Once you know what your typical CPO is, you can make better judgments regarding where to cut spending in order to achieve the amount of profit per order that you want.
High COGS (cost of goods sold)
COGS stands for “cost of goods sold” and is the cost of producing what a firm sells. It’s a crucial measure in determining profits because it shows you how expensive your manufacturing expenses are. If COGS is high, have a conversation with your manufacturer to see if there are ways to reduce costs and production lead times.
Depending on where orders are being fulfilled, shipping expenses may mount up. If you have a single storage or warehouse location in Florida and an Oregon address is required for the recipient, the delivery to the other side of the country will be more expensive than delivering to a neighboring state, Georgia.
Ecommerce merchants may save money on shipping by negotiating volume discounts with major carriers (or working with a third party logistics provider that can provide shipping discounts).
Storage or warehousing costs
Ecommerce inventory may be costly to store, especially if your products aren’t moving as quickly as you’d like. You’ll need storage area for every thing you own. If you have too many items that aren’t selling, you’ll have to add additional storage space to accommodate these expenditures.
4 more ways to decrease your cost per order(CPO)
Reducing your cost per order can help your ecommerce company be more successful, as well as improve your warehouses, fulfillment processes, and entire ecommerce supply chain.
1. Map out your workflow
There are several hidden cost savings in your retail order fulfillment procedures. Work with your pickers and warehouse employees to see how you may decrease costs by enhancing routing, picking, inventory storage, and other day-to-day processes throughout the order fulfillment process.
2. Process orders faster
Many ecommerce warehouses struggle to run efficiently while still generating a profit. Fulfillment and shipping costs are reduced by running a more efficient ecommerce warehouse. To save on fulfillment and delivery expenses, send orders to the warehouse that is closest to the customer.
3. Get shipping rate discounts
You can save money on your delivery by taking advantage of discount rates. If you ship a lot of cargo, several major carriers will provide you with shipping rate discounts. Because to their volume, many 3PLs provide discounted rates as a courtesy.
4. Outsource to a 3PL
Many ecommerce firms are discovering the advantages of outsourcing fulfillment to a 3PL. While you may believe it’s cheaper and more efficient to handle fulfillment in-house, many ecommerce companies actually develop quicker while lowering expenses by working with 3PLs:
Conclusion on CPO
You can easily discover ways to save money and improve profit margins by calculating CPO. To assist ecommerce companies not just develop their brand but also decrease shipping and fulfillment expenses, Launch Fulfillment has partnered with thousands of merchants.
If you’re searching for a more robust digital fulfillment solution, Launch Fulfillment is a tech-enabled 3PL that provides fast 2-day shipping, a network of fulfillment centers across the country, and best-in-class fulfillment technology.
Fill out the form below to learn more about how Launch Fulfillment can assist you in lowering costs and expanding your business.