This is How to Optimize Your eCommerce Fill Rate
A guest post by Carl Torrence
Global retail eCommerce sales are set to reach 8 trillion USD by 2027. But it’s gonna take a lot more than marketing campaigns and a large catalog for your online store to capitalize on this momentum.
It needs to have just as powerful of an order fulfillment process, and the metric that will help you in this process is the eCommerce fill rate.
Throughout this guide, we’ll explain what an eCommerce fill rate is, and what you can do to optimize it for your online store.
Here’s what’s in store:
Let’s get to it!
What is an eCommerce Fill Rate?
As an eCommerce company, very few aspects of your business matter as much as your order fulfillment process.
Fill Rate, or order fulfillment rate refers to the percentage of orders you can fulfill based on your available stock without causing backorders or stockouts.
When you can maintain a high eCommerce fill rate, it reflects well on your ability to meet customer demand and the effectiveness of your operations. And, you’ll be able to plan your logistics process by gauging demand for the products in your inventory.
If fulfilling your customer orders proves to be more challenging than usual, conduct a thorough audit of all the processes that go into it. To start, assess the percentage of orders you can fulfill successfully versus the total number of orders you receive.
Here is a simple formula you can use to calculate your order fill rate:
Fill Rate = (Total Orders Shipped/Total Orders Placed) x 100
eCommerce fill rate calculation helps confirm that your eCommerce order fulfillment system is working as planned…and that you can easily find opportunities to improve. It also helps better understand your inventory management process so you can make strategy changes if needed.
Best Practices to Optimize eCommerce Fill Rate
So, what do you need to keep in mind? Here are some of the best practices you should follow while improving the fill rate of your eCommerce business.
1. Stock up on Alternative Products
One of the most common strategies online stores use to improve their fill rate is to offer alternative products when they’re out of stock.
You can always improve your eCommerce fill rate if you offer substitute products. This tactic can prevent losing your customers to a competitor’s store.
Stocking up on alternative products can also help you fulfill customer orders and prevent any loss of sales that may occur in case of a stockout.
Once you stock up on these alternate products, communicate it to the customer to help improve overall customer satisfaction. With this, you can create a loyal customer base even if you don’t have the exact item they’re looking for!
2. Improve Your Relationship With Suppliers
If your order fulfillment process has no gaps, but you still experience low fill rates, it’s a sign you need to work on your supplier relationships.
Relationship-building tactics could include:
- Price-change negotiations
- Response time optimizations
- Order management process improvements
As a result, you’ll be out of stock less frequently as alternative suppliers help maintain your inventory levels.
Moreover, for your order fulfillment quality to scale with you as your business grows, it’s not enough to use just one supplier — Ideally, not only should you consider working with different kinds of suppliers based on product categories, but consider multiple suppliers for the same product.
3. Monitor Stock Levels Closely
Again, maintaining steady stock levels is an important part of optimizing and improving your eCommerce fill rate. Managing your inventory is closely tied to making sure that you consistently fulfill your customers’ orders.
As an online store owner, you know that any time you need to cancel an order, because of a stockout or because a product is marked as “out of stock” on your product page, you potentially miss out on a lot more than a single order.
Such a situation will impact your average order value and customer lifetime value. In the worst cases, it can even cause you to lose the customer forever.
Keep a close eye on your stock levels in real-time to prevent any of these situations.
4. Have a Robust Inventory Management Software
Since we just talked about maintaining stock levels and constantly monitoring them, your fulfillment process just got a little trickier. However, with the right inventory management software or tool, you don’t have to worry about hiring new personnel.
Good inventory management software can automate a huge portion of your inventory management process. More than that, it provides you with a perfect solution to manage sales, track inventory, and reduce your data entry and management load.
The best part is that you’re able to keep track of all these processes from a single central dashboard in real time so there will be almost zero confusion.
Some of the best inventory management tools also offer automated reordering features that trigger purchase orders whenever a product stock level falls below the reorder point. This can prevent an out-of-stock situation and increase the chances of a better eCommerce fill rate.
5. Streamline Your Supply Chain and Fulfillment Process
Simply put, your fill rate is a metric that signifies the performance of your order fulfillment system. So, it shouldn’t surprise you that one of the most important steps you can take to improve your eCommerce fill rate is streamlining your supply chain and fulfillment process.
One of the best things you can do for your fulfillment process is to make it more flexible.
You can do this by offering different delivery options such as in-store pickup, same-day delivery, and one-day delivery. Even dropshipping falls into this category, as many third-party logistics providers offer quick shipping solutions directly to your customer.
These additional delivery options will help you elevate the overall customer experience and satisfaction level. As a result, you can expect your fill rate to dramatically improve. You should also regularly monitor the efficiency of the process and make improvements as needed.
6. Forecats Demand Accurately
You’ll be able to maintain a good eCommerce fill rate and level it up even further by forecasting your demand accurately. You can use historical sales data and dynamic demand planning formulas to help you predict your inventory needs more effectively.
Accurate demand forecasts will also help you anticipate customer demand to help ensure you have enough stock at all times. With the help of these forecasts, you will be able to avoid stockouts, lost sales, and backorders more effectively.
By using accurate demand forecasts, you’ll improve your fill rate and strengthen the efficiency of your logistics operations.
7. Regularly Audit and Tweak Processes
If you’re experiencing consistently low fill rates, you likely have an issue somewhere in your supply chain or fulfillment process. You’ll be able to reduce the impact of these issues or even eliminate them by conducting regular audits of your processes.
Regular supply chain audits will help you identify and understand any issues that may disrupt your order fulfillment process. What’s more, you will also be able to narrow down the causes of these issues and eliminate them for good. You can also tweak your processes to help prevent these issues from derailing your processes in the future.
These audits should be conducted regularly so that no issue persists for enough time to hurt your fulfillment process.
8. Use Data Analytics To Empower Decisions
Lastly, you want to take an objective approach to improving your fulfillment process. With the help of inventory management software or tools, you’ll be able to monitor your fulfillment processes in real-time and always have enough data on hand to support your decisions.
When driven by data such as recent sales, seasonal trends and patterns, and other metrics, your business decisions are more likely to produce better results.
Final Thoughts
For an order fulfillment process to be successful, there are several factors to be considered and different kinds of strategies to be implemented in the process. The eCommerce fill rate is one of those metrics that you absolutely need to be on top of.
By using some of the best practices listed here, you will be able to not only increase your fill rate but also ensure a high level of customer satisfaction and loyalty.
Carl Torrence
Carl Torrence is a Content Marketer at Marketing Digest. His core expertise lies in developing data-driven content for brands, SaaS businesses, and agencies. In his free time, he enjoys binge-watching time-travel movies and listening to Linkin Park and Coldplay albums.
