Retail order consolidation is a growing trend that can help save money on shipping costs. It combines many orders into one single package for easy and efficient delivery. During recent months, Canadians are purchasing a far higher volume of goods online due to the COVID-19 pandemic. In fact, reports suggest the amount of packages sent during the pandemic has been as high as the holiday period. And with limited businesses able to offer in-store shopping, customers are more inclined to purchase a higher number of items per order.
Another component affecting logistics is the limited number of stores allowed to remain open during the peak of the pandemic. Due to this, many traditional B2B shipments (intended for in-store purchasing) have been rerouted to fulfil B2C (business to customer) and DTC (direct to consumer) demand. Skids holding bulk quantities of home furnishings, medical products and even food items have had to be repackaged for individual shipment.
Generally, customers buying more items per order translates into more profits and growth potential for your business. But, if you’re packing them individually, each package shipped can easily cut your profit margin – costing you extra in shipping and packaging costs. This is where retail order consolidation comes in. It brings inventory, sometimes from different sites, to a single location and combines them into one delivery parcel to reduce shipping costs.
While some benefits are more obvious than others, there are significant factors to consider when deciding if order consolidation is right for you. Let’s explore the top six benefits and some of the challenges.
Why should you consolidate retail orders into one shipment? Here are six benefits:
Save on shipping costs
It makes financial sense in a few ways to consolidate shipments. Firstly, each package being delivered requires an incremental amount of manpower and supply chain processing to complete the journey. While this might seem like an insignificant amount of additional work, it quickly adds up when multiple people order multiple items, everyday. The most obvious cost attached for individual packages is delivering to the same address multiple times, instead of just the once. Again, this is a situation that can quickly add up when delivering to multiple addresses repetitively – these additional deliveries could even contribute to a large part of a delivery route. Instead, by combining all the items into one package, you’re saving on shipping costs by decreasing the amount of manpower, processing and repetition of drop offs.
As an added benefit, it can qualify you for preferred shipping rates. When it comes to shipping a large amount of goods due to consolidation, you can save money on shipping by using the full capacity of a trailer, when you have enough packages. Though, if you’re unable to fill an entire truckload within a certain timeframe, consider using an LTL (less-than truckload) shipping option. This allows you to consolidate your (already consolidated) shipments with other businesses shipments to fill up a truckload, without compromising on lengthy delivery timeframes.
Reduce your packaging costs
Consolidating customer orders into one shipment requires fewer packaging materials. This makes sense especially with small items and with businesses that tend to use standard-sized boxes. Using an array of box sizes can also cut down on waste because you are not paying extra for larger boxes and using less filler. In instances where only one item is shipped, extra filler packing materials need to be placed inside to keep the contents from moving around. This adds to the overall weight of the contents, leading to higher shipping costs. With consolidation, the additional goods in each box naturally fill out the space, requiring less filler materials, and eliminating unnecessary weight. When properly managed, this can create a drastic reduction in not only packages but filler materials as well – requiring you to need less packaging materials on-hand and in storage.
Of course, even though consolidating means using less packaging, make sure it’s still able to ensure the integrity and security of your items. Ensure your packaging is up to standard before shipping consolidated packages.
Lower your environmental impact
With growing global awareness of climate change and increased scrutiny of businesses’ environmental sustainability, reducing packaging and, thereby, waste, makes sense. This benefit is two-fold. First, order consolidation means you’re using fewer packages and less packaging filler; reducing the amount of waste on the customer’s end. It’s no longer enough to simply use recyclable materials, businesses are now expected to cut down on any unnecessary materials. The second benefit of managing your shipments is the reduced environmental carbon footprint. Consolidated packages lower the number of delivery stops and distances needed to travel before they reach their final destination. This means lowered CO2 emissions and fuel consumption.
