In today's world, online shopping has become an essential part of people's lives due to its convenience. Consequently, the number of online orders has significantly increased, providing companies with an opportunity to reach a broader customer base. However, retailers face the challenge of meeting the time-sensitive demands of online consumers while keeping shipping costs low. Research has shown that expedited shipping can increase transportation expenses by up to 68%.
To achieve a balance between managing shipping costs while providing quick delivery, strategic retailers are turning to order consolidation and order merging as a solution.
In this blog, we’ll explore how order consolidation and order merging benefit retailers and consumers alike, as well as take a closer look at some scenarios where order consolidation can improve the outcome.
An Overview of Order Consolidation and Order Merging
Order consolidation and merging are two essential strategies that businesses can employ to enhance their order fulfillment processes, resulting in reduced shipping costs and improved operational efficiency.
Order Consolidation
Order consolidation is a process of centralizing all the items from a customer's multiple orders into a single inventory location. When various orders are received from the same customer, which are initially routed to different fulfillment locations, they can be conveniently brought together to a central location. By doing so, multiple orders can be consolidated and shipped from one location to the customer's desired delivery location. This consolidation step not only reduces shipping expenses but also minimizes the environmental impact associated with transportation emissions, promoting sustainability in logistics.
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Example: Suppose a customer places an online order for an item (let's say, a dress), and a few hours later, decides to purchase an additional item (such as shoes) from the same retailer. Utilizing order consolidation, the retailer can efficiently transfer these different orders to a location that is nearest to the customer and then ship them as a single shipment while saving on shipping costs.
Order Merging
Similarly, order merging is an effective technique used when a customer places multiple orders that can be fulfilled from the same location. Instead of treating them as separate orders, retailers prefer to merge them into a single shipment, ensuring a smoother and more cost-effective delivery process.
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Example: A customer orders a dress online and later spots a pair of shoes on the same website. Instead of doing two separate deliveries, order merging enables retailers to combine both items into one shipment. This not only pleases the customer but also streamlines the retailer's fulfillment process.
Exploring the Benefits of Order Consolidation and Order Merging
Now that we have a better understanding of what order consolidation and order merging are in retail, let’s take a closer look at the benefits they can bring to omnichannel businesses:
- Cost Savings and Efficiency
When a business receives multiple orders destined for the same address, adopting order consolidation and merging can yield substantial cost savings and operational efficiency. By consolidating multiple orders into a single shipment, retailers can benefit from lower shipping rates offered by carriers for bulk shipments. Additionally, this practice reduces handling costs associated with packaging and preparing multiple shipments, streamlining the fulfillment process.
- Improved Order and Tracking Accuracy
Through order consolidation and merging, the fulfillment team can avoid the complexities of packing and generating multiple shipping labels, reducing the likelihood of errors in the process. With a simplified workflow, businesses can achieve faster order processing times, leading to quicker and more precise deliveries. Enhanced accuracy in order fulfillment contributes to customer satisfaction and loyalty, as customers receive their desired products promptly and without confusion.
- Promotion of Sustainability and Social Responsibility
Order consolidation and merging are crucial strategies for businesses seeking to emphasize sustainability. Research indicates that sustainability factors into purchasing decisions for an estimated 70% of consumers. By streamlining order fulfillment through reduced shipments, retailers can minimize their utilization of packaging materials and transportation resources. This practice not only reduces their carbon footprint but also aligns with the growing consumer preference for environmentally responsible brands. As environmental awareness continues to rise among consumers, the integration of eco-friendly practices can significantly enhance brand perception and appeal to a greener customer base.
- Inventory Optimization and Dispersion
Order consolidation enables retailers to efficiently distribute inventory across their various stores. This method ensures that specialty stores, such as pop-up stores, can operate as efficient feeders to central consolidation locations. By avoiding the need to stock every item at each individual store, retailers can better manage inventory dispersion, reducing the risk of overstocking or stockouts.
- Enhanced Customer Experience
Order merging contributes to an improved customer experience in several ways. Firstly, receiving a single shipment instead of multiple shipments enhances convenience and reduces potential frustration for customers, especially when placing multiple orders within a short period. Secondly, streamlined tracking and delivery of a single shipment reduce the chances of lost or delayed packages, instilling confidence in the reliability of the business's delivery process. A satisfied customer is more likely to become a loyal patron, contributing to long-term business success.
How Does an Order Management System (OMS) Merge Multiple Orders to Reduce Shipping Costs?
An Order Management System (OMS) integrated with platforms like Shopify can adeptly route e-commerce orders to the most optimal fulfillment location. This strategic routing paves the way for cost-effective same-day or next-day deliveries. One of the key features of such an OMS is the ability to facilitate merging.
Fig 1. A visualization of order merging in HotWax Commerce OMS
With the functionality of order merging, retailers can conveniently combine multiple orders placed by a single customer into one shipment. The OMS carefully evaluates each order, and upon identifying orders with identical customer IDs, delivery addresses, and shipping dates, it efficiently merges them into a single entity.
By merging multiple orders, the OMS effectively reduces the overall shipping costs, providing significant savings for retailers. Moreover, this system also enhances the customer's shopping experience by ensuring the receipt of all ordered items in a singular, neatly packed shipment.
Adding Order Merging and Order Consolidation Operations to Your Retail Business
Order merging and consolidation can greatly benefit both retailers and customers in the e-commerce industry. It can lead to a better customer experience by reducing the number of packages received and allowing for more efficient tracking and delivery. Additionally, an Order Management System with order consolidation and merging functionality can help reduce shipping costs and optimize the shipping process. By implementing these techniques, retailers can enhance their customer's shopping experience and improve their overall operations.
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HotWax Commerce OMS supports order merging as an out-of-the-box functionality for retailers. For retailers whose needs require consolidation, our team is happy to work with you to create a solution that equips your operations for this process through HotWax Commerce OMS. Talk with our team to get started with order merging or order consolidation today.
