Online Sales Order Fulfillment

How to Use eCommerce KPIs to Sell More Online

eCommerce KPIs in order fulfillment are strategic measures of your business and help gauge success. Click to learn how KPIs can better support business.

eCommerce KPIs are not the first thing that comes to mind when setting up an online business. In fact, it is safe to say that most businesses are more focused on making money.

However, making money and tracking your eCommerce KPIs go together. Every business must deal with competition, customer satisfaction, and other factors. In addition to these factors, eCommerce businesses also have to deal with the challenge of order fulfillment.

The only way to truly know you’re doing well is to track the things that matter most, and KPIs help with that.

What is Order Fulfillment Success?

Order fulfillment is the process of ensuring that your customers receive their orders on time and in full. In other words, it is the process of ensuring that your customers are happy with their purchases.

This process can be challenging for any business, especially for businesses selling physical goods. A good example is inventory. Can your business ensure products are in stock or set up for backorders?

In addition, businesses must ensure that their customers are happy with their purchases. Although all of these factors can be challenging to manage, they are necessary for a business to be successful.

How eCommerce KPIs Help Measure Order Fulfillment Success

measuring eCommerce KPIs
Tracking eCommerce KPIs can be an important way to track your online business.

Fortunately, businesses can use a few key performance indicators (KPIs) to measure their success in order fulfillment.

By the way, a KPI is more than just a metric. You can measure many things about your business that won’t change your bottom line. However, a KPI is a specific, strategic measure of your business in an important area directly related to business success.

What’s an important area? For an online business, that’s answered by what is important for your consumers and what might generate the most negative reviews or returns.

Always remember that negative reviews can directly harm future sales. And that’s a problem when you often only get one chance to sell to a new customer.

KPI: On-Time Delivery (OTD)

Of all the eCommerce KPIs you can use, the most critical one for your business is “on-time delivery,” or OTD. On-time delivery is simply this: The percentage of orders delivered on time.

To calculate the OTD rate, you divide the total number of orders delivered by the number of deliveries that arrived after the promised delivery date. Consider measuring OTD with a date range that spans five or seven days before the delivery due date.

For example, during a targeted 5-day period, you might ship 100 orders, with 6 orders being late (according to the USPS) and another 3 orders listed on time but with customer complaints for speed.

To calculate: 100 – (6 + 3) / 100 = 91%.

Thus, if you’re shooting for 100% delivery on all orders and should be shooting for 100% delivery on all orders, then this KPI helps you understand where and when your delivery system is having problems. If your business is not delivering its orders on time, it is not doing a good job at order fulfillment, which may impact customer happiness.

KPI: Fill Rate (FR)

The “Fill Rate,” or FR, is the second critical KPI for your business. It is the percentage of orders filled in full without errors.

FR differs from the OTD since you strive to ensure each order is sent on time without packing errors, such as breakage or shipping the wrong item. Returns would also fit into this KPI.

To measure, group your shipments into weekly cohorts and count the shipments by the total complaints, delays, and breakage related to that cohort.

Like OTD, you might ship 100 orders, with 6 late (according to the USPS), 3 listed on time but with customer complaints for speed, and 5 where customers reported breakage or were returned.

To calculate: 100 – (6 + 3 + 5) / 100 = 86%.

This KPI is important because it measures how well your business fills orders and meets customer expectations. If your business is not filling its orders in full, it is not doing well at order fulfillment.

Note that it’s important to calculate OTD and FR separately since they tell you about separate parts of your business. A low OTD means you might be having an issue with a shipper, but a low FR means you could have a wider process issue, which is a problem.

Other Important eCommerce KPIs to Consider

Both KPIs are important, but they are not the only ones businesses should use to measure their success in order fulfillment. In addition to on-time delivery and fill rate, businesses should also consider tracking:

  • Customer Satisfaction
  • Buyer Loyalty

Customer satisfaction is the percentage of customers who are satisfied with their purchases. Customer loyalty is the percentage of customers who are loyal to your business.

Both eCommerce KPIs are important because they measure how well your business is doing to keep its customers happy. If your business is not keeping its customers happy, you’ll likely see negative reviews and returns that will eventually affect your bottom line.

For a great description of these eCommerce KPIs and how to use them, please see this article on measuring KPIs.

In conclusion, businesses should measure their success by using two order fulfillment KPIs. These two KPIs are on-time delivery and fill rate. In addition, businesses should also use customer satisfaction and loyalty to measure their success in order fulfillment.

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