Well-organized data tracking is not only important for sales and marketing - it's also critical for understanding your fulfillment capabilities. Fulfillment providers track a variety of metrics to help you ensure product availability, accurate shipping times, and operational efficiency. Below, we define some important metrics and explain why you should be reviewing with your 3PL provider on a regular basis.
Transportation Time & Cost
Shipping times and costs directly factor into your customer experience. Monitoring the average time-in-transit and transportation cost per package enables you to spot opportunities for improvement.
Units Fulfilled Per Hour
The number of units your fulfillment team can process per hour helps determine your throughput. Once you know what your capabilities are, you can proactively provide resources to your fulfillment team during product promotions or peak sales periods.
Average Units Per Order
The average number of product units required to fulfill an order is good information to have, from an operational standpoint. For example, a business averaging one unit per order can usually operate with fewer employees in the fulfillment department than a business that averages 10 units per order. You can use this information to ensure you have the right amount of staff for the holidays, or other peak seasons.
Average Lines Per Order
Lines represent the variations available for each of your product units. As an example, if a t-shirt is a product unit, then each color and size is a different line for that unit. Similar to the units per order metric, tracking the average lines per order is useful for operational planning – a higher average could indicate the need for more warehouse space (to ensure there is enough stock for each line) and more employees to pick, pack, and ship each order.
The cost of shipping is one of the biggest competitive differentiators in ecommerce. Customers will readily abandon a cart or buy from a competitor if it means they will save money on shipping. But if you want to reduce shipping charges for your customers without taking a hit to the profit margins of every order, you need to examine your shipping pipeline for ways to improve efficiency and/or eliminate unnecessary expenses. Fortunately, there are many strategies you can consider, such as:
Negotiate with your carriers
The best step you can take toward reducing your shipping costs over the long-term is to negotiate with your shipping or 3PL providers. Review your previous shipping bills to find the major cost driving factors, and research the prices from competitors to get a better understanding of average shipping costs. At Fulfillment Works, we pass 100% of our shipping discounts on to our clients, which allows them to give better shipping rates to their customers.
You can drive down your packaging costs by eliminating unnecessary dimensional space and excess dunnage. Examine your typical order sizes and order packaging assortments that suit them. Depending on your needs, custom packaging and kitting may be the best solution.
Remember to collect shipping refunds
Many shipping companies offer on-time shipping assurance as standard. As part of this benefit, you may be entitled to refunds on any deliveries that are delayed. If this kind of assurance is included in the agreement you have with your carrier, don’t forget to periodically review your shipping records and claim your refunds.
The main function of product pages are to provide users with the information they need to decide whether to purchase a product. There are many types of information you can add to these pages to make them more useful to potential customers, including:
Imagery & Video
Give shoppers something more than standard manufacturer-provided photos – which tend to convey only basic information about a product. In addition to using images that show customers as many models, colors, angles, and other variables as possible, include images or videos of the product in multiple scenarios (e.g. in use, before assembly, in storage, on display, etc.) to give customers more information.
Written descriptions educate shoppers about the product's functions and features, specifications, and advantages over similar products. However, you don’t want to frustrate your users with a wall of text - so keep your product descriptions short and to the point. When possible, try to let your images do the talking.
Whether positive or negative, reviews are an asset for product pages. Obviously, positive reviews reinforce a prospective customer’s decision to buy. Meanwhile, negative reviews give you the opportunity to help consumers who were unhappy with a purchase. Even if they do not respond or change their review, other readers will see that you made an effort and are sincere in your customer service.
For certain types of products (especially in the B2B space), users really appreciate technical product data like dimensions, weight, materials, instructions, and spec drawings.
Shoppers rely on various types of product information in their purchasing decisions. Your product pages should provide this information with as much clarity and detail as possible so customers can comfortably "add to cart" without needing to leave your site and find the information elsewhere – possibly from a competitor.
Using design choices to limit the checkout friction on your ecommerce site is a great strategy to increase customer spending. You can enhance a solid design with features that further add to the convenience of customers - encouraging them to order more. In this post, we'll highlight what some of these features are and why they work.
Adding “low stock” alerts to product pages creates a sense of urgency that prompts customers to purchase while the item is still available. If you link this feature with your inventory management system, you can even display the alert as a countdown.
Product suggestions are a way to show customers items they may not have found on their own. However, showing other products based on category alone (the default functionality of many product suggestion widgets) is not very effective. Instead, use algorithms to make suggestions based on customer preferences (demonstrated by their overall order history), or on purchasing trends you notice (e.g. items based on seasonality or products that are commonly purchased together).
The checkout process is the area where most ecommerce customers abandon a purchase. If customers can skip the traditional checkout process, they’re that much more likely to place an order. There is a caveat in that one-click functionality is patented by Amazon and requires a licensing fee to use. Although it’s a useful feature to have on your site, it may not be worthwhile if you can’t recoup the cost of the license from the extra sales.
Accurate tracking, measuring, and forecasting of inventory is crucial for seamless order fulfillment, financial decision-making, customer satisfaction, brand perception, and other aspects that drive the success of an ecommerce company. That is why even if your sales are through the roof, your success will be short-lived without capable inventory management. These guiding principles can help ensure that your inventory management stays successful and contributes to the growth of your business.
Inventory data is an important consideration when making logistical, purchasing, and fulfillment decisions. Inaccurate or unclear data negatively impacts these areas - so it's critical to have inventory data that is clear, accessible, and up-to-date (ideally, in real-time).
Inventory velocity is the time it takes to sell each individual item in stock. When you need to predict when inventory will need to be replenished, or decide if a product line should be liquidated, inventory velocity is a useful metric to have. It may not be tracked by your inventory management system, but it's something you should keep an eye on.
Compare your inventory management metrics with industry benchmarks on a regular basis. If your inventory performance falls behind industry averages, it’s time to reevaluate your approach to inventory management and create a plan for improvement. Outside perspective can prove invaluable in such a situation; by collaborating with the right 3PL provider, you can get the expertise required to fix issues, and even improve growth and stability.