New research indicates

that retailers spend a whopping

18 cents
to fulfill every single dollar of online
and omni-channel orders.

Threat…or Opportunity:
Seven Steps to Overcoming the
Shockingly High Costs of the Order
Management Lifecycle
Learn how you can recover a ton of that
lost revenue with integrated OMS.
 18 Cents on the Dollar!?!

That’s right. Retailers recently And as traditional store-based purchases

surveyed by EKN report that it costs continue to decrease and omni-channel
them, on average, eighteen cents of transactions continue to increase, those eighteen
every dollar of every eCommerce cents have the potential to devastate the bottom
and omni-channel order—whether line of retailers in virtually every category.
sold online, on mobile, on social sites,
on a kiosk, through the call center or via On the other hand, those eighteen cents also
endless aisle applications in the store— represent a huge opportunity. By carefully
just to get that order into the hands of and thoroughly reevaluating how they
the customer. manage every phase of the order
management lifecycle, retailers
Same day shipping, click and have a real chance to recoup
collect, buy in store / ship to home… a substantial amount of the
as customer expectations for choice money they’re now losing
and flexibility keep expanding, it’s no and apply real dollars
surprise that order management and directly to the bottom line.
fulfillment costs are also expanding in
lock step.

2
Where exactly did we get that number?

EKN published this The results suggest that more than 80% of the
stunning information retailers surveyed aren’t fulfilling profitably or,
in their November 2015 worse, they just don’t know.
Industry Point of View1
entitled “Managing Order
Costs and Velocity: A Route to Dynamic
Order Management.” The EKN Point of View
document summarizes the results of research
conducted in partnership with Aptos that
revealed, among other insights, the eighteen
percent order fulfillment cost.

Other research, from PwC, supports the EKN To make matters worse, most retailers still
findings, and also points to a potentially more measure these fulfillment costs “below the line”
ominous reality: that, when it comes to the on their balance sheets. Consequently, these
true cost of managing the order lifecycle, costs are not always integrated into the cost
many retailers may indeed be flying blind. of goods sold. Merchants are therefore not
A recently published PwC survey revealed that accounting for them when making planning
less than two in ten retail CEOs “believe” and purchasing decisions.
(as in, they “think”) they are fulfilling
orders profitably.2

3
 Enough is enough!
2015 CYBER MONDAY
With eight in ten retailers reporting an ONLINE SALES
increase in their order management and UP
fulfillment costs compared to last year,3
the time has come for retailers to 16%
begin seriously evaluating strategies for OVER 2014
improving their order management and 2014
fulfillment processes. 2015

Holiday season 2015 further highlighted

the urgency. Online sales on Cyber Monday
2015 were reported to total $3.07 billion (up
a whopping 16% over 2014).4 If fulfillment
costs for those orders averaged 18%, then
$3.07
on that one single day, US retailers spent
BILLION
$540,000,000 of their hard-won margins
just getting their products into their
customers’ hands. $540
MILLION
IN
FULFILLMENT
COSTS

4
Looking forward, this revelation
becomes increasingly important.

Why? Because order management and

fulfillment costs, as bad as they are now, are
103 million
people shopped online
on the rise. According to the EKN study,
2015 order fulfillment costs jumped
more than 5% over 2014.5
102 million
people shopped in stores
Moreover, as shoppers continue to
include more and more channels into
their shopping journeys, the number and
variety of non-traditional store transactions
continue to grow. A few NRF statistics from
57% ofused
smartphone owners
their phones to shop
Thanksgiving Weekend 2015, as reported
in the Wall Street Journal,6 demonstrate just
how dramatically shopping journeys are
migrating away from the stores. 58% tablet owners used
their devices to shop

5
 The good news? Retailers are facing
a tremendous earnings opportunity.

In this eBook, we’ll investigate the

real-world challenges that retailers face TOP STRATEGIC INVESTMENT AREAS
throughout the entire order lifecycle. RELATED TO ORDER MANAGEMENT
We’ll explore the source for these costs.
We’ll examine their implications to your
business, and most importantly, we’ll
describe strategies to help you overcome 52% Optimize Enterprise-wide
Inventory Control
these challenges and capitalize on this
tremendous opportunity to reduce costs…
and apply the savings directly to your
bottom line. 48% Improve End-to-End Order
Management Visibility
Say hello to the most important
18 cents you have ever counted...

