It’s no surprise order accuracy is tied to customer retention, considering the overall shopping experience impacts whether shoppers will do business with you again. That’s why it’s now considered a KPI (key performance indicator) to measure your business’ success.
Order accuracy directly impacts revenue and the perception of your business.
- Incorrect orders reduce profit margins to as little as 15 to 30 cents on the dollar compared to accurate orders.
- More than half of online shoppers say order accuracy influences where they shop. And nearly 40 percent will never shop from a store again after a negative delivery experience.
- Between 43 and 48% of customers will express their dissatisfaction about a poor delivery via their social media accounts.
If your e-commerce business is struggling with order accuracy, this guide will cover everything you need to know to boost accuracy rates, including:
- How to evaluate order accuracy.
- Tips to improve order accuracy.
- What steps to take next when you’ve done all you can in-house.
How to Evaluate Order Accuracy
Although every e-commerce business should shoot for 100% order accuracy, this is nearly impossible, no matter what size you are. A more obtainable goal is closer to 96-98% accuracy. Evaluating your order accuracy can let you know how close or far you’re from that goal.
How do you calculate order accuracy?
Total orders fulfilled correctly [divided by] total number of orders, [multiplied by] 100.
If you fulfill 100 orders and six of them are wrong (94 correct), you have an accuracy rate of 94%.
E-commerce businesses have different methods for arriving at their accuracy counts, depending on their setup and the level of sophistication at which they operate. Some startups may simply look at returns or exchanges for errors and use those figures.
However, it’s better to use hard data for your order accuracy rate. Many companies compare the SKUs of items packed and shipped with SKUs in their orders (wrong item, color, or size, for example.).
But that only takes into account errors in packing. It doesn’t include merchandise that’s returned or exchanged because it was damaged or broken in transit, which many online vendors also include in their order accuracy statistics. So, you also need to add these returns to your tallies to get the correct number of inaccurate orders.This can be backed up with information from inventory management.
You should also include parcels that never reached their destination in this total because they were either lost during shipping (delivered to the wrong address, stolen in route, held at customs, etc.) or mislabeled. All of these scenarios are considered inaccuracies by consumers, and they all can result in the same negative consequences for e-commerce businesses.
7 Ways to Improve E-Commerce Order Accuracy
When you calculate your order accuracy rate, how does your company fare? If there is room for improvement, even less than a percentage point, here are some ways you can improve order accuracy, as well as overall customer retention.
1. Decide on Your Order Accuracy Goal
Measuring order accuracy without a goal in mind is like grading student papers without a grading scale. You must have metrics in place before you can implement order improvement methods. Decide in advance what your improved order accuracy will look like with a quantifiable goal (e.g., move from 95% to 97% accuracy) and how precisely it will be calculated.
2. Make Sure Your Inventory Management Is Sufficient
You can’t compare your numbers against inventory if your inventory management isn’t accurate. You may need to upgrade your inventory management system with software that’s better integrated with your order taking, packing, and returns process. Be sure you’re looking at numbers in as close to real-time as possible for the greatest accuracy. This is particularly vital if you’re pulling items from multiple storage locations.
3. Evaluate Your Pick and Pack Process
Every vendor is unique when it comes to their goods and order processing system. But there are steps successful e-commerce companies use to improve their pick and pack process:
- Automate as much as possible to reduce human errors (see more below).
- Use barcodes, and audit them frequently to make sure they are correct.
- Utilize descriptive picking lists.
- Digitize SKUs and optimize them for their inventory routes.
- Leverage warehouse slotting (segmenting inventory so it makes sense for the picker).
- Find the right balance between single-order picking (more accurate, but the least efficient time-wise), multi-order picking (faster, but usually less accurate), and zone picking (often a good compromise).
- Don’t skimp on packing materials that protect your merchandise in transit.
4. Work to Eliminate Human Error
As mentioned, human error plays a role in order inaccuracy, so you want to eliminate as much of it as possible with these methods, in addition to automating or creating a logical manual picking and packing layout:
- Don’t keep putting workers at different stations or doing different jobs; consistency is key to accuracy.
- Offer incentives for accurate picking and packing, which can improve performance by up to 44%.
- Track individual employee metrics on accuracy as part of employee performance.
- Use quality assurance techniques for random checks and other means of evaluating errors before parcels leave your facility.
- Develop a protocol for shipping label accuracy, including label placement.
- Have customers double-check their shipping address prior to checkout.
5. Enable Order Tracking
You can have the best pick and pack process in the industry, but if you don’t know what happens to parcels when they leave your facility, you won’t have an accurate figure for how many don’t ultimately make it to their destinations. Furthermore, customers expect to know the status of their orders.
Some consumers will tolerate slower shipping as long as they have the reliability of knowing when their orders will arrive. Order tracking from door-to-door is essential and has become a norm for e-commerce.
6. Use Reliable Shipping Methods
Part of the trustworthiness and predictability that customers crave comes from the shipping companies you work with. This means not only partnering with delivery services that have greater accuracy in delivery overall, but shippers that:
- Can handle difficult last-mile delivery (handoff to a different agency, delivery to rural areas, etc.).
- Have the capability for overseas shipping to get parcels through customs.
- Maintain integrity in their order tracking process (e.g., not saying a package is en route when it’s really still at their warehouse, so providing legitimate real-time tracking).
- Provide proof of delivery.
Depending on your business, you may need to charge more for a premium delivery company (either in shipping charges or the cost of merchandise).
7. Provide Stellar Customer Service for Lost Orders, Returns and Exchanges
You need to be able to process returns and exchanges in a timely and accurate manner, with the least amount of inconvenience and expense to the customer. Free shipping, pre-printed return labels, and little extra gifts, coupons, or credits are all ways to show you’re sorry for a mistake. Providing a replacement for lost orders should be done as quickly as possible.
Struggling with Order Accuracy? Outsource E-Commerce Fulfillment to GLF
If your e-commerce business has been doing all of the above and is still struggling with order accuracy, it may be a sign that it’s time to outsource fulfillment to an e-commerce fulfillment partner. A fulfillment service is a third party that, at minimum, picks, packs and ships your orders, although the best e-commerce fulfillment companies today do much more.
There are many benefits to outsourcing fulfillment, in addition to boosting your order accuracy.
- There is no need to store inventory, which saves you money, space, manpower, and from dealing with seasonal or economic fluctuations.
- You don’t have to invest in expensive equipment, warehouse space or staff.
- Your business can allocate staff elsewhere for a greater impact on growth and profitability.
- A top fulfillment company works with the best delivery services and can also manage international shipping, including the collection of duties, taxes, and fees.
Ready to explore outsourcing e-commerce fulfillment to improve order accuracy? GLF E-Commerce Fulfillment welcomes the opportunity to speak with you about the myriad of services we offer. Not only can we take the pick and pack process off your plate, but we also provide a range of resources that helps you scale and grow your bottom line–all under one roof for improved efficiency.
It’s easy to get started– take our assessment to see if outsourcing fulfillment is the right choice for your e-commerce business. We’ll take the conversation from there and get your company on the path to better order accuracy and all the benefits that come with it.