A Simple Guide to Improving Order Accuracy

Order accuracy rate directly ties to customer satisfaction and retention. Here’s how to get it right.

To err is human—and because order fulfillment includes a handful of manual processes, mistakes will inevitably crop up and cause dips in your order accuracy.

But with the right systems and tools, you can raise your order accuracy to keep pace with customer demand.

Not sure where to start? Look no further—we’ve created a roadmap to help you understand and improve order accuracy (all while delighting your customers).

What is order accuracy?

Order accuracy is the percentage of all orders that are correctly fulfilled and reach their destination without any problems.

A high order accuracy rate means most of your customers are satisfied, received exactly what they ordered, and their products arrived in good condition (read: not damaged).

In contrast, a low order accuracy rate shows there are a lot of human errors in your order fulfillment process (meaning customers aren’t getting the right items).

How to calculate order accuracy

To calculate order accuracy for your retail business, use the following formula:

order accuracy rate = [total orders fulfilled accurately ÷ total orders fulfilled] * 100

First, you’ll need to count the total number of orders your team got right.

📝 Note: Most customers won’t reach out if they receive more items than ordered. But they’ll definitely reach out if something they paid for doesn’t come. So, if you’re only relying on customer tickets to calculate the number of orders fulfilled accurately, you’re likely missing some data.

That’s why it’s a good idea to regularly compare your actual inventory levels to your records. You can then use any discrepancies between the data sets to gauge how many errors popped up during fulfillment (or identify other inventory issues, like shrinkage).

Once you know the number of orders your team fulfilled accurately, divide it by the total orders they fulfilled. Then, multiply that sum by 100.

For instance, let’s say your DTC brand fulfilled 1,000 total orders. Of those 1,000 orders, 20 had some sort of mistake (like a mispick, for example). But 980 orders were fulfilled accurately. In this situation, your order accuracy rate would be 98%.

[980 ÷ 1,000] * 100 = 98%

What’s considered a good order accuracy rate?

Because the order fulfillment process has so many moving parts (including a lot of human intervention), reaching 100% order accuracy is tough. In fact, it’s almost impossible when all of us inevitably make mistakes!

But even if flawless fulfillment isn’t always realistic, retailers can aim to get as close as possible to 100%. And generally speaking, an order accuracy rate between 96-98% is considered a very strong score.

If your brand stays within that healthy range, improving your accuracy rate (even by 1%) can give you a major advantage over competitors.

🧠 Keep in mind: If your brand scores 95% (or below), you’ll find yourself at a competitive disadvantage. In this case, you’ll need to boost your order accuracy rate, so you don’t lose customers (and lose revenue as a result).

Why is order accuracy important?

Order accuracy is an essential metric to determine the health and wealth of your ecommerce business. That’s because it’s directly tied to customer satisfaction—and, ultimately, customer retention.

Not to mention it’s also the gateway to customer loyalty, accurate forecasting, and more.

Accurate orders help build customer loyalty

Simply put, happy customers are loyal customers, and loyal customers are good for your bottom line. That’s because repeat customers generate 44% of total revenue and 46% of total orders (even though they only make up about 20% of your customer base, on average).

And if that wasn’t enough, acquiring a new customer costs 5x more than retaining an existing one—further proof that it literally pays to keep customers happy.

One of the best ways to improve customer satisfaction (and likewise boost retention)? Prioritizing order accuracy.

Customers who always get what they ordered will look at your brand in a positive light (since you keep delivering positive experiences). This goes a long way in building brand loyalty and making sure these customers don’t take their cash to a competitor.

That’s because it takes 12 positive customer experiences on average to make up for one negative experience.

And after just one bad experience, 80% of consumers would rather switch to a competitor than give your brand another shot. And whether it’s their first time buying from you or their 50th, these numbers remain roughly the same.

That’s why focusing on order accuracy is so important. This ensures customers get the correct products and quantities to boost loyalty (and revenue).

Accurate orders lead to accurate inventory forecasting

Maybe it goes without saying, but accurate inventory forecasts start with accurate inventory counts. So, if you’re working with incorrect inventory data—because you’ve mispicked items or shipped the wrong orders—you can kiss precise forecasting goodbye.

A mispick is a human error that happens when a worker fails to pack products as listed on the order slip (or as guided by warehouse management software).

Sometimes employees pick the wrong item along with the right one. Other times they pick the wrong item instead of the correct item. It’s also a mispick if an employee grabs the wrong quantity of products.

Similarly, a mis-shipment happens when you ship the wrong item to a customer. Although mispicks often cause mis-shipments, they can also happen because you shipped to the wrong address.

Unfortunately, both mispicks and mis-shipments can wreck your inventory accuracy. Think about it: When a customer places an order, all the items they bought are removed from your inventory counts.

But if an employee picks and ships the wrong item, your inventory records won’t reflect that an item is missing. Why? Because it’s not what the customer actually bought (and therefore, not what they were supposed to get).

As a result, when you create new forecasts, you’ll be working with incorrect inventory data. And the opposite is true as well. Items in stock show up as unavailable (since the customer purchased those items but never received them).

In other words, order fulfillment errors mess up your inventory counts…big time. That’s why order accuracy is the way to maintain precise inventory levels and inventory reporting.

More than that, a high order accuracy rate means you’re basing your forecasts on reliable inventory data. Meaning, your forecasts reflect what’s actually going on with your products and represent real customer demand.

And those benefits continue downstream. Accurate inventory forecasting helps you avoid stockouts (which frustrate customers since you don’t have the products they want). And it helps avoid overstocks (which cost you more money in ).

Accurate orders save your brand time and money

When you send customers an incorrect order, it takes a lot of extra time and money to right your wrong by returning or exchanging items.

In fact, mispicks can easily cost companies hundreds of thousands of dollars every year. Mispicks cost retailers an average of $100 per occurrence in 2020 alone. Now, consider brands that have mispicks happening daily (or hourly). See how quickly these costs can add up?

The tricky thing is that mispicks have a lot of hidden costs you might not anticipate too. Such as:

• Warehouse and equipment costs: The warehouse space and machinery needed to manage returned orders (think: paying for extra square footage, barcode scanners, and so on).
• Transportation costs: A free return for the customer is never free for your brand. It actually costs a lot to move goods back to your warehouse or another area for disposal. Essentially, you’re paying to ship the same order 3 times (to, from, and back again to the customer). And while brands like Amazon and Glossier let customers keep the mispicked order to save on shipping costs, this has other consequences since they still don’t know what’s missing from their inventory. (Plus, they’re closer to a stockout than their records show.)
• Labor costs: You have to pay your warehouse team to manage returns and restock mispicked items, but you also have to pay your customer support team to handle inquiries regarding refunds, returns, and exchanges.
• Environmental costs: McKinsey estimates 10% of apparel returns end up in a landfill. Likewise, perishable food items and beauty products also create tons of waste since these SKUs can’t be resold even if the customer returns them unopened.

To make matters worse, mispicked items mean you’ll have a reduced inventory since these products can only be sold once they’re officially back in stock. Meaning, the return has been entered back into your inventory management system and audited to confirm it still meets your company’s standards (AKA, it’s in good enough condition to be resold).

Then there’s the fact the original shipping—which your company already paid for—is money you can’t get back. So, you lose money on the outbound shipment, and you likely lose money on the inbound return as well.

You’ll also need to shell out more to appease unhappy customers. For instance, you might offer them a discount or incentive so they’ll shop with you again.

Needless to say, when you get orders right the first time, you can save yourself these headaches and hassles. Plus, by improving your order accuracy rate, you can recoup this revenue to reinvest in growing your business or developing new product lines.

4 ways to improve order accuracy

Have a low order accuracy rate or simply want to outshine the competition? You can optimize your order fulfillment process to reduce errors and set yourself up for future growth.

So, here are the best ways to improve order accuracy for your DTC brand:

1. Set a goal for your order accuracy rate

As you know, goal setting is necessary to run a successful product-based brand. In order fulfillment, you set goals to see where you’re hitting your order accuracy targets and where there’s room to improve your metrics.

