Are Small Orders Actually Worth It?
On the flip side of the big order problem is the small order problem. The single-item pick. The "I just forgot to buy toothpaste" order.
Marketing hates Minimum Order Values (MOVs). They say it increases cart abandonment. But Operations (that’s me) loves them. Why?
(You can fix this with Order Triggering Products).
The Fixed Cost of Motion
Every order, no matter how small, has a fixed "setup cost" in the warehouse. You have to print the label. You have to walk to the bin. You have to tape the box. That takes time. Whether the box contains a diamond ring or a £2 packet of biscuits, that time is largely the same.
If your Direct Operational Cost per order is £3.50, and your gross margin on a £10 order is £3.00, you have lost 50p before you even pay for the courier.
Capacity Drains
It’s not just about the money lost on that specific order. It’s about Opportunity Cost. Your packers have a finite amount of time in a day. If they spend 2 hours packing 100 tiny, loss-making orders, that is 2 hours they aren't packing profitable orders.
You need to know your numbers. What is your break-even basket size? If you don't know, you might be busy being broke.