As an added benefit, fewer deliveries mean less handling of each package, which leads to decreased potential damage to the goods. Why does this matter? Less damage equals fewer customer returns – lowering CO2 emissions even further. And speaking of returns, a consolidated package gives customers the opportunity to place several returns into one box – reducing waste, carbon emissions, and saving you on return shipping costs. If these reasons are not enough, consider this: With more and more people willing to call out companies on social media for wasteful practices, order consolidation could save your company from embarrassing PR issues.
Your environmental impact depends on your delivery provider.
Not all delivery providers use the same methods to get your business from A-B. The variety of packaging choices, delivery trucks and returns logistics processes can vary in how eco-friendly they are. Along with utilizing packaging consolidation, review your provider’s environmental policy to make sure you’re doing your part in a way you aspire to. You can view our info here: environmental responsibility policy.
Customers are using their purchasing power to shape the future of sustainability
Improved customer experience
When buying multiple items, customers generally prefer to receive everything in one package. Besides the packaging waste, separate packages increase the chances of items getting lost or damaged. And there’s the added work on the customer’s part. For those who live in remote, inaccessible locations or for those who prefer to have purchases delivered to pickup locations, this cuts down on the number of trips they need to make to retrieve their purchases.
Consolidation = longer deliveries?
Some companies may be hesitant to consolidate their shipments due to the additional time added to the delivery. But as it turns out, customers generally don’t mind. Offering customers a choice in delivery times can actually enhance overall customer satisfaction. According to eMarketer.com, many are willing to wait. “Almost a quarter (24%) of respondents—also the largest share—said that three days was the acceptable timeframe. Some 9%, said that four days was the acceptable timeframe, and 16% of respondents said five days was sufficient.”
Reduced risk of order errors
Having one package to track greatly reduces the possibility of errors, which can lead to reduced shipping costs. There’s less of a chance for lost packages and less work for companies to track these parcels because there are fewer to oversee. Besides being easy to track, retailers that consolidate their shipments have more control over delivery times. Being able to better control delivery times and provide transparency into shipments can ultimately lead to a better customer experience – and increase brand loyalty.
Higher profits with order size incentives
While retail order consolidation saves you on shipping costs, have you considered the possibility of increased profits from the customer end? By offering free shipping incentives when orders surpass a threshold, you encourage customers to buy more from you. Oftentimes, customers who are just below the order minimum will buy an additional item to avoid shipping costs.
For many shoppers, free delivery is the number one incentive to purchase from an online seller. And the lack of free delivery options often translates into lost sales – customers dislike paying extra fees. They will often add items to their cart simply to eliminate these charges. Offering this incentive gives you two substantial benefits: decreased shipping charges through consolidation and increased sales.
Some considerations before you consolidate your shipments
For many large retailers, retail order consolidation makes the most sense. Any additional cost and time incurred would be offset by the savings in shipping and packaging costs. These retailers also often have consolidation centres that oversee every aspect of this endeavour, taking care of everything from paperwork, logistics, to consolidation.
But what about the smaller ventures – startups and small businesses? It’s often cost-prohibitive for these businesses to engage a consolidation centre, or they may not have enough inventory to warrant such a cost. Therefore, small retailers often take on this task themselves. While not a large endeavour when customer orders are manageable, peak times, however, like the Christmas holiday season, are a different story. These retailers may not have the time or resources to consolidate their shipments as it takes time away from other parts of their business. There’s also managing the logistics of it – the paperwork, finding carriers and dealing with customs. These are some of the aspects that need to be considered when deciding on order consolidation.
Retail order consolidation – the right move for any business.
For many retailers, the cost savings, coupled with happier customers, is enough incentive to adopt this method. Beyond what you stand to save in costs and efficiency, the environmental advantages can’t be underestimated. The onus to safeguard the environment is falling onto companies more and more. Moreover, the public expects businesses to be an active participant in its stewardship. When leveraged properly, consolidation can improve customer experiences, save on shipping and incentivize more purchases. From this standpoint, the benefits of retail order consolidation overwhelmingly outweigh any downside for the majority of e-commerce businesses.