Prevent Order Processing Errors

Prevent Order Processing Errors to Protect and Grow Revenue

While order processing isn’t top of mind for the average shopper, it should be for retailers and brands who sell to them. From delayed deliveries to wrong shipments or damaged items, the list of potential glitches that impact the shopper experience is long.

An error-prone order processing system can lead to lower order fill rates, customer dissatisfaction and, consequently, lower sales. Additionally, a customer who has a poor fulfillment experience is less likely to buy from the same seller again.

So what are the most common order processing errors, and how can you avoid them? Here are some ideas.

Communication Gaps Between Channel Partners

While making sure an order is seen and processed by all of the right people may seem like common sense, it’s surprising how many orders get mislaid as a result of poor communication.

The problem starts with missed emails, misplaced purchase orders or other issues at the very start of the order process. Next are the times a customer cancels or modifies an existing order or updates his or her shipping address, and the changes don’t get reconciled with the original order fast enough (or at all). Together these relatively simple order integration and communication issues add up to a high number of missed orders, fulfillment errors, and delivery issues.

What makes it more challenging is that many sellers use order processing systems that operate blind, with little or no visibility into the status of the fulfillment process at each stage from the order being placed, to received and processed at the warehouse, to put on a truck and delivered to the customer’s doorstep.

The Solution – Invest in a distributed order management platform that manages and updates communications between suppliers, retailers, brands, logistics partners and customers in real-time. An early warning system that sends notifications to the order fulfillment team about a potential delay or an order modification is a good way to reduce rework and returned orders.

 

Out-of-Stock and “Wrong Item Picked” Issues

Have you ever been in a situation where you receive an order from a customer only to discover that the item you just sold is now out of stock at your supplier’s end, with the chances of a refill in the near future bleak at best? This is a fairly common event for many sellers that do not receive regular inventory updates from their suppliers. Stock-outs become even more problematic during high-volume periods like the holiday season.

Another common scenario you might have encountered: your inventory levels are fine, but the wrong items are shipped to the customer due to a mismatch in SKUs between those listed in your online catalog data and those sitting in your warehouse. #ProductDataFail.

According to market research, the cost of “fixing” a wrong shipment can be up to $42 per package. This figure takes into account double the pick time, return shipping costs, return processing costs, double the outbound shipping costs, and more. That doesn’t even account for the cost of customer dissatisfaction and possibly losing that customer forever.

The Solution – Set up your order fulfillment system to receive real-time inventory updates from your suppliers. If real-time inventory updates are too much to ask for, at least ensure that your order processing system receives stock updates from all suppliers multiple times a day. Additionally, you can use your system’s advanced features to set a minimum acceptable inventory threshold after which your online storefronts trigger a “low stock” alert to shoppers. This has the added benefit of driving additional demand, as shoppers may respond favorably to the need to act fast to avoid missing the opportunity to purchase while the product is in stock.

If you are an omnichannel seller, a centralized master catalog that unifies all the SKUs you sell, whether offline or online, is tremendously helpful. A master catalog helps ensure consistency in the product descriptions and SKU numbers across different channels, thus reducing the chance of erroneous picks and shipments.

 

Product Data Inconsistencies from One Sales Channel to Another

If you sell on more than one channel (e.g. your own e-commerce store, Amazon, Google Shopping etc.), you probably know that different channels have different requirements. From variations in product data taxonomy to hierarchies of product categories to dissimilarities in order processing and delivery expectations, managing the requirements of even a small handful of sales channels can be overwhelming.

Errors are inevitable if you rely on multiple spreadsheets, native channel solutions or other manual methods to manage order processing for different channels like marketplaces or your own e-commerce store.

The Solution – Move from disparate product catalogs to a centralized master catalog that stores all of your product data in a consistent, clear and syndication-friendly format. Next, integrate your order processing system with your marketplace syndication platform to ensure that the product data that shows up across all your channels matches the data to which your fulfillment team has access.  When your data flows in a direct, automated pipeline from your catalog to the sales channel and then onward to your fulfillment centers and eventually to your customers, the probability of errors or miscommunication drops significantly.

 

The Cost of One-Size-Fits-All Shipping

Most e-commerce companies depend on shipping carriers like UPS, FedEx or USPS for their last-mile fulfillment. More often than not, these carriers do a fine job of reliably delivering your products to your customers. However, how do you know that you’ve picked the optimal shipping method for each of your shipments? Retailers often unknowingly overspend on shipping by expediting shipments that could be delivered on-time with a cheaper delivery method.

Another not-so-hidden cost comes in the form of shipping products from far-away warehouses without a way to easily and quickly know if the product can be shipped faster (and probably cheaper) from a warehouse located closer to the customer.

The Solution – Invest in shipping optimization software that will algorithmically pick the optimal ship method for each shipment. The saved shipping costs have the potential not only to make your business more profitable, but also to help in ensuring higher levels of customer satisfaction with more on-time deliveries. You can read how one large retailer saved an estimated $2.8 million in shipping costs with our SmartShipping solution.

Additionally, a 3PL warehouse network that allows for geographically distributed inventory can dramatically reduce your shipping costs. Packages are delivered faster and cheaper since they’re shipped from warehouses located closer to customers’ locations.

 

Payment and Billing Issues

If you’re like most retailers, you want to spend more of your time focusing on your customers instead of worrying about paperwork.  Scrutinizing every vendor invoice might be difficult to manage on a regular basis, but vendor invoicing is often where costly errors happen behind the scenes. Errors might take the form of accidental overcharges, mismatched products or services, or even erroneous payments your company makes and never catches.

The Solution – Your order fulfillment platform is your first line of defense against costly invoicing errors. Ensure your fulfillment platform can build and maintain standard templates for invoicing and payments for all your suppliers. It should be able to automatically cross-check invoices against actual orders before processing payments to minimize manual intervention and accidental expenditure.

 

Not Controlling Fulfillment Performance and Vendor Compliance

Did you know that promising a quicker delivery timeline can increase your conversion rate?

CommerceHub data shows that every one-day improvement in delivery promise increases order conversion rates by an average of 4%.

While it’s easy to promise quick deliveries to your customers, actually working with your channel partners to ensure those promises are fulfilled is a whole different story. Many sellers lack insight into the common metrics that help them determine whether their channel partners downstream are keeping their service level agreements.

The Solution – Establish the fulfillment metrics that matter to your business. These might be order fill rates, order processing times, in-stock rates or other metrics that are more specific to the product categories you sell. Set a clear baseline with your channel partners of what is acceptable, exceptional and below par performance.

CommerceHub data suggests that best-in-class sellers have fulfillment metrics in these ranges:

  • In-stock rate: 99.5%
  • Inventory update frequency: Every 15 minutes
  • Order Fill Rate: 99.8%
  • Cancel Rate: 0.2%
  • Perfect Package: 99%

Your order fulfillment system should be able to track how each of your vendors performs on your established metrics and send automated alerts to them when any of these metrics are in danger of defaulting. This type of exception-based order management system offers sellers a strong degree of control over their order fulfillment process and helps to ensure that any disruptions or delays in fulfillment are prevented before they even happen.

 

Wrapping Up

Research shows that at least 86% of shoppers all over the world now regularly shop on two or more channels. More channels equals more complexity in order processing and fulfillment. But complexity can be managed, and can even give you a competitive edge, if you have the right processes and platforms in place.

Contact us for information on how CommerceHub can help improve your omnichannel order fulfillment.

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