With these goals in place, retailers can know whether their business is on the right track or totally off course.

But before you run off and set targets, you need to figure out your current order accuracy rate. This way, you can set a realistic goals and timeframe based on the existing benchmark (rather than relying on guesswork and gut feelings to decide on your goals).

Start by calculating your current order accuracy rate using the above formula. From there, create goals you can realistically achieve in a designated timeframe (while realistic, your goal should also be a slight stretch). For example, if your brand’s order accuracy rate hovers around 90%, you might aim to make it 95% within the next 12 months.

Once set, clearly communicate this goal with your whole team. You’ll also want to advise stakeholders on how they can help make it happen (like taking their time and double-checking their work).

Better yet, incentivize employees by rewarding them at specific milestones on the way to your larger goal. The best part? These rewards don’t have to be big or pricey to really make an impact on your team.

A well-structured incentive program can increase employee performance by as much as 44%—meaning you might reach your goals faster than you imagined.

2. Improve inventory management

Of all the possible mistakes in order fulfillment, mispicks are the most common. And more often than not, mispicks stem from a disorganized warehouse or poor inventory management (that is, you don’t have the right inventory to fulfill orders).

More specifically, mispicks tend to be the result of:

• Picking the incorrect item from the correct location: A picker goes to the right bin, but the item inside is wrong (due to an error during the replenishment process).
• Substituting incorrect items: If you have out-of-stock products, pickers might not know what to do and replace an item ordered with a “similar enough” item. (Amazon, for instance, often substitutes similar grocery items when they’re out of stock. Yet, these substitutions create a ripple effect that can mess with inventory records.)
• Adding incorrect items: If you don’t have enough inventory to fulfill a bulk order, a picker might add the wrong items to the order to give the impression that it’s complete.

In other words, many mispicks happen when the right inventory simply isn’t available. Connecting the dots here, you can see inventory management’s direct impact on your picking accuracy (and overall order accuracy).

So, by improving your inventory management process, you can simultaneously raise your order accuracy rate.

And investing in inventory management software is the easiest way to enhance your inventory management strategy. The leading software tracks all your inventory around the clock, so you always know what SKUs you have on hand (and which ones you need to replenish).

🔥Tip: Cogsy helps Shopify brands like yours maintain better inventory visibility and stock control across their warehouse locations. With Cogsy, you can avoid costly stockouts and always have inventory to fulfill orders accurately (and on time). See for yourself—try it free for 14 days!

That said, your operations software can’t eliminate all human errors during order fulfillment. But it radically reduces these issues and increases the chance your team will find the inventory your customers ordered (since that inventory will actually be in stock).

🧠 Keep in mind: Inventory audits are also crucial to good inventory management. Audits compare your actual inventory levels to your current financial records so you can check the accuracy of your accounting. (This allows you to identify and get ahead of inventory shrinkage before it impacts order accuracy.)

Sometimes, you can do inventory audits in-house with a simple count of your existing stock. But when counting thousands of SKUs over multiple warehouses, you’ll be better off leaning on a 3rd-party auditor.

Either way, the results are the same. The more often you perform audits, the more accurate your inventory records and the more likely you are to deliver the right SKUs to your customers.

3. Work with quality fulfillment centers

Fulfillment centers are the backbone of processing customer orders. After all, this part of your supply chain handles the nitty-gritty of getting your products to the end consumer.

In short, fulfillment centers are responsible for the entire order fulfillment process—order picking, packing, and shipping. So, you’ll want to work with a trustworthy fulfillment center to ensure the job gets done right.

But outsourcing fulfillment doesn’t mean you need to be completely hands-off (read: out of control). By nurturing close fulfillment partner relations, you can ensure they meet your expectations for order accuracy (so you, by extension, can meet customer expectations).

That’s because a good working relationship makes sharing feedback with your fulfillment partner easier. In turn, they’ll be more willing to use this feedback to adjust their processes to better suit your needs (and vice-versa).

