5 Mistakes in e-Commerce Order Fulfillment and How to Avoid Them

2021-12-13

5 Mistakes in E-Commerce Logistics and How to Avoid Them

What are the most common mistakes in e-commerce logistics and how can e-shops effectively prevent them while facing daily logistics challenges?

In the highly competitive environment of e-commerce, e-shops cannot afford to repeat mistakes that deprive them of customer loyalty and profits. Demands for e-commerce business services are constantly evolving, and increasing demand is also significantly reflected in logistics procedures. Updated e-commerce business services need to ensure not only fast delivery of customer orders, but also accurate and quality parallel order picking for retail and wholesale channels.

This is why logistics is one of the basic pillars of successful e-shops. It is becoming increasingly important nowadays, when the standards of online shopping are being overwritten with unprecedented frequency. In addition, the advent of new retail and omnichannel sales, which have become the new standard, further accelerate change. E-shops must be prepared to evolve quickly to stay relevant.

Read below for the 5 most common mistakes e-shops should avoid when managing e-commerce logistics.

NON-TRANSPARENT INVENTORY MANAGEMENT

34% of businesses said they ship because products are sold when in not stock

Out-of-date information on goods that are available in the warehouse, incorrect location pinpointing of these items, and unavailability of stock – these are costly, and entirely avoidable, mistakes that happen during the process of picking and completing orders. These mistakes cause an increased rate of incorrectly shipped orders, which also increases the operating costs of complaints. Up-to-date and correct inventory data increases the quality and speed of picking processes.

Inventory management is one of the key processes in warehouse logistics. Access to accurate and up-to-date stock level data prevents the sale of goods that are not actually available or are limited in availability. Insufficient inventory can paralyze some customer order picking processes which, in the worst case, can also lead to mass order cancellation and loss generation.

Inventory management tables have long been surpassed by tailor-designed fulfillment management software or WMS system modules for inventory planning and management. Access to up-to-date inventory data allows WMS systems to automatically monitor inventory levels and prevent them from falling below a critical level through timely notifications, especially for strategic items and bestsellers. WMS systems also monitor the upper limit of inventories, thus preventing unnecessary capital from being tied up in overstock.

In addition to automating inventory tracking, modern warehouse management systems (such as the Warehouse Execution System) also allow you to automate the maintenance of optimal inventory levels based on real item turnover. Modern WMS / WES systems already have predictive inventory planning features, which are evaluated from a previous purchase, consumer behavior, and item popularity data.

These predictive analytics can also optimize inventory storage - for example, by matching the items that are most often bought (or picked) together. Analytics can also identify items whose turnover will increase in the coming period and recommend relocation of these items as close as possible to the assembly zone, thus increasing the strategic availability of the most sought-after items.

INSUFFICIENT DATA

Average retail operation has an inventory accuracy of 63%

Access to correct and up-to-date data is also important in managing other parts of business, not just inventory. Successful e-commerce companies using multi-channel or omni-channel sales need to have access to other indicators to make operational decisions for the management of logistics and business processes.

Visibility of processes in real time such as

  • order planning,
  • picking status,
  • best-selling and least-requested items,
  • turnover, ongoing complaints,
  • and returns monitored

can provide the company with the information to optimize their business on multiple levels. It increases the speed and quality of both tactical and strategic decision-making while effectively meeting customer requirements.

Another important benefit of process transparency through operational data is the ability to identify and eliminate problems that slow down or reduce the quality of logistics processes. In particular, it is crucial to find the location of bottlenecks and identify the causes of downtime in storage zones. In addition to supervisors and managers, the customer support department needs the right data.

In order for customer service staff or chatbots to be able to efficiently process customer requests, they must have access to accurate data showing where their orders are located and approximately how long the picking will take. Ideally, customer departments should also have direct access to existing orders so as to be able to change the quantity or types of items in the order based on the wishes of customers before completion and shipping.

