But as the desire to build data-led cultures expands, there is also the risk of data overload, particularly for CEO’s and brand owners overseeing various business functions.
So when it comes to evaluating the performance of your eCommerce Fulfilment, how do you decide if things are running smoothly, and what data should you be considering?
1. Order Accuracy
One of the most important KPIs to monitor regularly is the number of orders picked, packed and shipped correctly as a percentage of all orders. Unfortunately, inaccurate orders will occur within any fulfilment processes; however, minimising this will help safeguard your brand and your profit. On average, a good order accuracy for direct-to-consumer (DTC) brands is 96-98%.
Order accuracy = (total orders fulfilled accurately/ Total orders fulfilled) *100
Declining order accuracy rate is a pivotal sign of a problem within your operations and typically occurs due to training, processes or capacity limitations.
2. Total Order Cycle time
As Amazon continues to transform shipping times, eCommerce consumers’ expectations are also changing. According to a recent study by McKinsey, consumers expect online orders to be delivered the next day. That means for other brands, the pressure is on to meet customer expectations with delivery times.
While many businesses struggle to meet these expectations, brands must deliver on the timescales they promise consumers. Monitoring the total order cycle time will allow brand owners to ensure they continue to deliver the promised customer experience.
Number of days elapsed between all orders placed and when delivered / total number of orders in time frame
Increased time within the order cycle will result from an issue within your in-house fulfilment or with your delivery courier.
3. Distribution Costs (As A Percentage Of Sales)
As with any operation within your organisation, it’s crucial to monitor costs, and that’s no different for your eCommerce fulfilment operations.
This includes all expenses relating to receiving and storing stock and picking, packaging, and shipping orders.
Distribution costs (as a percentage of sales) = total distribution costs / total sales
Monitoring your total distribution costs over time is a great way to identify an issue if there is a sudden cost spike.
4. Average Warehouse Capacity Used
As your brand grows, your storage needs will also increase, however with many brands affected by seasonality, that usage will likely fluctuate throughout the year.
Unfortunately, this can result in eCommerce fulfilment operations rapidly running out of space when they are faced with consistent growth and seasonality growth.
Average Warehouse capacity used - amount of warehouse floor space used / total warehouse space x100
Monitoring average warehouse capacity usage and predicting future use can provide the foresight to seek alternative solutions.
5. Total Number Of Customer Complaints
While customer complaints are not traditionally associated with operational KPIs, for an eCommerce brand, they are critical and act as a key warning signal that your customers are unhappy with the service. An increase in complaints about orders and delivery is a clear signal of a problem within your eCommerce fulfilment process.
How to manage a drop in operational performance?
As brands grow, it’s not uncommon to experience turbulence within their operational performance, particularly as they outgrow their in-house capacity or existing provider.
However, eCommerce businesses need to react fast to protect their brand and ensure customers continue to buy. For some brands, it may be time to consider next stage fulfilment.
