7 ways to reduce retail costs with a dom
Tuesday, May 8, 2018

7 Ways to Reduce Retail Costs with a DOM

When discussing omni-channel retailing, we often discuss the upside sales opportunities. These definitely exist. But, providing customers with omni-channel services also offers seven core means to reduce retail costs. Specifically, the DOM (distributed order management) is the key system to make this happen. This is music to any chief operating officers’ (COO) ears.

1) Shipping Rate Brokering (SRB)

Advanced DOM systems should all include shipping rate brokering. First, this lets the system automatically find a carrier that meet an order’s timing needs (overnight, next day shipping …). Next, it finds the lowest cost shipper for that particular package. It means the system is constantly working to reduce your shipping costs.

2) Order ConsolidationConsolidating the entire order into one shipment also has the beneficial effect of improving customer satisfaction.

Again a function of an advanced DOM, order consolidation brings all of an order’s items into one box. It consolidates all items for an order fulfillment to one location. This means one single package shipped once, with the customer’s complete order. For multi-unit order, the system finds the closest location to the shopper which can provide most of the order’s merchandise. Then it finds other locations with the additional goods. The smart part, is that the system knows that inter-store delivery costs are lower than last-mile costs. Bringing the entire order together into one single box is a much lower cost option than multiple shipments. Better yet, it improves customer satisfaction.

3) Ship-from-Store

Omni-1000Ship-from-store uses in-store associates for picking, packing, and shipping orders to customers. Someone could argue that this is technically less efficient than using a distribution center (DC). DC’s have specialized and highly efficient workflows. However, leveraging a ship-from-store strategy improves in-store inventory turnover. Higher inventory turns reduces the pressure to discount merchandise. Slow moving inventory, and in-store stock at season end results in heavy markdowns. Improving stock turnover, alleviates discounting pressures.

 

4) In-store Pickup (Click and Collect)

Core to the omni-channel retail concept is the in-store pickup. It is also called click and collect or BOPIS (buy online pickup in-store). Savings here come from customers picking up their own orders. No expensive last mile shipping charges.

5) In-store Returns

BORIS stands for buy online return in-store. Like the in-store pickup, BORIS helps reduce retail costs. Like BOPIS, in-store returns eliminate last-mile return delivery fees. Since customers prefer to return items to stores, let them do so. It save you money on each return. The extra bonus is that they will often buy more goods while in your store.

6) Optimal Order Routing

Click and collect=customer picks up =reduced shipping costsEvery DOM’s heart is the order routing engine. Not all engines are built equally. A good DOM will review orders against all of a merchant’s inventory locations. It then chooses the optimal location from which to route an order for fulfillment. This is based on the retailer’s business rules. Using the DOM for this routing is the only reasonable option for mid to large retail chains. When doing so, operation managers can rest assured. The system will work to find the least cost, fastest, or best way to fulfill orders – based on the company’s prioritized business rules.

7) In-Store Returns – Again

Another way to reduce retail costs on returns, is how a retailer deals with merchandise returned to a store in good condition. There is no need to discount these items. A good DOM will have returns management capabilities. It can process a return, track and update inventory data real-time. As a result the returns can be put back on the shelf right away. Replacing an item on the shelf for resale increases the chance of another sale of that item. The big savings are in the form of merchandise that does not need to be discounted.

Saving with DOM Technology

Very few retail order management systems are Advanced DOMs. However, systems like the OrderDynamics DOM offer retailers the full breadth of options discussed above. This gives retail operation managers with a greater sense of control. It also give operations more options to help reduce retail costs, effectively. If your DOM does not give you this flexibility, give us a call for a no-pressure demo and discussion about your needs.

 

Author:

Charles Dimov - Director Marketing OrderDynamicsCharles Dimov is Vice President 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.

 

 

 

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