State-of-Ecommerce-Order-Fulfillment-Shipping.pdf

By continuing to create unrealistic shipping

This preview shows page 11 - 15 out of 17 pages.

By continuing to create unrealistic shipping expectations among consumers, many analysts question whether the trending ecommerce model is sustainable among online retailers, including Amazon. 25% of consumers are willing to pay a premium for same-day delivery. $3.00 is the most that they’re willing to pay for it. SECTION 3: PRICE SENSITIVITY THE AMAZON EFFECT 11 Source: McKinsey&Company Parcel Delivery The Future of Last Mile
Image of page 11

Subscribe to view the full document.

Feature 5 How Do Consumers Qualify for Free Shipping? ® Nine out of 10 consumers say that free shipping is the number one incentive that would make them shop online more often . While the importance of free shipping has actually declined over the past four years, 74% of ecommerce buyers say it remains the most important option at checkout. Free Shipping Still Rules Multi-Unit Sales Because the added margin of multi-unit sales typically outweighs the added expense, online retailers are wise to implement free shipping thresholds to encourage customers to add more itesm to their baskets. 94% of online shoppers have taken some type of action to qualify for free shipping. Source: SECTION 3: PRICE SENSITIVITY CLOSING THE SALE 12
Image of page 12
Feature 5 The Mostly Costly Aspects of Order Fulfillment ® SECTION 4: COST MANAGEMENT With low fees expected from consumers, ecommerce sellers must do everything they can to minimize costly order fulfillment. For online retailers, the average cost to fulfill an order is 70% of the average order value. Retailers must effectively manage data and inventory to avoid the costly situation of splitting orders between multiple distribution points. Order Splits Low Ship Velocity High Number of Returns Online retailers must also effectively manage labor costs as order volume fluctuates to avoid unnecessarily adding to their cost of goods sold. To avoid costly returns, retailers must provide buyers with detailed product images, descriptions and other tools, and ensure orders are shipped on time. MINIMIZING COSTS 13 Source:
Image of page 13

Subscribe to view the full document.

® To lower costs and help meet customer expectations, retailers utilize a variety of approaches to order fulfillment, including shipping from one or more of their own stores or warehouses, or outsourcing to a 3PL. Because order splits result in costly order fulfillment, and because of the added inbound logistical and carrying costs of splitting inventory, distributing from multiple locations does not make sense for all ecommerce sellers. Where Do Online Retailers Ship From? Multi-Point Distribution Multiple stores Suppliers / manufacturers Drop shippers / 3PLs One warehouse One store Multiple warehouses 14 Source:
Image of page 14
Feature 5 How Do Online Retailers Handle Order Spikes?
Image of page 15
You've reached the end of this preview.
  • Fall '13
  • Expectation

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern