How to measure the effectiveness of logistics in your ecommerce
Posted: Mon Jan 06, 2025 6:33 am
If you have an online store, you probably know how important logistics management of shipments is to meet your customers' expectations. Delivery times should be kept to a minimum, and of course the product must arrive in perfect condition.
How can you tell if your e-commerce logistics are efficient? Well, by establishing a series of indicators (or KPIs) that you should measure regularly to know how well (or poorly) your business's logistics are working.
In this post, we are going to list the 10 key indicators that you should measure to know what you need to improve in the logistics management of your online store.
From the moment a customer checks out of your online store, how long should they wait until the product arrives at their home? The time of the entire process is what the “click to delivery” indicator measures. This KPI is the general measure to know how the logistics management of your e-commerce is working. The average delivery time in Spain should be between 1 and 2 days.
2. Percentage of shipments with incidents
An incident is anything that happens that prevents a package from being delivered. It could be because the customer's address is wrong, because no one was home, or because the package arrives damaged or broken and the customer does not want to receive it.
For whatever reason, it is important to measure, of the total number of packages sent, what percentage is not delivered. Once you know what the main problem is that is preventing the delivery of orders, try to find a solution as soon as possible to try to reduce this rate, which should not be higher than 3%.
Picking process indicators
3. Order fill rate indicator
This indicator is used to measure the capacity of your warehouse to prepare orders. Can you process all the orders that arrive in a day, on the same day? Ideally, 99.8% of the orders that arrive each day should be prepared. Find out why that 0.2% of orders cannot be prepared. This failure or failures are putting delivery times at risk.
4. Percentage of picking errors
Indicators of the shipping and transport process
5. Shipping time indicator
Shipping is the process of transporting goods from the warehouse to the customer's home or delivery point. The time it takes from receiving an order until it is ready to leave the warehouse is called shipping time. Calculating this KPI will give you an idea of whether your logistics service provider is taking too long to get orders ready for shipment.
6. Average transit time
Once the order is prepared and delivered to the carrier, how long does it take to arrive at the customer's home or to the final delivery destination? This KPI is useful to know in order to detect if orders are spending too much time in transit.
Need a tool to manage your online inventory? Try Holded Inventory.
Delivery process indicators
7. Percentage of lost or stolen shipments
Of the total number of orders delivered, what percentage did not reach their destination due to theft or loss? This KPI should not exceed 0.5%.
9. Percentage of shipments delivered on the first try
It may happen that an order is not delivered on the first attempt for various reasons, as we discussed in point 2 of this list (different types of incidents). Although most will be delivered on a second attempt, it is interesting to know, of the total number of deliveries made, what percentage of orders have been delivered on the first attempt. Ideally, this KPI should be higher than 92%.
blog image
Related Post: How to Become a Customer-Centric Company
Indicators of the processes of managing incidents and returns
9. Percentage of returns based on total shipments
Of all the shipments made, what percentage have been returned? The variability of this KPI is very high, depending on the type of product you sell and the returns policy you have iceland number data defined in your company. So there is no ideal maximum percentage, but in any case it is interesting to calculate this KPI.
10. Percentage of returns based on delivered shipments
This KPI is similar to the previous one, but instead of being calculated based on total shipments, it is calculated based on delivered orders. It is a good idea to measure it because you can get more information about why the customer decided to return the product.
As in the previous case, there is no reference percentage for this KPI.
Conclusion
You can't improve what you don't measure. So, in order to improve the logistics effectiveness of your e-commerce, it's essential that you measure these indicators or KPIs, at least the first three. Only by knowing what's wrong can you take the appropriate measures to fix it.
At Holded we offer accounting and billing software that allows you to easily manage your business from a single place. And one of the features we offer is inventory management.
With Holded Inventory you can create a pipeline to track all your customers' orders, and know at all times if they have already left the warehouse or if any incident has occurred. Try Holded Inventory today and start managing your e-commerce logistics well from the beginning.
How can you tell if your e-commerce logistics are efficient? Well, by establishing a series of indicators (or KPIs) that you should measure regularly to know how well (or poorly) your business's logistics are working.
In this post, we are going to list the 10 key indicators that you should measure to know what you need to improve in the logistics management of your online store.
From the moment a customer checks out of your online store, how long should they wait until the product arrives at their home? The time of the entire process is what the “click to delivery” indicator measures. This KPI is the general measure to know how the logistics management of your e-commerce is working. The average delivery time in Spain should be between 1 and 2 days.
2. Percentage of shipments with incidents
An incident is anything that happens that prevents a package from being delivered. It could be because the customer's address is wrong, because no one was home, or because the package arrives damaged or broken and the customer does not want to receive it.
For whatever reason, it is important to measure, of the total number of packages sent, what percentage is not delivered. Once you know what the main problem is that is preventing the delivery of orders, try to find a solution as soon as possible to try to reduce this rate, which should not be higher than 3%.
Picking process indicators
3. Order fill rate indicator
This indicator is used to measure the capacity of your warehouse to prepare orders. Can you process all the orders that arrive in a day, on the same day? Ideally, 99.8% of the orders that arrive each day should be prepared. Find out why that 0.2% of orders cannot be prepared. This failure or failures are putting delivery times at risk.
4. Percentage of picking errors
Indicators of the shipping and transport process
5. Shipping time indicator
Shipping is the process of transporting goods from the warehouse to the customer's home or delivery point. The time it takes from receiving an order until it is ready to leave the warehouse is called shipping time. Calculating this KPI will give you an idea of whether your logistics service provider is taking too long to get orders ready for shipment.
6. Average transit time
Once the order is prepared and delivered to the carrier, how long does it take to arrive at the customer's home or to the final delivery destination? This KPI is useful to know in order to detect if orders are spending too much time in transit.
Need a tool to manage your online inventory? Try Holded Inventory.
Delivery process indicators
7. Percentage of lost or stolen shipments
Of the total number of orders delivered, what percentage did not reach their destination due to theft or loss? This KPI should not exceed 0.5%.
9. Percentage of shipments delivered on the first try
It may happen that an order is not delivered on the first attempt for various reasons, as we discussed in point 2 of this list (different types of incidents). Although most will be delivered on a second attempt, it is interesting to know, of the total number of deliveries made, what percentage of orders have been delivered on the first attempt. Ideally, this KPI should be higher than 92%.
blog image
Related Post: How to Become a Customer-Centric Company
Indicators of the processes of managing incidents and returns
9. Percentage of returns based on total shipments
Of all the shipments made, what percentage have been returned? The variability of this KPI is very high, depending on the type of product you sell and the returns policy you have iceland number data defined in your company. So there is no ideal maximum percentage, but in any case it is interesting to calculate this KPI.
10. Percentage of returns based on delivered shipments
This KPI is similar to the previous one, but instead of being calculated based on total shipments, it is calculated based on delivered orders. It is a good idea to measure it because you can get more information about why the customer decided to return the product.
As in the previous case, there is no reference percentage for this KPI.
Conclusion
You can't improve what you don't measure. So, in order to improve the logistics effectiveness of your e-commerce, it's essential that you measure these indicators or KPIs, at least the first three. Only by knowing what's wrong can you take the appropriate measures to fix it.
At Holded we offer accounting and billing software that allows you to easily manage your business from a single place. And one of the features we offer is inventory management.
With Holded Inventory you can create a pipeline to track all your customers' orders, and know at all times if they have already left the warehouse or if any incident has occurred. Try Holded Inventory today and start managing your e-commerce logistics well from the beginning.