Survey: Omnichannel fulfillment costs now 18% of retailers' sales

By Ian P. Murphy | March 10, 2016

Dive Brief:

• Satisfying shoppers’ omni-channel expectations accounts for 18% of every sale, according to a study from EKN Research and Aptos Inc. 
• Only 19% of executives think that omni-channel order fulfillment strategies improve company profitability, according to a separate survey from PwC. 
• Almost half of the respondents (48%) who took part in the Aptos survey say they want to improve end-to-end order management visibility in 2016. 

Dive Insight:

Retailers are struggling to keep up with the demands of omnichannel fulfillment and order delivery, according to a survey of retail executives from EKN Research and Aptos, an order-management software supplier. Retailers spend 18% of their budgets simply getting customers what they want when they want it, the survey indicates.

That’s a staggering amount of money—if fulfillment costs averaged 18% per order on Cyber Monday 2015, for example, they totaled $540 million in a single day. Eight out of 10 retailers told Aptos that their order management and fulfillment costs went up in 2015, citing an average uptick of 5.1%.

Managing consumer expectations is getting more complicated, the executives surveyed said, and demand for free shipping is the biggest headache. Respondents want to improve order cycle times, improve visibility, and align inventory, order and supply chain operations in the year ahead, and with consumer expectations unlikely to retreat, end-to-end order management software will likely be the key. 

Omnichannel retailers increasingly find themselves investing in their supply chains to keep up with e-commerce, the Wall Street Journal reported earlier this year, citing a survey of retailers by JDA Software Inc. that found 68% are experiencing rising fulfillment costs. The highest costs were in e-commerce shipping and returns and services like in-store pickup for online orders.