Order Consolidation Explained

Order splitting is often a necessary evil in ecommerce, allowing businesses to ship partial orders when stock is limited or inventory is scattered across warehouses. However, this strategy frequently frustrates customers, especially when critical items arrive late.

Imagine ordering an outfit for a Halloween costume contest—leopard print pants and a metallic top—only to receive the top in 24 hours and the pants two weeks later, long after the party's over. Best case scenario, you might be able to improvise a plan B, but you can’t be Mel B (the one and only Scary Spice of the Spice Girls) without some leopard print.

Beyond inconvenience, split shipments can increase costs for businesses, waste packaging materials, and alienate eco-conscious customers who value sustainability. In fact, according to the 2024 PwC Voice of the Consumer Survey, customers are willing to pay 9.7% more on average for more sustainable products and services.

Automate order management with Extensiv

Order consolidation flips this equation, offering a smarter, more sustainable fulfillment strategy that reduces costs, enhances efficiency, and aligns with consumer values. Let’s unpack the common mistakes sellers make when consolidating orders and how to implement this strategy effectively to elevate your operations.

What is order consolidation?

Order consolidation is an order management and logistics strategy where multiple purchase orders with the same destination are merged into a single shipment.

Typically, consolidation is a collaborative process involving ecommerce retailers, their business partners, distribution companies, and third-party logistics (3PL) providers if they outsource their order fulfillment.

It lowers overall shipping costs by decreasing the number of shipments and leveraging bulk shipping rates, thereby reducing carbon emissions and fuel consumption.

4 Things Sellers Get Wrong about Order Consolidation

Many sellers struggle with order consolidation, often misunderstanding its core principles or failing to align strategies with customer expectations. These common missteps can derail even the best thought-out strategies.

Let’s explore four key mistakes sellers make when consolidating orders:

1. They assume order consolidation slows fulfillment.

The assumption that order consolidation slows down fulfillment stems from a misunderstanding of how order consolidation works and the benefits it can bring. Some sellers worry that combining multiple orders into a single package will add extra time to the fulfillment process, but this is not necessarily the case when done correctly.

By grouping orders that are destined for the same location, businesses can streamline the packing and shipping processes. This reduces the number of shipments that need to be processed, minimizes handling time, and decreases the chances of errors such as lost packages or incorrect shipments. For example, a retailer consolidating orders heading to the same city can optimize delivery routes, reducing the number of deliveries per route and cutting down on overall transit times.

With tools like Extensiv’s platform for ecommerce brands, businesses can dynamically manage order consolidation without sacrificing efficiency. Our platform includes automated order routing and intelligent order orchestration, which enables real-time adjustments based on order volume, stock availability, and shipping options.

Instead of slowing down the process, these tools enhance the accuracy and speed of fulfillment, creating a better customer experience and freeing up resources to handle increased order volumes.

2. They don’t consider all the benefits of order consolidation.

True, order consolidation reduces shipping costs—a critical factor considering that 44% of online shoppers abandon their carts due to high shipping and handling fees, according to a Forrester study.

But it can do so much more. Let’s take a closer look at some of the other benefits of order consolidation:

  • Sustainability is a growing priority for customers, and order consolidation supports sustainable shipping by reducing packaging waste, fuel consumption, and overall environmental impact. Statista reports that 22% of Gen Z and 20% of Millennials purchase exclusively from brands they deem sustainable, making green commerce a powerful way to attract this eco-conscious audience.
  • Beyond customer appeal, businesses embracing eco-friendly practices see tangible benefits; a study from IBM shows that they are 75% more likely to report significant revenue growth from their efforts and 52% more likely to outperform competitors in profitability.
  • In ecommerce shipping, two key factors shape the customer experience: speed and cost. Order consolidation addresses both by using less packaging and less fuel. By shipping all items together, businesses can meet shipping deadlines fast, ensuring customers receive entire order at once rather than waiting for individual items delivered separately.
  • Order consolidation improves the customer experience by simplifying how end customers can track their orders. Since all parts of the order are in the same shipment, you can set realistic and transparent expectations by updating them on the transit status of a single shipment.
  • Order consolidation can lead to better order accuracy, which not only improves the customer experience but also minimizes the need for returns. With consolidated shipments, you get to collect and review all the orders before they’re shipped out. This makes it easy to spot inaccuracies before shipping orders and significantly reduces the risk of sending out incomplete or incorrect orders that could ruin the customer experience.