34% Reduce Lead Time From

Receipt of Order to Delivery
8

6
More Orders Move Online

Opportunity knocks, and the knock is getting louder

Looking forward, the evidence of the continued Adding to the challenge, online order increases
migration of shopping journeys away from the inevitably bring an increase in same-day
store continues to mount. By 2016, online shipments as retailers attempt to battle
revenues are expected to increase by 13.9% Amazon.com, who has been offering
compared to 2013, and mobile revenues same-day shipping since 2009.11
22.6%. Simultaneously, store revenues are
expected to decline by 4%.9 Presently, eight in ten retailers are offering
standard, expedited or second day order
As more and more revenues shift to delivery. Seventy-three percent offer next day
transactions that require order management shipping, and only four in ten currently offer
and fulfillment, 6 in 10 retailers report a sharp same-day shipping. Rapid growth of next-day
rise in operational costs and order complexity and same-day offers, however, is looming.
associated with this transition.10 In the next 12-24 months, 23% of retailers
plan to offer next-day delivery, and
same-day shipping is expected to
reach 75% saturation.12

7
 With speed comes complexity. And If history is any indication, we can expect
complexity tends to put severe pressure on a large percentage of the retailers that
the entire organization. In the past, when are about to add new fulfillment services
faced with competitive pressures for speed and options will do so without sufficient
and/or flexibility, too many retailers responded commitment to process optimization.
with processes that were thrown together Consequently, those who do commit to
quickly, with an eye to fulfilling customer developing efficient, scalable and repeatable
service expectations and much less regard processes throughout the order management
for scalability, efficacy or cost. lifecycle will have a distinct opportunity to
gain competitive advantages in the form of
And therein lies the (increasingly lower costs, higher margins, higher earnings,
urgent) opportunity. more consistent service experiences, and,
what may be considered the most powerful
competitive advantage of all: lower prices and
fees for consumers.

8
What’s Holding People Back:
OMS Process Challenges

Three challenges that must be overcome to capitalize on

the opportunity
Numerous challenges await any retailer attempting to streamline and optimize their order
management and fulfillment processes. However, the EKN survey identified three challenges
that are of highest concern to the retailers they surveyed:13

CYCLE TIME

45% indicate the need to

improve order cycle time VISIBILITY
44% cite a lack of visibility
across order functions ALIGNMENT
and processes
51% indicate that inventory,
order and supply chain
operations are not aligned

9
CHALLENGE 1 Less than stellar order cycle time
When time is of the essence, Order cycle time is also a critical barometer
productivity is paramount. And when of the overall effectiveness of your
order cycle times become protracted, extended ecosystem, from suppliers and
you can bet that productivity has been planners to distribution centers, stores and
compromised somewhere along the way. logistics partners. However, only 4 out of
10 retailers are measuring lead-time
Productivity losses in the order lifecycle are or order cycle time for year-on-year
often caused by ineffective order planning performance.14 Clearly, opportunity knocks
workflows and poor integration between for those who measure, adapt and improve
the distributed order management system, their order cycle times.
POS, inventory planning and warehouse
management systems. These productivity
losses add up quickly, and in most retail
enterprises they represent a significant
opportunity to begin taking cents out of the
cost of managing the order lifecycle.

