Calculating the True Cost of Receiving a Wholesale Order

Have you ever found yourself asking what the cost of receiving and processing a single order is? The whole process from start to finish has some hidden costs that you might not be aware of, especially in terms of time and person-hours. Likely, the cost may be higher than you think because of factors like manual data entry, time taken away from your sales team, and the cost and effort of spinning up new catalogs.

There is a known baseline average cost across all industries for what processing an order can cost you. According to a study done in 2022 by the Center for Advanced Procurement Strategy (CAPS), each order costs an organization around $527. This isn’t to say that the costs can’t be lower, this is across all industries who have different processes, procedures and regulatory requirements. 

While this stat might not hold to be directly applicable to you, it does underline the key point. Order management can be far more expensive than you might have originally thought. The stat doesn’t even include what you have to spend to even generate that revenue in the first place, administrative overhead costs, time taken from your sales reps and catalog generation can all eat into your precious budgets of both money and time.

To reduce the time, money, and effort it takes to fill an online order, there are a list of factors that you can make more efficient and less cost prohibitive.

Why order processing can be so expensive.

Catalogs

The design, printing and shipping of catalogs for your target markets can be extremely costly, especially if you have a wide variety of customers with special pricing. Ensuring that everything is being sent to the right customers and putting the most appealing items on display can be time and cost-prohibitive for many wholesalers.

While it’s true that catalogs are often considered a marketing expense, they’re still a large part of your ordering process and should be recognized as such. This means that you should factor in the cost of design, printing and shipping your catalogs against each order that’s placed.

To simplify your cataloging and save time and money across your organization, you could switch to an online catalog and ordering system. This will allow you to easily update your catalogs on the fly, and ensure that your customers will see the pricing and deals that are meant for them.  There are options to use the native function within OrderEase for the online catalog or OrderEase can be an integrator between your online sales channel such as Faire into your ERP or accounting system. 

Read our guide to the ultimate online catalog today. 

Customer service

How much time do your salespeople spend with your customers to receive an order? How much time do they then spend manually entering orders into your system to make sure that your revenue is assured?

The more time that your team is focusing on your existing customers and preparing orders, the less time they’re spending on finding new customers. Ideally, you want your sales process to be as low touch as possible, especially with existing clients.

By providing an ordering portal, your customers can enjoy self-serve ordering that is automatically linked to your ERP or accounting system, putting time to sell and prospect directly into the hands of your sales team. Cutting down the time that you spend with each pre-existing customer can directly and positively impact your revenue growth.

Read why your business should commit to online ordering 

Order Entry

The amount of time and effort it takes to process an order across all your systems can have a direct impact on how much it costs your company to manage orders. Let’s face it, traditional manual order management is slow, and requires employees to copy information over multiple different internal systems to make sure that your process is running correctly.

As your company scales, your order management costs will increase as you’ll need to hire more people to make sure that your product is getting out the door in a timely manner. The cost of employees for order management is one of the biggest chunks of your order management expenses. 

Instead of hiring more employees, you could make your existing ones more effective by cutting down the amount of time that it takes them to process the order. By automating your order management system, you can reduce order processing time from 20-30 minutes down to 2-3. This lets your staff get more done and significantly reduces your cost per order.

Order errors

We all make mistakes, that’s just part of being human. It’s also an often overlooked expense. Order errors happen to every company that manually processes their data, and each one adds up. 

You might not think that it happens that often to you, but error rates can be as high as 4% for manual data entry, making them more the rule than the exception. This means that for every 1000 data entries your company makes, you could be seeing up to 40 errors — which will make an impact on your bottom line. In fact, correcting an order error could cost your company up to 50% - 125% of the cost of your product in the first place.

By encouraging digitally submitted orders and having your ordering system integrated directly with your ERP or accounting system, you can mitigate the costs of order errors by reducing the amount of manual steps that you employees have to take to fill the order in the first place.

Read more on how you can reduce the cost of order errors. 

Reducing the cost of order processing.

The main costs associated with order processing stem from the traditional manual systems that many companies are using. Receiving orders through phone, fax and email is inherently slow, and the manual steps that your team has to take to make those orders move through your system are prone to error and confusion.

Switching to an online ordering portal that automatically sends order information through your systems can reduce the amount of time and money spent on making sure your product is going to the right place at the right time. 

If you want to know more about how wholesale online ordering and automation can save your company, take a look at our ROI calculator today.

Alternatively, reach out to us for a discovery call and we can show you how OrderEase can reduce the time and money costs of order management.