How to Save Costs and Increase Your Company’s Profitability with the fulfillmenttools Solution

Flexibility, a positive customer experience and a high level of service are increasingly important for customers in retail. The pressure on retailers is high. Service offerings such as Click & Collect, Ship-from-Store or Click & Reserve promote customer satisfaction but can also lead to pain points and increased costs on the retailer side. But how can retailers manage to meet the demands of their customers and save costs at the same time? With the help of an Order Management System, delivery processes can be optimized, costs reduced and services improved. In our example, we show you the actual savings potential.

A classic example: A customer orders an urgently needed product, for example hiking boots for their upcoming vacation. They order the boots online via Click & Reserve for pick-up in a store of their choice. In the classic, non-cost-optimized case, the retailer sends the ordered hiking shoes from a warehouse to the store of the customer’s choice. As soon as the shoes are ready for collection from the store, the customer receives a notification via email. They then pay for the goods on site when they collect them. This gives them enormous flexibility, as they can be sure that the preferred shoe size is actually available thanks to Click & Reserve.

• Assumption: The goods ordered via Click & Reserve are delivered from a warehouse to the store of the customer’s choice
• Pain point for the retailer: high delivery costs and long delivery times

Exemplary company key figures:

• Click & Reserve order volume of the retailer p.a. = 300,000 orders p.a.
• Delivery costs to store = € 4 per order (The standard shipping costs for large customers are between 4-5 € per delivery.)
• Total costs for Click & Reserve orders p.a. = € 1,200,000 Total costs p.a

So, if Click & Reserve orders are fulfilled with stock from the warehouses, this means high delivery costs for the retailers and long delivery times for the customer (approx. 2-5 working days for parcel delivery. With other delivery options, it can even take up to 9 working days). However, if the customer needs the goods as quickly as possible and decides to change their mind due to long delivery times, the ordered goods may not be picked up or may be canceled in advance. On the retailer’s side, there is a surplus for the customer’s reserved and unclaimed goods. In the long term, this leads to a loss of sales for retailers.

• Assumption: The customer cancels the ordered goods or does collect them
• Cancellation/no show occurs in approx. 40% of cases according to experience
• Consequence: The retailer incurs additional return costs of around €4 per order for unused goods.

Key corporate figures:

• Click & Reserve Orders, p.a. = 300,000 orders
• No Show Quote store = approx. 40 % of Click & Reserve orders, p.a.
• 40% no show x 300,000 click & reserve orders p.a. = 120,000 uncollected goods
• Return costs to warehouse for no show = 4€ per order 

What can retailers do to counteract these costs and improve the overall customer journey at the same time?

The provisioning process is crucial. Instead of serving Click & Reserve orders from the warehouse, retailers can use the stock already available in the customer’s preferred store and thus reduce the provisioning time to a minimum.

This requires transparency across all stocks – both in stores and warehouses. It provides customers with a comprehensive overview of all order details during the checkout process. This creates a high degree of flexibility for customers and increases efficiency for retailers and customers throughout the omnichannel process.

The ordered hiking boots are already available at the store and can be provided within a very short time so that the customer receives the goods in good time before her vacation.

Assumption: On average, approx. 30% of Click & Reserve orders are available directly from store stock and can be delivered immediately (delivery times of 30, 60 or 120 minutes are possible)

By using an Order Management solution, costs can be saved by using store stock for eCommerce orders.

Assumption:

30% of orders can be fulfilled directly using store stock.

The available goods from 300,000 Click & Reserve orders = 90,000 goods, p.a. do not incur any additional costs and find their way directly to the customer

Shipping costs from originally € 480,000 (without the fulfillmenttools solution, see calculation above) can be reduced to € 360,000 p.a. and thus saved by directly sourcing goods from a store . (Note: Example assuming one item order per order. The figures vary for multi-item baskets.)

Compared to the initial situation without the use of an order management system with total costs of € 1,680,000 (if the goods are not directly available, see incoming calculation), the total costs are reduced to € 1,320,000 p.a. with direct store procurement. The retailer saves € 360,000 of the total costs per year.

This calculation example is based on empirical values and real assumptions from over 90 years of trading experience.

The basis for this process optimization and considerable savings potential is provided by a software solution that makes it possible to connect your entire fulfillment network. This primarily includes cross-network transparency regarding stocks in stores, central warehouses, dark stores, etc., so that you can always fulfill customer orders in the best possible way. This means you always know which goods are available where and can fulfill orders quickly and cost-effectively, such as click & reserve via store stocks. By using an Order Management System, it is precisely these processes in the omnichannel network that can be optimized and considerable costs reduced. In the long term, the use of an order management system increases the profitability of your company and can even act as a growth booster.

In addition to reducing costs, the use of a fulfillment solution tailored to your individual needs offers you many other advantages in your day-to-day business:

With fulfillmenttools, you can optimize all steps in your customer journey, expand your service portfolio portfolio and offer a convenient shopping experience. At the same time, you can simplify your processes, improve the utilization of your resources and reduce lost sales.