How to Avoid Retail Multi-Shipments Embarrassment
Tuesday, September 12, 2017

Avoiding Retail Multi-Shipments Embarrassment

Have you seen Amazon’s ridiculous packaging? Isn’t it wild? Sometimes we do the strangest things in retail shipments. But, don’t think this is exclusively the domain of Amazon. Not only are there more and more stories about excessive shipment packaging, but there are numerous customer stories about crazy retail multi-shipments for online orders. All told, you don’t want your brand to be among these case examples. Remember that your surprised and social media enabled customers will readily publish these follies.

Retail Multi-Shipments Embarrassment

You don't want to be among the examples of crazy retail multi-shipments that customers share

Most retailers already know the scene. You are pushing hard to make your omni-channel strategy work. It is the smart thing to do. Sure, customers who pickup in-store are your preference. They are more profitable because they most often buy additional items, and reduce your shipment costs (so – higher margins). But face it, there are going to be many customers that want a traditional (old school), online order to be shipped to them.

No problem. Your omni-channel system is built for this. Your order management system will find the inventory from a store, and you will fulfill the order from in-store inventories. Again, the smart approach. Great idea! However, you wisely encouraged the customer to buy a few more items to hit your minimum order value for free shipments. Again no problem, the order management system will handle it, by optimizing your solution. It will find the store with the most inventory items, and ship from there, then find the other locations nearest to the client and ship the remaining items from that store, to minimize shipping costs (shortest shipping distance is generally least expensive).

Retail Order Consolidations - What is it? Read the Brief.

Where’s the Problem?

This is where most simpler order management systems fail. In fact, my wife’s experience ordering 7 pair of socks and 2 lipstick packages is a great example. This online order resulted in three separate shipments that arrived over three consecutive days. Each shipment was in a standard over-sized box. In our case, we found it amusing. For the retailer, it meant an embarrassing customer experience, bad environmental impact, and significant NEGATIVE margins! They spent much more shipping the product to her, than the entire value of the order.

How Retail Multi-Shipments Happen

For retailers, it means an embarrassing customer experience & significant Negative margins!Like most simpler order management systems that lack order consolidation capabilities, this retailer’s system picked the store with the most inventory to fill the order. It immediately shipped from that location. Then found the next most inventory, and shipped from there. In our case, it then found a third location with the last item, and shipped yet another box from there. The last shipment often becomes the most ludicrous. For this example, the third box showed up with a single pair of socks.

At the retailer’s shipping rates, it easily cost $12 per shipment. That’s $36 against a $26 total value order. Estimate the cost of good sold to be about $8, and the total cost of this order was $44. That’s NET LOSS of $18. Worse yet, this does NOT include the cost of shipping material, pick & packing cost, and other internal costs of running the business.

All Retailers Need Order Consolidations

Fortunately for this very large retailer, we did not publish our amusement on social media, or other consumer advocacy sites. However, as more retailers adopt omni-channel strategies, this type of occurrence will happen much more frequently, for those selecting simple or light order management systems.

For your order management system, make the right choice. Ask your vendor for order consolidation capabilities as a core requirement. There are times that you may not use it, but you want this feature available for most of your order fulfillments. To avoid the multi-shipments embarrassment, and losses – your systems simply needs order consolidation capabilities!

Honey, it's your online order of socks. I think the retailer shipped each sock individually!

 

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: 

Pay Online Pick-Up In-Store: Only for Goliaths?

Want to Know More About Distributed Order Management?

How To Find Out What's Really In your OMS