How Your Order Fulfillment Operations Might Be Negatively Impacting Your Ecommerce KPIs
It’s no secret that each part of your business has both direct and indirect impacts on the other areas of your business. But perhaps no other part of your business has the potential to impact others as your order fulfillment operations.
Problems with your order fulfillment operations can have far-reaching consequences related to profitability (through efficient inventory management) , customer satisfaction & retention, and sales, all of which can suppress revenue growth.
Free Guide: Top Order Fulfillment KPI Indicators
Ultimately, order fulfillment is a simple concept: Getting your customers what they want when they want it. Customer loyalty and confidence is built on meeting these delivery expectations, and failure to meet these expectations can result in needing to offer costly incentives (free shipping, discounts on future orders, etc.) in order to retain a customer’s future business.
Here are some of the common issues you might be facing with your order fulfillment KPIs and what you can do to correct them.
You accept orders later and later in the day and can’t process them quick enough.
To be successful in order fulfillment, you’ve got to be customer focused. Many of your competitors allow same day shipping if the order is received by a certain time, and that time keeps getting later and later in the day. But small package carriers can’t be pushed any later to get the packages to their hubs to make the cut off.
When a customer places an order, it is normal practice for them to receive an estimated delivery date, and it’s really important that you do your best to meet that date: According to one survey, 69 percent of respondents are less likely to shop with a retailer in the future if a purchase is not delivered within 2 days of the date promised when the order is placed.
Depending on your operations, you may or may not have workers picking and packing orders 24/7. A company like Amazon is an example of a company that is perpetually picking orders, regardless of the time, but many smaller companies don’t have the volume to justify working around the clock and only staff their fulfillment operation during regular business hours, while their website is chugging 24/7.
If a customer places an order just before you cease operations for the day, then when you return to work the following day you are already behind schedule for that order. And if you’ve lost a day then you’ve either got to double-down on your speed for filling the order (increasing the risk for errors) or you’ve got to ship the order knowing that it may not reach the customer in time.
This problem can be especially compounded by orders that are placed with same- or next-day delivery. When a customer selects one of these options, you can be sure that it is because the delivery is urgent; they wouldn’t pay the premium otherwise. If you aren’t able to meet the order on time due to an order cut-off that is too late in the day, your customer isn’t going to be happy, and you risk losing their future business.
For this reason, many ecommerce fulfillment operations stagger their shifts so that there is an overlap of staff during this critical “crunch time.” This allows the needs of the order demand to be met while there is still ample staff in the building in order to meet the promise to ship the same day.
Your seasonal and temporary employees aren’t aligned with retention policy or company goals.
Many businesses pick up additional employees during their busy seasons, and with good reason: The cost of hiring temporary or seasonal workers tends to be much lower than the cost of expanding your full-time staff.
The downside to this cost saving is that temp and seasonal workers tend not to have the same level of commitment as regular employees. Whereas regular employees benefit from company success (through raises, profit sharing, and other benefits), temp workers don’t; to them, it’s just a job, and most likely not a permanent one.
While there’s nothing inherently wrong with this outlook (it makes sense, after all), it can lead to issues. Because temp and seasonal workers don’t have as much at stake as regular employees when it comes to company success, they may not be aligned with company goals. Or, they may not understand how their actions and mistakes might be impacting the overall health of the company.
This lack of commitment can lead to a reduction in your perfect order percentage, fill rates, and orders picked, all of which will make retaining customers more difficult.
Keeping Order Fulfillment Top of Mind
It has never been more important or challenging to retain customers than it is in today’s competitive business environment. Performance of your order fulfillment operations has a direct impact on your ability to keep your customers happy so that they continue coming back for more. By identifying issues in this area of your business and working to correct them, you can boost your bottom line and ensure growth for the future.