10
CHALLENGE 2 Managing orders in the dark
A slightly deeper dive into the EKN effectiveness. Many of the retailers
survey data makes it clear why surveyed recognized that this must quickly
retailers cite a lack of visibility across become a priority investment, with almost
order functions and processes as one half of respondents (48%) identifying
of their top challenges. Fully three out of improvements to end-to-end order
four retailers surveyed (74%) report sales management visibility as an area of
channels silos. Less than thirty percent focus in 2016.
report standardized processes across
channels and throughout the fulfillment
life cycle.15

One doesn’t need to be an expert to

understand that this lack of visibility
severely inhibits effective decision
48%
want to improve
making, productivity and enterprise end-to-end order
management visibility
IN 2016

11
CHALLENGE 3 Aligning operations
Alarmingly, automating order capture proactive. And reactive organizations
and processing, integrating inventory typically face a constant struggle to stay
and standardizing order management aligned and streamlined.
from different order types across
channels remains a major challenge for Defining standardized workflows for
40% of surveyed retailers.16 each order type can go a long way
toward achieving enterprise alignment.
This data point comes as no surprise, Unfortunately, more than a third of retailers
however, as operational alignment has surveyed by EKN do not clearly define
become a perpetual challenge in today’s workflows for each order type.17 By not
retail environment. This is in large part taking steps to define the workflow for
due to the eternally fluid nature of modern each order type, retailers quickly begin
retailing. Every year, consumers become to experience inconsistencies in order
more connected, more empowered, and processing and management across the
more in control of the shopping journey. As entire order value chain, from the warehouse
consumers exert more control, retailers all the way to delivery.
often become more reactive than

12
7 Steps to Help Overcome the
Challenges and Capitalize on
the Opportunities

Our experience with dozens of omni- Only then can you hope to successfully
channel retailers—that manage and fulfill implement these seven steps designed to help
billions of orders a year—has helped us bring down the high cost of order management
identify seven steps taken by leaders to and fulfillment in your business:
successfully control the costs of managing
the order lifecycle. However, fully realizing
the competitive opportunities inherent in
order management is simply not possible
with “cookie cutter” solutions. Success
requires careful evaluation of your people, the
processes that drive your operations and the
technology that supports them, combined with
a deep understanding of the expectations of
your target customers.

13
 1 Allocate Based on Fulfillment
Smart retailers know that successful order
management starts long before an order
is ever placed. Best-in-class order managers
give their fulfillment operations a great head
start on efficiency and cost savings by basing How Aptos Can Help
their assortment and allocation decisions on
Aptos merchandising solutions
fulfillment demand, not just sales demand.
recognize and address the
complexities inherent in omni-channel
So when allocating inventory, demand must
retailing. They offer merchants the
be measured by accounting for all orders, flexibility to make assortment and
including those that either originate from or allocation decisions based on the true
are fulfilled from locations outside the store. demand for each location, thereby
By doing so, initial inventory distributions have minimizing fulfillment costs long
the best chance of being closely aligned to true before order management processes
customer demand patterns, hence minimizing are engaged.
the distance inventory will need to travel to
reach the customer. Learn More Here

14
2 Connect the Channels
Without a doubt, the most common While less than 30% of retailers have
attribute among retailers that standardized order management processes
successfully contain order lifecycle across channels today, a large number of
costs is an integrated channel strategy. retailers are beginning to understand the
As more and more shoppers hop between potential of integration. EKN reports that
more channels more often, making decision within two years the number of retailers
in vacuums and silos becomes more who will have integrated order management
compromised and inefficient. Incomplete across all channels will double.18
pictures lead to workarounds, and workarounds
lead to pain. Pain that comes in many forms:
inefficiencies, breakdowns, letdowns and costs.

Don’t make the mistake, however, of How Aptos Can Help

assuming that integrating your sales channels
Aptos’ Digital Commerce platform,
is enough. The biggest opportunities for
which includes a comprehensive order
cost savings are often found through cross-
management solution, is fully integrated
channel integration of order management
with Aptos store solutions to ensure
processes and technology. When every
maximum efficiency and effectiveness
channel has visibility to every order, and every while minimizing costs throughout the
order can be accessed and managed in every order management lifecycle.
channel, good things happen to the customer
experience and the bottom line. Learn More Here