UNSUITABLE ORDER PICKING STRATEGIES

Travel often accounts for as much as 50% of labor time during order picking

Delayed shipping of a customer order or incorrect goods in bulk orders are two major faux pas that slow down further processes in order processing. Late deliveries and incorrectly picked items not only increase operating costs, but also damage the seller's reputation. Reputation is everything to an e-shop, and a string of bad reviews often lead to the devaluation of the hard-built e-shop brand, a reduction in consumer loyalty, and a decrease in the number of returning customers, all of which ultimately translate into a decrease in profitability.

In addition to crisis management, these situations can also be prevented by advanced management of orders and warehousing processes. These procedures can be optimized by deploying the right picking strategies, which also improve the allocation and use of enterprise resources.

Picking strategies and procedures should be adapted to the seller's e-commerce business model and current sales priorities. It may not only be about picking large volumes of smaller orders with fast moving goods or smaller numbers of orders with larger goods, but also combinations and variations of different numbers and types of orders, especially if the distribution center serves different sales channels or customer segments.

Standard e-commerce sales are usually defined by a large number of orders with a small number of items. For these types of orders it is most effective to deploy cluster picking. Today, online retailers combine different types and sizes of goods for diverse client groups. For example, many businesses merge retail (B2C) and wholesale sales (B2B).

In these cases, the deployment of a single strategy is no longer enough. In order to streamline picking processes, which also optimizes warehouse logistics, it is necessary to use a combination of different picking strategies. To maximize performance, the WMS / WES company will deploy a system that selects the most suitable picking procedures according to the incoming number of orders, their composition, available stock, distribution of goods in the warehouse, and set delivery times. Their system then results in efficient scheduling of task assignments by available operators or handling and transport equipment.

INSUFFICIENT FLEXIBILITY

70% of consumers want more flexible delivery options

Logistics in e-commerce must be able to cope with sudden sales. The distribution center can prepare in advance for the expected increase in orders during seasonal sales or targeted marketing campaigns. During the strong months, such as the traditional pre-Christmas period, e-shops often hire seasonal workers to cover the temporary peak.

Ideally, the e-shop or distribution center has a scalable warehouse and inventory management system, which can allow several dozen more warehouse workers than usual to connect during the high periods. The use of correctly set up WMS systems also shortens the training of new and temporary employees from a few days to a few hours. This is the importance of having intuitive user interface and correctly set procedures.

In the event that e-shops cover the fulfillment of orders on their own, they should also be prepared for sharp and unexpected spikes in orders beyond predictable peaks. In order to avoid being overwhelmed by increased order volumes, it is essential that the distribution center or e-shop warehouse has flexible and scalable processes. This elasticity of warehouse logistics and fulfillment also contributes to the sustainability of operational processes and adherence to delivery deadlines, even when adding new sales channels or expanding into other territories.

Modern WMS / WES systems are already adapted for operational extension of processes and modification of functionality. Small and medium-sized e-shops, in turn, can use dynamic scalability for further growth, whether in the volume or composition of the portfolios offered.

ERRONEOUS RETURNS MANAGEMENT

79% of consumers want free return shipping

E-shops are primarily focused on the fastest possible equipment and delivery of orders according to their customer preferences. Shortening picking cycles and order delivery below the 24-hour limit creates additional pressure on the warehouse and last-mile logistics.

E-shops that plan to build a loyal base of returning customers must, in addition to fast delivery, also ensure the smoothest possible return procedure for customers. Up to 92% of customers make a repeat purchase if returning is easy The basic rule of successful e-shops remains that returning goods should be as difficult as buying them.

The goal of every seller is to ensure customer satisfaction and thus minimize complaints. This is one of the reasons why e-shop operators focus on measures that prevent unnecessary returns burdening reverse flows. At the same time, a lower number of complaints also contributes to optimizing the operating budget.

The most common reasons why customers return goods are the delivery of damaged, incorrect, or visually different goods. Complaints and returns cannot be completely eliminated, so e-commerce operators should make sure the processes of reverse logistics and return management are optimized. The sooner the claimed goods are returned to the available stock in the warehouse (if they are not damaged), the sooner they can re-enter the sales process.

E-shops are currently facing many challenges, from reducing delivery times to expanding customer service and sales channels. Flawless picking and customer satisfaction require continuous innovation of the online retail operating model, which is inseparable from the latest advancements in process automation of warehouse logistics, inventory management, and orders.

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