So, you’ve done what many people consider to be the hard part. You’ve made your audience aware of your brand, attracted them to your store and converted some into customers. While some may think the hard work stops there, there’s still plenty to do to ensure customers are happy and your business remains successful.
Picking and shipping is integral to the success of a business. It can make or break a business, no matter the size. Get it right and you’ll build a loyal customer base and repeat business. Get it wrong, and you’ll lose customers, increase operating costs and ultimately reduce profits.
In this post, we cover the key aspects of a successful pick and ship process, while highlighting things to be aware of and areas you might improve. Whether you’re an online shop or a physical store mailing products out, it’s a must-read.
The cost of picking and shipping errors
A recent estimate shows that in the US, around 5% of total shipping costs are lost to shipping errors every year. For businesses with tight margins, this can have a devastating impact. The cost of shipping and picking errors is, therefore, not to be ignored.
One way to calculate the cost of shipping and picking errors is to work out the cost-per-error. Cost-per-error acts as a benchmark for improvement and helps you understand the actual cost of errors, and if errors are having a significant impact on your bottom line.
To calculate cost-per-error, you need to assign a cost to each of these factors:
- Picking up incorrect deliveries
- Handling those deliveries
- Processing returns
- Re-shipping the correct order
- Writing off a broken/lost delivery
- Losing a customer (customer lifetime value)
Once you have assigned a cost to each factor, you can build a model that shows the cost of errors by adding the total cost of errors and multiplying it by the number of errors that occur. Although this is useful for putting a number on the cost of errors, it doesn’t tell you where the errors occur.
To identify where errors are occurring, we recommend mapping out your pick, pack and ship process. Once complete, you can assign points to each part of the process when errors occur. For example, dispatch sent the wrong product – in this case, add a point to the ‘pick’ stage. Over time, you will see where to make improvements.
But the actual cost of picking and shipping errors goes way beyond lost stock and reduced margins. It has a significant impact on your brand reputation too. According to American Express, on average, Americans tell 15 people about a poor service experience and just 11 about a good experience. If you have hundreds or thousands of customers, this soon adds up.
Common shipping error problems to keep in mind
While every business strives for a perfect pick, pack and ship process, there are common errors that occur. Knowing what these are will help to pick these up before they become a significant issue.
- Wrong items sent – It happens in every business and almost always occurs at the picking stage. In some cases, it could be that two items are very similar and so the wrong item is picked. It could also be down to the item being in the wrong warehouse location. Either way, it’s a costly error as you need to retrieve the incorrect item and sent out a replacement.
- The wrong number of items were sent – This happens a lot with businesses that sell bundles or packs of products. Multi-packs often cause issues like this, especially if they need to be broken down before being sent. Bundles made up of multiple single products can cause problems too. The direct cost to your business of sending an incorrect quantity may not be as great as sending the wrong product, but it will put your stock figures out, which is another shipping error to be aware of.
- Stock is incorrect – While stock may not cause picking issues directly, it can cause problems with missed or late deliveries. Returns are one of the leading causes of inaccurate inventory and can lead you selling products that you don’t have back in stock yet. Stock figures can also be made inaccurate if you have the same product in different warehouse locations.
- Items sent to the wrong delivery address – Many online stores will ask for a delivery address and a billing address before an order is processed. For most people, these are the same; however, errors can occur when these are different. Similarly, products bought as a gift will have a different delivery address. Always double check before entering shipping information.
- Items don’t arrive on time – Delivering on your promise of super fast delivery is a must in modern retail. If you don’t, customers will be unhappy and might cancel their order and never shop with you again. Always remember to state order processing time as well as shipping times when you take an order. If you offer next-day delivery, but it takes you one day to pick and pack an order, the reality is that it will take two days for a customer to receive their order.
How to prevent picking and shipping errors
Shipping errors will occur in every business, regardless of size. The key is understanding how to reduce and sometimes prevent these errors to ensure your business retains customers and an excellent reputation. These are our top 10 tips for avoiding picking and shipping errors.
1. Double-check order information
For orders taken over the phone, it’s always a good idea to read back the order details to the customer to reduce inaccuracies. For online orders, check that the address has been completed correctly including zip code. This will save you sending shipments to a non-existent or incorrect address.
2. Offer 3-4 shipping options
Too many shipping methods will create complications and leave room for errors. Still, more importantly, they will severely complicate matters when you have to account for express and international shipping. As a rule, avoid using more than four shipping methods, and try to avoid using more than three.
3. Work with reliable delivery services
Sometimes, shipping errors are out of your control and can be caused by an unreliable delivery service. Don’t settle for one service, conduct regular reviews to ensure you’re getting the best price and service for you and your customers. Don’t just go for the cheapest option.
4.Use an end-to-end shipment tracking service
Although you might be able to claim on insurance for parcels that have gone missing, this doesn’t get the customer their order any faster. Where possible, opt for an end-to-end tracking service and share the tracking details with your customer. This way, the customer can see where their order is at all times and make sure they are in to receive it.
5.Choose your packaging wisely
It will likely cost you more to re-ship an item than spending an extra 10-20 cents on a stronger box or bubble wrap filler. Not only do you have to re-ship the item, you can’t put the broken item back into stock. Choosing the right packing is a must if you want to reduce returns.
6. Create a double-check pick system
At some point in your pick, pack and ship process you should incorporate a double-check system. The same person could do it in picking, or someone further down the line in packing. Either way, while it may seem like extra work, it will prevent the majority of picking errors.
7. Conduct regular inventory and product location checks
Inventory spread across multiple warehouse locations causes significant issues with picking and inventory management. Conducting quarterly reviews and re-arranging stock can help to reduce errors and speed up pick times.
8. Implement an automated warehouse system
There are several technologies you can use to automate your warehouse including robotics, RFID tagging, cloud computing and on-demand warehousing. Each of these will help to improve your accuracy, increase efficiency and in some cases, help to love your carbon footprint.
9. Use a barcode scanner
Barcode scanners will tell your pick team if they’re picking the right product off the shelves and in the right quantities. It’s a surefire way to boost your picking accuracy. Also, many scanners will update your inventory after a product has been picked helping with inventory management accuracy too.
10. Implement a robust returns process
Returns can be a nightmare for businesses that don’t have a robust process in place. They can impact stock accuracy and be a massive drain on resources, both staff and physical resources like tape, paper and boxes. A good returns process will get products back into stock as soon as possible and ship the right product (where required) to the customer within 1-2 days.
Building and maintaining an accurate pick, pack and ship process is vital and time should be spent planning and reviewing each stage. Although errors may still occur, knowing why and when they happen goes a long way towards improving the system.
Investing in technology can also help, especially if you plan to grow your business as this is a time when mistakes are often made and engrained into old processes.