15
 3 Automate. Rank. Route.
One of retail’s oldest adages, “Every time costs and customer service levels to ensure
you touch inventory, it costs you money,” that inventory moves as little as possible
still applies today, perhaps more so than and yet still meet the customer’s
ever. As shoppers expect to be able to view delivery expectations.
(and purchase) inventory from any location
in the retail chain, the number of times each
piece of inventory needs to be handled can
grow dramatically. The store is no longer the
final destination, which is a dramatic change
from retail’s last 150 years. Many retailers How Aptos Can Help
have still not adapted to this important shift.
Aptos Enterprise Order Management is designed
Successful order management strategies to optimize every order during every phase of
include advanced order brokering and routing the entire order lifecycle, from order entry to
systems that allow retailers to both define fulfillment and even through returns. Real-time
and rank the principles that guide order inventory visibility from across the enterprise,
combined with powerful order brokering and
fulfillment decisions. These advanced order
sourcing logic, ensures that every order is
routing capabilities allow retailers to strike a
sourced from the most profitable locations that
careful balance between inventory handling
are able to meet each customer’s expectations.

Learn More Here

16
4 One Customer…One Enterprise…One Order
The evidence is clear: Efficient order
management requires a consolidated
view of every order. Legacy applications
and processes that force enterprises to
How Aptos Can Help
maintain, share and fulfill orders from
disparate, disconnected systems and silos Whether your company sells to
can cripple a retailer’s ability to efficiently businesses or individual consumers
and effectively manage orders throughout shopping via marketplace, store, kiosk,
the entire lifecycle. Facebook, mobile device or your website,
Aptos Enterprise Order Management
Successful retailers create and manage serves as a central commerce hub to
orders in one single place and share those ensure efficient, profitable and on-time
execution of every order through every
orders throughout the enterprise.
fulfillment option.

Aptos order management solutions

combine the power of a single view of
the order, the customer and inventory to
profitably manage all orders throughout
their lifecycle, from initiation to fulfillment
and back.

Learn More Here

17
 5 Start Splitting Orders
Retailers that are the most successful
at containing order management
and fulfillment costs typically
have the ability to split orders for
optimal efficiency. Sophisticated order How Aptos Can Help
management systems treat each order line Every order line stands on its own with
as a separate entity as well as a part of an the Aptos Enterprise Order Management
entire order. By managing individual order solution. Orders can be split or
lines, each order can be optimized based combined, and sophisticated rules
upon the business conditions that exist for like “ship complete,” “ship from one
each line, rather than being forced to make location,” “do not ship from store,” etc.
“all or nothing” decisions at the order level. can be established that determine the
Rules can then be applied to determine optimal outcome for every order based
the best course of action for both cost on the status of every line.
control and the customer, resulting in highly
Learn More Here
optimized order fulfillment processes.

18
6 Get to the Cloud
Retailers must also weigh the
comparative value of on-premise and
cloud-based order management systems.
Recent surveys reveal that on-premise
systems can take up to two years or
longer to deploy! This greatly delays the
benefits of integrated, enterprise-wide order How Aptos Can Help
management and fulfillment processes,
Aptos Enterprise Order Management
including customer service, inventory delivers all the tools you need to
efficiencies, and of course, reduced costs. manage all orders end-to-end—
fulfillment, shipping, returns,
Ideally, an order management system customer communications and
should be deployed and operational more—completely in the Cloud.
within one year or less to allow omni- Dozens of omni-channel retailers
channel teams to immediately improve leverage our cloud-based solution
their processes, introduce rapid change for maximum agility and flexibility
management and reap benefits for both across channels, fulfillment locations,
business users and consumers alike. suppliers and partners.

Learn More Here

19
 7 Support the Store
Most brick and mortar stores were never the EKN survey reported that orders that
intended to be shipping centers. Store are picked up in the store are among the
designs, floor plans and layouts are not least expensive orders to fulfill. When one
typically optimized for fulfillment processes. considers that nearly 2/3 of customers
However, as more and more orders require who come into a store to pick up an item
the store to support the fulfillment process, purchased online also shop for more
it is imperative that retail enterprises work items while in the store, the potential
closely with Store Operations to ensure that opportunities for both revenue and margin
each store is able to successfully adapt to impact is significant. The trick is ensuring the
these changing business conditions. stores are supported with the right tools.

