Advanced Omni-Channel: Retail Order Consolidations
Friday, January 19, 2018

Advanced Omni-Channel: Retail Order Consolidations

Among omni-channel retail techniques, retail order consolidations is one of the most advanced feature sets. Order consolidations offers retailers two significant advantages which corrects two flaws in most omni-channel retailer operations, today. First, order consolidation lets retailers set order routing business rules that keep an order whole. Second, the function lets retailers execute on the more sophisticated hub and spoke omni-channel model for their ship-from-store strategy.

Single Order Multi-box A Major problem facing most retailers running ship-from-store fulfillment, is the single order multi-box scenario

A major problem facing most retailers running ship-from-store fulfillment, is the single order multi-box scenario. To entice customers to shop online, we often offer free shipment with a minimum order. It is a smart move to overcome a hesitancy among consumers. You have probably set your order value just high enough such that the shopper must either purchase a healthy valued item, or must purchase a few items to get over the minimum order size. This helps grow order sizes, and also increases the routing complexity.

Keeping Orders Whole

However, all light order management systems, and non-advanced systems lack the functional depth to handle this effectively. For this scenario the omni-channel retailer needs a retail order consolidation function that not only sources products from multiple store inventories, but also brings this inventory into one location. Doing so means using the in-store inventories localized to a region. Then the advanced order management system’s consolidation capability effectively does one or multiple ship-to-store routes to bring in any missing inventory at the prime packaging location. It means one single location consolidates all the merchandise into one single package to fulfill one order.

Consolidating the order into one location means the retailer can pack and ship once. This saves on external, courier or postal shipping costs. It also reduces the brand eroding embarrassment of having multiple large boxes shipped to a customer for small items.

 

Retail Order Consolidation Brief

Are Retail Order Consolidations Cheaper?

Order consolidations are usually configured to go to the location that has the most inventory already present in-store. This minimizes store to store transfer costs. Note; however, that store to store merchandise transfers are usually significantly less expensive than external shipping methods. Most chains already have runner trucks that replenish inventory between stores, daily or a few times per week. As it leverages the existing inventory runs, order consolidation can be a significant margin improver for a retailer.

Reducing Your Carbon Footprint

Besides saving on external shipping costs, retail order consolidation also helps reduce a retailer’s carbon footprint. Today’s customers are becoming more sensitive to wasteful packaging, and the carbon emissions from multiple shipments. Using order consolidation helps a retailer improve on their environmental friendliness policy. In fact, those using consolidation should make their shoppers aware of the extra effort made to help the environment. This is a simple yet solid step for the retail brand.

Hub and Spoke Strategy

Briefly, hub and spoke omni-channel is an advanced retail strategy that brings ship-from-store orders to hub locations. But, the model leverages the in-store inventory of both the hub store, and smaller format or popup sites. The strategy lets retailers predetermine the stores will ship orders from the store directly. It requires stores that have the room, setup, specialized personnel, and/or inventory capacity to do so efficiently and effectively. On the whole, using a hub store to execute ship-from-store fulfillment leverages more in-field merchandise. It also improves the chain’s overall efficiency by having specialized associates at certain stores do the pick, pack & shipping. Although not as efficient as the operations within a distribution center, it is significantly better than spreading a ship-from-store policy to every location – large and small. For more on the Hub and Spoke strategy look out for the Advanced Omni-channel: Hub & Spoke blog post in the coming weeks.

For Advanced Techniques

Order consolidation is a very difficult function for an order management system to accomplishRetail order consolidation is a very difficult function for an order management system to accomplish. Light order management systems are too basic to have this capability. Standard order management systems are a vast improvement over light (add-on) starter solution, but also will not be able to handle this advanced function. To execute order consolidation effectively, retailers need an advanced OMS with this specific capability. It allows your retail chain to differentiate by using advance omni-channel retail techniques, unlike the vast majority of competitors. Order consolidation opens the doors to dramatically reducing multi-box shipment costs, and using a more efficient hub and spoke omni-channel approach. If you are reviewing your current OMS or next solution set, don’t buy into a solution missing this feature. It is your choice between simply running standard omni-channel retail… or running a smart strategy strategy that will make a difference!

Author:

Charles Dimov - Director Marketing OrderDynamicsCharles Dimov is Director of Marketing at OrderDynamics. Charles has 21+ years experience in Marketing, Sales and Management across various IT and Technology businesses. Previous roles include Chief of Staff, Director Product Marketing, and Director Sales. Charles has held roles in brand name firms like IBM, Ericsson, HP, ADP, and OrderDynamics.

 

 

Related: 

Advanced Order Management, What is it Truly?

Want to Know More About Distributed Order Management?

Retail Order Routing - What Exactly is it?