When online shoppers make a purchase, they expect their order to contain the correct products. An incorrect order can ruin a shopper’s experience, so order accuracy must be a top priority for ecommerce merchants. Learn how to calculate and improve order accuracy and why order accuracy is important.
What is Order Precision?
Order Accuracy is a key metric used by Merchants to determine the number of orders that are processed and delivered to customers without error. Common errors in customer orders include incorrect product quantities, sizes, or colors, or shipping the wrong or damaged items.
Several factors can affect order accuracy, including human error, inventory control issues, defects in manual or automated systems, supply chain delays, fluctuations in order volumes, shipping errors and communication issues.
Why is order accuracy important?
Shipping the right products to your customers is important for many reasons:
Increase customer satisfaction
The accuracy of the order Customer ExperienceIncorrect orders can create a bad customer impression of your e-commerce business. Getting more sales from existing customers is essential to growing your business, but it requires order accuracy.
building Customer Loyalty Order fulfillment is difficult without accurate picking, packing, and delivery of customer orders. Creating a streamlined, quality-controlled order fulfillment process Customer Retentionwhich will impact your company’s bottom line.
Increased efficiency
Optimizing your picking and packing processes and your shipping processes will save you and your team time and energy. Communicating with customers about incorrect orders, reshipping correct orders, and adjusting inventory records takes up valuable company time. If order processing errors occur frequently, you’ll end up spending more time solving the problems than improving your company in new ways. Marketing campaigns or Product family.
Further cost savings
Poor order accuracy can affect your profits by incurring unnecessary shipping costs and returning items that cannot be resold. In addition, incorrect orders can cost sellers money. Customer Retention Strategy While these tactics, like discounts and store credits, can help satisfy customers who received incorrect orders, they can also eat into your profit margins.
Improved inventory forecasting
Companies that process orders accurately have more accurate information about their inventory. Inventory forecast—The process of forecasting future inventory needs based on past sales data. Fulfillment errors can skew inventory data, making it difficult to forecast inventory needs.
How is the Order Accuracy Rate calculated?
To calculate your Order Accuracy Rate, determine the total number of orders that were filled correctly and divide it by the total order value. Once you have that number, multiply it by 100 to get a percentage. That percentage represents your Order Accuracy Rate.
The formula for calculating order precision is:
Order Accuracy Rate = (Total Orders Filled Correctly / Total Orders Filled) x 100
For example, if you process a total of 1,000 orders and notice 30 processing errors (i.e., 970 correct orders), your order accuracy rate would be calculated as follows:
970 correctly filled orders / 1,000 filled orders = 0.97
0.97 x 100 = 97
So in this example, the order accuracy rate is 97%.
What is a good order accuracy rate?
All merchants should strive to have an order accuracy as close to 100% as possible, but mistakes in fulfilling orders are inevitable. However, as a general guide, a good order accuracy rate is between 96% and 98%. If your order accuracy falls below 95%, you may be at a competitive disadvantage as customers choose more reliable merchants.
How to improve order accuracy
- Identify current order accuracy
- Set clear goals for order accuracy
- Improved inventory management
- Optimize your warehouse
- Use automated tools
- Track key performance indicators
Here are some basic steps to improve order accuracy:
1. Check current order accuracy
Use the order accuracy formula to calculate your current rate. Identify the number of orders that were filled accurately by analyzing customer feedback and noting inaccurate stock levels. Customers who receive more than they ordered may not report this to your customer service department, but by regularly monitoring your stock levels, you can catch these mistakes.
2. Set clear goals for order accuracy
Once you’ve identified your current order accuracy rate, set a new goal for how you want to improve it. For example, if your accuracy rate is 93%, you could set a goal to increase that number to 96% within 12 months. Setting clear goals helps keep your order fulfillment team on the same page.
3. Improve inventory management
Inventory management is the process of monitoring and organizing a company’s inventory. Inventory Management System (IMS) Monitor various stocks Sales ChannelsUsing inventory management software can help you optimize your entire inventory management process and increase order accuracy.
Integrated e-commerce platform Shopify It offers built-in inventory management tools that allow entrepreneurs to easily manage their company’s stock levels. Dropshipping Model For products provided and shipped by third-party vendors, choose a fulfillment provider that boasts high order accuracy.
4. Optimize your warehouse
Organize your warehouse to make picking and packing processes logical and efficient. For example, use a warehouse slotting strategy to organize your inventory based on product categories or price differences. Use a barcode system with distinct SKU numbers (stock keeping units that correspond to specific products in the warehouse).
A good warehouse management system (WMS) can track SKU levels and monitor the picking and packing process. For example, entrepreneur Kerith Rogers says: Founder of the fashion brand “Flexin’ In My Complexion”— We realized that moving inventory to a warehouse would bring great benefits to our company.
To Episode of Shopify MasterKerris Rogers is Fulfillment operations She started her company at age 10 and began producing clothing from her home. After the clothing sold out, she moved the company’s new stock into a warehouse where she handled the picking, packing, and shipping process.
5. Use automation tools
Use software automation tools to optimize your entire order fulfillment process. For example, some warehouse management systems include the ability to automatically alert you when stock levels of certain products need to be replenished.
These automation tools help reduce human error that occurs in manual processes and avoid misfulfillment and inventory management. out of stockRegularly perform quality checks of the order fulfillment process to identify system errors that create order inaccuracies.
6. Track Key Performance Indicators
a Key Performance Indicators (KPIs) are the metrics ecommerce merchants use to track their business success. Here are some of the most important KPIs to monitor as you tweak your order fulfillment process:
- Order picking accuracy. Order Picking Accuracy (OPA) monitors a specific aspect of the order fulfillment process: the number of orders that are correctly picked in the warehouse before being shipped.
- Average delivery time. This KPI helps you monitor the efficiency of your supply chain and delivery process by measuring the average time it takes from when a customer orders a product from your store to when that product is shipped.
- Return rate. Your return rate is the percentage of customers who return incorrect or damaged products. A lower return rate generally means higher order accuracy.
- Inventory turnover. Inventory turnover is a metric used to identify the rate at which a particular product is sold out. A low inventory turnover ratio indicates low demand, while a high inventory turnover ratio indicates high demand for a particular product.
Order Accuracy FAQs
How do you ensure order accuracy?
To ensure high order accuracy, set clear goals for order accuracy rates, improve your inventory control systems, automate your warehouse, and monitor key performance indicators such as order picking accuracy and return rates.
What are the benefits of Order Accuracy?
High order accuracy translates into increased customer satisfaction, increased efficiency, and better data for inventory forecasting.
What factors affect order accuracy?
The main factors that affect order accuracy include flaws in inventory control systems, humour errors, miscommunication and supply chain delays.
