Omnichannel is the future of retail, but it doesn’t run cheap: Retailers spent 18 cents of every dollar to satisfy online-to-offline selling experiences, according to a new study.
The report, from EKN Research and Aptos, Inc., highlights the need for more optimized strategies, as well as streamlined O2O infrastructures that keep costs low while maintaining a quality of service that shoppers are quickly coming to expect.
“This study is a huge wakeup call to retailers,” said Aptos CEO Noel Goggin in a press release. “As traditional store-based purchases continue to decrease and omni-channel transactions continue to increase, ‘runaway’ order management and fulfillment costs have the potential to devastate the bottom-line of retailers in virtually every category.”
The press release noted that the online sales executed through Cyber Monday alone — totalling $3.07 billion — would have cost retailers $540 million if all sales were fulfilled through omnichannel measures.
Building A Better System
According to the research, better infrastructure can go a long way toward mitigating these costs. Because systems for order fulfillment are fairly new and rudimentary — some retailers may simply be working with improvised solutions, rather than a specialized system — upgrades are seen as a key step toward cost reduction.
An end-to-end order management system is recommended as a way to address decision-making lapses, visibility concerns, productivity and efficiency. Cycle times need to be reduced, and inventory management tools can help optimize that phase of fulfillment. Brands must also find better ways to align inventories with order and supply chain management — as online orders demand inventory movement to new locations, facilitating this movement efficiently is a top concern.
The good news is that these high costs seem easy to address with better infrastructure. As omnichannel strategy takes root, retailers will make the investments needed to lower costs and make omnichannel more affordable and lucrative. High costs are just the product of a new, untapped opportunity — but time and resources can resolve these short-term issues.
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