With the right tools and processes in place, Leading retailers make the investments
stores can become some of the most required to give store associates visibility into
efficient and cost-effective fulfillment every order, from every channel, via every
options in the enterprise. Respondents to POS station and device.

20
This visibility enables associates to access
work lists, alerts, changes and customer
communications within POS tools they
use every day. Adoption time is quick, and
engagement is typically high. Associates How Aptos Can Help
can then pick orders, prep them for pick-up
Aptos Enterprise Order Management
(or shipment) and ensure that the orders functions across all in-store and
are ready on time, every time. digital touch points and integrates
fully with Aptos POS. It delivers a
Additionally, by integrating POS into OMS, unified view of the online/offline
all purchases, including items selected intersection of commerce, order
while the customer is in the store to pick brokering, order management, order
up their online orders, can be consolidated fulfillment, logistics and analytics—
into a single transaction that minimizes and everything in between.
transaction time and streamlines
the experience. Learn More Here

21
 Getting Back Some of that 18%:
The Time to Act is Now

Order management is now imperative for channel fulfillment currently costs. Those who
retail success. Customers demand it, so move quickly have the most advantage to gain:
retailers must find a way to ensure efficient, more competitive services, higher margins,
profitable and on-time execution of every order better experiences and lower prices.
through every fulfillment option. The time has
indeed come to take costs out of the order
management lifecycle and to take advantage
of the numerous opportunities to reclaim a
portion of the 18 cents every dollar of cross-

22
Optimize Your Order Management
Lifecycle with Aptos

Aptos Enterprise Order Management

is designed to optimize every order
during every phase of the entire
order lifecycle, from order entry to
fulfillment and even through returns.
Real-time inventory visibility from across
the enterprise, combined with powerful
order brokering and sourcing logic ensures
that every order is sourced from the most
profitable locations that are able to meet
each customer’s expectations.

Every order is monitored and tracked

throughout the lifecycle, and exception
alerts ensure orders are fulfilled on time
with minimal disruption or delay.

To learn more about how Aptos Enterprise

Order Management can help you take
costs out of the order management life
cycle, visit www.aptos.com.

23
In an era of virtually limitless choice,
sustained competitive advantage only comes to
retailers who engage customers differently—by
truly understanding who they are, what they
want and why they buy.

At Aptos, we too, believe that engaging customers differently

is critical to our success. We are committed to a deep
understanding of each of our clients, to fulfilling their needs
with the retail industry’s most comprehensive omni-channel
solutions, and to fostering long-term relationships built on
tangible value and trust.
Sources:
EKN, “Managing Order Costs and Velocity: A Route to Dynamic Order
1

More than 500 retail brands rely upon our Singular Management,” November 2015.
Ody, Penelope, “Stalking the silent killer (IRM54),” Internet Retailing,
2

Commerce platform in the Cloud to deliver every shopper October 6, 2015.

3
EKN, “Managing Order Costs and Velocity: A Route to Dynamic Order
a personalized, empowered and seamless experience…no Management,” November 2015.
Gustafson, Krystina, “Cyber Monday sales top $3 billion, beat forecast,”
matter when, where or how they shop.
4

CNBC, December 1, 2015.

5
EKN, “Managing Order Costs and Velocity: A Route to Dynamic Order
Management,” November 2015.
6
Nassauer, Sarah, “Online Shopping Tops Stores on Black Friday
Weekend,” The Wall Street Journal, November 29, 2015.
7
Risher, Wayne, “FedEx in full swing with Cyber Monday,” The
Commercial Appeal, November 30, 2015.

Learn more at aptos.com and [email protected]. EKN, “Managing Order Costs and Velocity: A Route to Dynamic Order
8-18

Management,” November 2015.

© 2016 Aptos, Inc. All rights reserved.