Order accuracy is essential to ecommerce efficiency and customer satisfaction. Learn how to improve your order accuracy rate.
When an online shopper makes a purchase, they expect their order to contain the right products. An incorrect order can ruin a shopper’s experience, so ecommerce merchants must prioritize order accuracy. Learn how to calculate and improve your order accuracy—and why you must get it right.
Order accuracy is a critical metric merchants use to determine the number of orders fulfilled and delivered to customers without errors. Common errors with customer orders include shipping the wrong quantity, size, or color of a product and incorrect or damaged items.
Several factors can
Shipping the correct items to your customers is important for various reasons, including:
Order accuracy impacts the customer experience. Incorrect orders can create negative customer perceptions about your ecommerce business. Earning more sales from existing customers is essential to growing your business, but this requires good order accuracy.
Building customer loyalty is difficult if you aren’t picking, packing, and delivering precisely what your customers ordered. Creating a streamlined and quality-controlled order fulfillment process can increase customer retention, which, in turn, impacts your company’s bottom line.
By optimizing your picking and packing process and your delivery process, you and your team can save time and energy. Communicating with a customer about a wrong order, reshipping the correct order, and reconciling inventory records take valuable time away from your company. If order processing errors occur regularly, you could spend more time fixing problems than improving your company with new marketing campaigns or product lines.
Poor order accuracy can
Companies that fulfill orders accurately have more precise information about their inventory, which helps with inventory forecasting—the process of anticipating future inventory needs based on historical sales data. Fulfillment errors can skew your inventory data, making it harder to predict inventory needs.
To calculate order accuracy rate, identify the number of total orders fulfilled accurately and divide it by the total order amount. Once you have that number, multiply it by 100 to find a percentage. That percent represents your order accuracy rate.
Here is the order accuracy formula:
Order accuracy rate = (total orders fulfilled accurately / total orders fulfilled) x 100
For example, if you fulfilled 1,000 orders total and noticed 30 fulfillment mistakes (and therefore 970 accurate orders), you would calculate your order accuracy rate like this:
970 orders fulfilled accurately / 1,000 orders fulfilled = 0.97
0.97 x 100 = 97
Therefore, in this example, your order accuracy rate would be 97%.
Although every merchant should strive for an order accuracy rate as close to 100% as possible, some order fulfillment mistakes are inevitable. However, as a general rule of thumb, a good order accuracy rate falls between 96% and 98%. If your order accuracy rate drops below 95%, you may find yourself at a competitive disadvantage with customers choosing more reliable merchants.
Here are some basic steps to follow to improve your order accuracy:
Use the order accuracy formula to calculate your current rate. Identify the number of accurately fulfilled orders by analyzing customer feedback and noting incorrect inventory levels. Although customers who received a higher quantity of what they ordered may not report this to your customer service department, you can catch those mistakes by monitoring inventory levels regularly.
Once you’ve identified your current order accuracy rate, set new goals for how you’d like that rate to improve. For example, if your rate is at 93%, you could set a goal to increase that number to 96% within 12 months. Setting clear goals will help get your order fulfillment team on the same page.
Inventory management is the process of monitoring and organizing your company’s inventory. Use an inventory management system (IMS) to monitor inventory across various sales channels. By using software to manage inventory, you can optimize the inventory management process across the board to ensure better order accuracy.
Integrated ecommerce platforms like Shopify offer built-in inventory management tools that give entrepreneurs the power to easily manage their company’s inventory levels. If you’re using a dropshipping model with products supplied and shipped by a third-party vendor, choose a fulfillment provider that boasts a high order accuracy rate.
Organize your warehouse to make the picking and packing process logical and efficient. For example, use a warehouse slotting strategy to organize your inventory based on product categories or variations in pricing. Use a bar code system with individual SKU numbers—stock keeping units that correlate to specific products in your warehouse.
A good warehouse management system (WMS) can help you track SKU levels and monitor your picking and packing processes. For example, entrepreneur Kheris Rogers—the creator of fashion brand Flexin’ In My Complexion—discovered huge benefits for her company once she moved her inventory into a warehouse.
On an episode of Shopify Masters, Kheris Rogers describes running the fulfillment operations for her clothing line out of her house when she started the company at 10 years old. After selling out of her clothing products, she moved the company’s new inventory to a warehouse that handles the picking, packing, and shipping process.
Use software automation tools to optimize your entire order fulfillment process. For example, some warehouse management systems include features like automatic alerts for when particular products need their inventory levels replenished.
These automation tools can reduce human error that occurs from manual processes and help you avoid fulfillment mistakes or inventory stockouts. Perform regular quality checks on your order fulfillment process to identify any system errors creating order inaccuracies.
A key performance indicator (KPI) is a metric that ecommerce merchants use to track the success of their operations. Here are some of the most important KPIs to monitor as you make adjustments to your order fulfillment process:
To ensure high order accuracy, set clear goals for your order accuracy rate, improve your inventory management system, automate your warehouse, and monitor key performance indicators like order picking accuracy and return rate.
The benefits of good order accuracy include increased customer satisfaction, improved efficiency, and better data for inventory forecasting.
Some of the main factors that
