What is the cost of receiving and processing one order? From creating a catalog to sending a sales rep to a customers retailer location, the actual cost of an order is likely higher than you think. All wholesale suppliers have an idea of what each order costs them and that number varies considerably for each company because of how they calculate it. Time, effort and money are all factors in receiving one order, for both your company and your customers.
On average, it costs a company approximately $200 to process a manual product order. The cost of the order isn't just the administrative time it takes to fulfill it, nor is it the time it takes for sales reps to get the sale. The true cost is much more complicated. So how do you calculate it and more importantly how do you reduce unnecessary expenses?
Here is a list of factors that make up the true cost of a purchase order
Catalog - How much did the design, printing, and shipping of your print catalog cost in total and how much does that equal per order placed. Although catalog expenses are often considered to be marketing expenses your catalog is a large part of the ordering process and should be recognized as such.
Customer Service - How much time spent with a customer to receive one order is critical to measure. Customer service includes sales rep visits, phone calls, and even emails. What was the average amount of time your team spent serving that customer from the sales process to order fulfillment.
Order Entry - On average, how much time does it take to enter an order into your internal system based on the annual cost of personnel to perform that task. This measurement doesn’t include the time it took your customer to build the order.
Order Errors - This is likely the measurement missing from your order calculation as it is often overlooked. How many order errors occur annually and what is the cost divided by each order received. Order errors are costly and part of the cost of receiving and processing an order.
With all that in mind you get a pretty good idea of what the financial cost of your current order management process is. Looking at the cost per order and your margin per order, you get a pretty clear picture of what you net with each order.
The Cost of a Manual Verse Online ordering
Wholesale online ordering is becoming standard practice in the b2b world because it offers a more efficient alternative to a costly manual process. It provides long-term savings for the wholesaler but also the wholesale customer because of how little time it takes. Once you have a good idea of what your annual numbers are, you can see precisely how much wholesale online ordering will save you by using the LinkGreen ROI Calculator.