Currently looking for a fulfillment provider? Here’s a short list of what to look for:

• Industry experience: More years of experience typically indicates a strong knowledge of fulfillment (meaning, you can count on them for accuracy and consistency).
• Scalability: You want a fulfillment center that can scale with you to meet increased demand—from thousands of orders shipped to tens of thousands of orders and so on.
• Tools and technology: The most effective fulfillment centers use warehouse management systems (WMS) to optimize a range of backend fulfillment logistics.

The great thing about WMSs is they offer insights into real-time inventory levels, staff productivity, and fulfillment workflows at your warehousing locations. And many systems will even run routine audits on your brand’s behalf.

With this amount of visibility, you can quickly identify what areas of the order fulfillment process need improvement (and make changes as required). Plus, a WMS can automate parts of the picking and packing process to increase speed—all while adding quality checks at each stage of fulfillment to ensure accuracy.

Not to mention, fulfillment center technology greatly reduces the manual work needed to fulfill and ship orders. And, as you’ve likely guessed, less manual work means fewer errors. And fewer errors means increased order accuracy, happier customers, and greater customer retention overall.

4. Optimize warehouse organization

Like it or not, the hard truth is that a messy warehouse is a recipe for picking and packing errors (and poor inventory management). If your inventory isn’t sorted and stored logically, your fulfillment team doesn’t stand a chance of improving order accuracy.

Make sure your products are easy for the team to find, especially if you have products with multiple variants (like different sizes or color options).

Warehouse slotting is one of the top strategies for cleaning up your picking and packing processes. The slotting method stores your inventory wherever (and however) it’ll make the most sense for the picker—which could mean SKUs are organized by type, size, or weight.

Well-run warehouse slotting can really move the needle on order accuracy by eliminating confusion for pickers. And with less confusion, your pickers can work even faster since they won’t struggle to find what they need (or worse, give up and substitute the wrong items).

Another way to enhance warehouse organization is to standardize bin and pallet sizes. When you place products into standard bins (on standard pallets), it’s a heck of a lot easier to sort, count, and manage. The result? More accurate inventory tracking and reporting (plus improved order accuracy down the line).

When organizing your bins and pallets, you can also implement more efficient methods for picking—like zone picking, for example. Zone picking is where retailers organize SKUs into different areas based on attributes like price or package type.

One employee picks items for multiple orders within their designated work zone. And when they’re finished, they pass those orders to another employee who retrieves items from their assigned zone.

Not only does zone picking reduce employee travel time and congestion, but it also cuts down errors since employees are responsible for just one zone versus a whole warehouse.

Improving order accuracy with Cogsy

Order accuracy is somewhat of an art and a science. That’s why having the right tools in place makes all the difference.

You can use a formula to measure your order accuracy rate—and then implement modern software to improve that rate as much as possible.

But the order fulfillment process still involves a lot of human intervention (mainly during the picking and packing phase). And it leaves room for mistakes to sneak in and negatively impact your accuracy rate.

Luckily, implementing an ops optimization tool like Cogsy is the first step to wildly improving your order accuracy. That’s because Cogsy’s actionable dashboard offers Shopify brands like yours a single source of truth for all its inventory data, including your:

• Real-time stock levels
• Historical sales data 24/7
• Forecasted demand

Cogsy then uses this information to remove guesswork and self-doubt from how you manage inventory.

How so?

Whenever you’re running low on a SKU, Cogsy will automatically send you a replenish alert, letting you know that it’s the ideal time to place your next purchase order. You’ll even get clear, data-backed restock recommendations, so you can place accurate purchase orders in minutes.

But say you’re overstocked at one warehouse and understocked at another. Rather than purchasing more inventory (which ties up more cash), Cogsy’s multi-location support feature will show you how to redistribute your inventory.

This way, you can easily maintain optimal inventory levels at every location, accurately fulfill customer orders, and reach your revenue goals.

Case in point: After DTC brand Caraway teamed up with Cogsy, they generated 40% more revenue by implementing backorders, leveling up their inventory management game, and increasing order accuracy as a result.

Want to improve your order accuracy with a reliable teammate by your side? Try Cogsy free for 14 days!