments in less than a minute. The time we’re saving is just amazing.”  Daniel, Westbrothers

 

Sign up for a FREE 30 day trial of StarShipIT and we will be in touch to help you get set up and shipping straight away!