3. They ignore the role of software in order consolidation.

Order consolidation is all but impossible without a robust and integrated ecommerce technology stack. Without the right software, you can’t track inventory levels with real-time accuracy, increasing the risk of stockouts, overselling, and delayed shipments. The absence of automated order routing and orchestration rules means manual intervention for every decision, increasing the risk of errors and inefficiencies.

One of the most common mistakes sellers make is relying on manual or overly simplistic processes for consolidating orders. For example, attempting order consolidation without inventory management software often results in shipping separate packages for items that could have been combined, inflating shipping costs unnecessarily. Without automation, you will struggle to handle the nuances of real-world omnichannel fulfillment scenarios.

The right software doesn’t just automate these processes; it also centralizes data from various sources, offering a comprehensive view of inventory and order status. Omnichannel fulfillment software like Extensiv makes managing orders across multiple platforms—including order consolidation—a breeze.

Additionally, solutions like Extensiv’s inventory management platform provides includes functionalities like integration across all sales channels and intelligent order routing to automatically direct all orders to the best warehouse for consolidation and shipping. These features allow you to consolidate orders seamlessly, reducing shipping costs, improving accuracy, and freeing your team from manual processes.

As the new year comes closer into view, there’s no time to waste in preparing  for 2025—but you don’t have to do it alone. Unlock year-round success with our  Ultimate Ecommerce Annual Planning Calendar so you can stay ahead of the curve.

4. They fail to adapt consolidation strategies as their business grows.

As companies grow, their operational needs evolve, requiring updates to consolidation strategies. What worked at a smaller scale—like consolidating orders by truckload or regional batches—may not be effective anymore when handling multiple fulfillment centers or international shipments.

For example, a mid-sized ecommerce brand consolidating orders based on a single warehouse setup may find using the same strategy ineffective as they expand to additional warehouses. Without adapting their consolidation strategy, they might end up with duplicate shipments, increased transit times, or stockouts. This not only impacts delivery speed but can also inflate costs and strain customer relationships.

To adapt successfully, businesses need scalable solutions that can handle the complexities of growth—such as order routing across multiple fulfillment centers, dynamic inventory allocation, and integration with global shipping networks. 

Advanced software like Extensiv’s order management solution allows businesses to adjust consolidation strategies dynamically as they scale. For instance, Extensiv enables intelligent order routing that accounts for factors like warehouse location, stock availability, and delivery speed, ensuring that orders are consolidated and fulfilled efficiently, no matter how many fulfillment nodes the business operates.

How to Set Up Order Consolidation for Your Business

So how do you integrate order consolidation procedures into your business practices?

Start with these practical steps:
Seek Out Trusted Partners

Adopting order consolidation requires collaboration between trusted partners, including fulfillment centers, distribution companies, and/or reliable shippers who specialize in consolidation services. It’s also essential to partner with an order management system (OMS)  software provider with the capacity to merge all your orders within the same platform.

These partnerships are vital to your consolidation success and can help your company avoid certain supply chain delays.

Outline Your Fulfillment Process

The next step in consolidation is to define your fulfillment process from start to finish. Create a thorough outline with details on who is responsible for what and when. For example, is your shipping partner solely in charge of consolidating and shipping your orders, or will they provide warehousing services in addition to order fulfillment?

Your outline should cover the entire process from the shelf to the final delivery. It’s also a good idea to draft written service level agreements (SLAs) for all participants to sign off on to avoid concerns or confusion down the line.

