How to Avoid a Split Shipment

Attempting to avoid a split shipment for multi-SKU orders has become a white whale for many ecommerce shippers — and with good reason. Splitting too many multi-SKU shipments can have one of the most significant negative impacts on your business's margins. 

Let’s explore the top strategies to minimize single orders becoming multi-piece shipments upstream in your ecommerce supply chain and ways to manage costs downstream if splitting an order is unavoidable.

Why split shipments impact your bottom line

Operators focus intently on ecommerce split shipments because of their effect on bottom lines. Consistently separating multi-product orders into individual packages sent from different—or even the same— fulfillment centers leads to: 

• Higher shipping costs: Fulfilling different parts of your customers’ orders from dispersed locations, sometimes across the country, can dramatically boost your per-parcel costs.
• Reduced resources: Using two or three boxes instead of one per customer increases packaging expenses.
• Potential for customer dissatisfaction: Making customers wait longer to receive their complete order, especially for complimentary items like a mop and a bucket, results in a poor delivery experience.  

The best 3 pre-purchase strategies to avoid a split shipment

While you can take steps throughout the logistics workflow to ensure minimal shipment splits, a more practical approach is implementing measures that limit their likelihood before your customers even finalize their purchase decision.

Here are three effective strategies to consider:

1. Mirror your inventory 

When implemented correctly, inventory mirroring is one of the more effective ways to avoid shipment splits. It is the strategic practice of distributing your inventory equally across multiple fulfillment centers (FCs). For example, if you stock 100 units of a product, you might distribute 25 units each to four different FCs nationwide. 

Mirroring ensures that your products ship from the hub closest to your customers. However, depending on the product range, complete catalog mirroring can increase warehousing and inventory costs.

To effectively balance the reduction of possible shipping splits and warehouse expenses, your strategy should include:

• Consumer analysis: Examine customer order patterns and geographic distribution to predict regional demand and optimize inventory placement.
• Warehouse strategy: Select strategic FC locations that cover major customer hubs to minimize shipping distances and times.
• Popular item placement: Identify best-selling items and ensure they're well-stocked at all FCs to reduce the likelihood of a split shipment for frequently ordered products.

2. Forecast demand strategically 

Proactively forecasting demand based on a mix of historical and geographically relevant elements is a strategy that has helped ecommerce leaders like Amazon reduce and manage instances of multi-piece orders. Using a pull-based approach, build an understanding of where your customers are and what they are purchasing so you can work backward, placing items closest to where they are most likely to end up. 

For example, assume your inventory includes winter jackets and scarves. Your data will probably show customers located in the coldest states in the country are more likely to purchase these products. That means placing a higher concentration of your inventory in the Minnesota FC vs. your Miami FC minimizes the likelihood of shipment splitting and reduces time in transit.  

Key elements of this strategy are:

• Real-time inventory visibility: Implement systems that provide up-to-date data on stock levels across all fulfillment centers, enabling quick decisions on inventory placement and order routing.
• Consistent stock rebalancing: Regularly adjust product distribution, considering consolidation opportunities (like mittens and boots to match your jackets). Consider nightly, weekly, or monthly rebalancing processes to optimize placement based on updated forecasts and sales data.

Learn how a closed-loop parcel fulfillment process can help you reduce costs and improve shipping performance.

3. Enhance consumer engagement

Consistent, centralized visibility into your inventory levels across all your FCs can facilitate better transparency in the pre-purchase stage of your customer journey, allowing you to minimize split shipments or lessen their effect on your profits. 

This consumer transparency can include:

• Shipping choices: Present your customers with clear delivery options before purchase, empowering them to balance delivery date vs. cost themselves. When given a choice between delivery speed or additional fees, VML research revealed only 43% of consumers would choose cheaper delivery.
• Incentive programs: Offer customers discounts or benefits, like free shipping for bundling items, to increase your per-order margins.

In addition to cost savings for your business, giving customers more control over their purchases enhances their overall delivery experience. According to research by SMG, 90% of satisfied customers are highly likely to repeat purchases and recommend your business.

What to do in the case of an unavoidable multi-piece shipment

From inventory constraints and backorders to carrier restrictions and seasonal volumes, there are a multitude of reasons why you may not be able to avoid separating a customer’s order into multiple shipments. However, there are steps you can take to manage those costs when split shipments occur.

1. Consolidate your shipments

Consolidation leverages your transportation network to combine split orders at intermediate points before final delivery. This strategy is particularly effective when regular inter-warehouse transfers, such as nightly trucks between fulfillment centers, allow you to combine order components without significantly impacting delivery timelines.

Just pay attention to: 

• Delivery promise integration: Ensure your consolidation strategy leans on pre-purchase promises, only combining orders when it doesn't interfere with delivery windows. Your system should also consider product type, enforcing partial shipments for critical orders like medical prescriptions.
• Multi-point fulfillment analysis: Quickly assess the cost-effectiveness of shipping from multiple locations versus consolidating at a single point.

2. Optimize shipping processes

While splits are difficult for operators to avoid altogether, you can control costs by continually improving logistics processes. 

Focus on:

• Carrier negotiations: Leverage your shipping volume to negotiate better carrier rates, especially for multi-piece shipments. Consider using regional carriers for specific routes to reduce costs.
• Packaging efficiency: Invest in right-sized packaging and advanced cartonization solutions to minimize dimensional weight charges.
•  Route planning: Implement route optimization software to provide the most cost-effective and timely delivery possible when you ship multiple packages.

Using a tech partner like Shipium can simplify modernizing and optimizing your current processes. Integrating your existing ERP, OMS, WMS, and TMS systems, our Fulfillment Engine helps intelligently route your shipments, speeding up delivery times, boosting accuracy, and reducing costs by at least 12%.

3. Leverage shipping technology 

Adopting the right shipping technology can impact your ability to make the rapid, nuanced decisions necessary to manage every split shipment effectively. The key is implementing solutions that can balance speed, cost, and customer promises in real time. 

When selecting shipping software, evaluate its ability to:

• Forward drain modeling: Balance immediate shipping decisions against projected future inventory needs and shipping costs.
• Use predictive analytics: Leverage AI-driven tools to make real-time decisions on optimal fulfillment centers and shipping methods based on current inventory, costs, and delivery promises.
• Automate decision-making: Implement AI-driven solutions that can make real-time decisions about order routing, consolidation, and shipping methods based on a complex set of variables, including inventory levels, cost, and promises.

Reduce shipment splits and optimize your operations with Shipium

The Shipium platform empowers ecommerce businesses to consolidate shipments intelligently, reducing instances of split shipment and ensuring the lowest parcel spend for every order fulfilled. Our end-to-end shipping platform selects the best carriers and the right FC, applying real-time decision-making that helps our customers reduce their shipping spend by 10% on average.

Book a demo today and learn how to manage split shipments more effectively with Shipium.

Frequently asked questions

What is a split shipment?

A split shipment occurs when a single multi-product order requires multiple packages to fulfill. Splits typically happen when inventory is available from different FCs or the complete order can't be accommodated in a single box, resulting in customers receiving their purchase in several deliveries.

Why do ecommerce businesses use shipping splits?

Ecommerce operators sometimes resort to shipment splits to accelerate order fulfillment. Shipping in-stock items immediately from various warehouses aims to get at least part of the order to the customer quickly rather than waiting to consolidate all items into a single package.

Why should I avoid splitting shipments?

You should avoid splitting shipments because multiple packages for a single order may cause customer confusion and frustration, potentially increasing your volume of service inquiries. Each package also adds handling and shipping fees, impacting your bottom line and eroding profit margins.