Only 16% of retailers and brands fulfil their omnichannel sales profitably: study

Only 16% of retailers and brands can fulfil their omnichannel sales profitably, a new study suggests.

The report, The Omni-Channel Fulfillment Imperative, carried out for JDA Software Group by PWC, found that the high cost of fulfilling orders hits profitability for 84% of the more than 400 chief executives from retail and consumers goods manufacturers who were questioned.

Some 71% pointed to the cost of handling returns from online and store orders, while 67% cited the cost of shipping directly to the customer, and 59% mentioned the costs associated with shipping to the store for customer pick-up.

Despite this, 57% said their top priority was to improve their omnichannel performance, with 57% saying they wanted to invest in new customer experiences, and 53% looking to resize their physical stores as they expanded the ecommerce business. However, 71% said omnichannel fulfillment was a high or a top priority for them, and one that, on average, they’re planning to invest 29% of capital expenditure in improving.

“Every time retailers receive an online order, they have a number of options to fulfill that demand,” said Kevin Iaquinto, chief marketing officer at JDA. “They can pull the product from a local store, send it from a centralised warehouse or ship it directly from the supplier. JDA’s new study demonstrates that most retailers lack the insight to make these decisions in a profitable manner — and are not sufficiently focused on this critical capability gap.

“They need intelligent logistics and fulfillment solutions that can reveal the hidden costs, and the customer service trade-offs, associated with every delivery option.”