Bringing clarity to these responsibilities will hold each partner or team member accountable for their part in the process and ensure everyone is on the same page regarding expectations, key performance indicators (KPIs), goals, and other factors critical to success.

Prepare for Implementation

Once you have your outline, you can start preparing for implementation. For many ecommerce companies, implementation is the most challenging part of order consolidation. As you’re making the transition from multiple packages to streamlined shipments, your orders may be exposed to human errors or bottlenecks within the supply chain.

With that in mind, implementing consolidation should be carefully planned and properly spaced out to cut down on any potential negative impacts. Many retailers find it helpful to do a test run on different aspects of the order consolidation process before making changes to the entire system.

For example, you can run test transactions with different fulfillment locations or distribution centers, including if you haven’t locked in these partnerships just yet. This way, you can determine the best match for your business and identify any underlying issues before finalizing your contracts. Taking the time to audit your test transactions (i.e., review them for compliance and accuracy) will give you a better idea of how to proceed with your chosen partners and how the consolidation process will flow from beginning to end.

Make It Easier with Order Consolidation Software

Implementing order consolidation manually can quickly become overwhelming, especially as your business grows. Managing inventory across multiple sales channels, coordinating shipments from different warehouses, and ensuring accurate fulfillment require a level of precision and efficiency that’s hard to achieve without the right tools.

That’s where order consolidation software comes in: transforming a complex process into a streamlined, scalable operation.

Software with order consolidation capabilities like Extensiv provides the functionalities businesses need to optimize their fulfillment processes. By automating key tasks—such as routing orders to the best fulfillment center, grouping shipments logically, and integrating with your existing technology—these tools eliminate the guesswork and manual effort from order consolidation.

Perfect Your Order Consolidation with Extensiv

Extensiv’s platform stands out as a powerful solution for ecommerce businesses looking for help with order consolidation. But don’t just take our word for it; here’s what we bring to the table:

  • Extensiv’s order management solution enables ecommerce sellers to leverage logic-based order orchestration rules through Orderbots that allow you to set customizable rules for grouping orders, such as consolidating items based on customer location, shipping speed, or inventory availability. Plus, our software’s order merging feature automatically makes recommendations for shipping efficiency—like pointing out where two or more unshipped orders can be combined into one. This automation reduces the risk of human error, speeds up fulfillment, and ensures a seamless customer experience.
  • What sets Extensiv apart is its ability to work seamlessly with your existing technology. With hundreds of out-of-the-box integrations for leading sales channels like Amazon, Shopify, and Walmart, Extensiv creates a unified platform where all your order and inventory data can be managed in real time. This connectivity ensures that your consolidation efforts align perfectly with your broader business operations, whether you’re fulfilling from a single warehouse or a distributed network.

Let Extensiv do the heavy lifting for your order consolidation strategy; we work hard so you don’t have to.

Ready to take the next step? Request a demo today!

Share this article:
Topics:

Order Consolidation FAQs

Does order consolidation affect delivery times?

When done efficiently, order consolidation can actually improve delivery times. By optimizing routes and reducing the number of individual shipments, businesses can often achieve faster and more reliable deliveries.

Can order consolidation be used for both outbound and inbound shipments?

Yes, order consolidation can be applied to both outbound shipments (customer orders) and inbound shipments (supplier deliveries) to help streamline the receiving process for businesses.

What is the difference between order consolidation and order shipment consolidation?

Order consolidation combines multiple orders destined for the same customer or location into a single shipment, reducing shipping costs and enhancing efficiency.

On the other hand, order shipment consolidation focuses on grouping multiple shipments—often from different customers or orders—into a single transport unit (e.g., truckload or container) to optimize logistics and reduce transportation costs.

While order consolidation operates at the order level, shipment consolidation addresses efficiencies at the transportation level.

From the shopping cart to delivery, Extensiv makes order fulfillment seamless and easy. Total visibility. Total control.

Sales-Analytics