No matter what industry your business is operating in, metrics are crucial because they help you to track your progress as well as identify opportunities for growth. In this article, we will be introducing the most important ones which ecommerce store owners should keep an eye on. As they are related to inventory management, order fulfillment, and logistics and supply chain management, knowing them would help dropshippers make better strategic decisions.

1. Order accuracy rate

This refers to the proportion of your orders that are fulfilled and delivered correctly, including the right addresses and the items within the orders. You would want to maintain this figure as high as possible to keep your customers happy and build a strong brand reputation.

One helpful tip is to work with a dropshipping agent who uses automation software to connect with your stores. As you do not have to manually send them your customers’ orders, there would be fewer errors in the fulfillment process.

2. On-time shipment rate

This measures the percentage of parcels that arrive at their destinations (i.e. your customers’ doorsteps) within the expected delivery time. Similar to the above, a higher ratio would help you to boost customer satisfaction and increase customer lifetime value.

If you are dropshipping internationally, you might want to consider collaborating with multiple shipping companies as different couriers have their own Unique Selling Points (USPs). More specifically, some companies have shorter delivery times to certain regions due to their extensive physical presence (e.g. offices and storage centres). Working with a pool of shipping partners would give you greater flexibility over which service providers you can entrust your parcels depending on the nature of the shipments. Alternatively, you could put this matter into the hand of a dropshipping agent while focusing on front-end business development.

3. Intact parcel rate

This number shows how many percent of packages is delivered without being damaged during transit. It is probably among the most important metrics because customers care a great deal about whether the items they receive are in good working condition. Otherwise, all the wait they put up with is meaningless. Furthermore, no one likes to go through the hassle of complaining to sellers and asking for refunds, returns, and/or exchanges.

One area that you should particularly pay attention to is the shipment of fragile and delicate items, such as glassware or electronics, because they are much more likely to break when being transported. Some good practices include carefully inspecting the delicate parts of the products as well as using suitable boxes and dunnage.

4. Average shipping and delivery days

While the average shipping days refers to the time it takes your shipping partners to deliver the parcels, average delivery days indicates the time it takes from when your buyers make their purcahses until they have the parcels on hand. These numbers help you assess whether your shipping companies and suppliers are meeting your expectations.

5. Number of orders fulfilled within a timeframe

The timeframe for this depends on the sales of your ecommerce stores. If you are scaling and have a significantly large number of orders, you would want to monitor this on a daily basis. On the other hand, if you have just entered the dropshipping industry, you might consider keeping track of this figure weekly or monthly.

Although this seems similar to the processing time, it gives you additional insights. For instance, you would learn about the efficiency and overall performance of your suppliers and have a gauge on whether they are a good partner who can support you in the long run.

Besides metrics above which are more related to the suppliers’ side, we would also be listing some others that help you better manage your business operations.

6. Inventory turnover ratio

This figure describes the rate at which you sell and replace your inventory within a specific period. Knowing this allows you to compare your performance with other competitors in the industry, thus realising your challenges and developing suitable strategies to overcome them. Moreover, keeping records of inventory turnover ratios for different types of products enables you to understand which kinds of goods are particularly appealing to consumers. A high ratio might suggest that you expand the product line and/or offer greater variations (e.g. colors and patterns). However, if the rate is low, you would be timely alerted and take appropriate measures to prevent the stock from sitting in the warehouse for too long. This is important because if the issue persists, the goods would eventually become dead stock, resulting in various costs for your business.

7. Sales lost due to stock-out

This is the total amount of money that you lose because of out-of-stock supplies. This usually results from poor inventory management. Therefore, partnering with a trustworthy dropshipping agent who has experience in managing logistics matters as well as industry knowledge would help you reduce your losses.

8. Average overheads and fulfillment cost per order

This facilitates the process of financial planning and management for your dropshipping business as it helps you understand where and how a large portion of your money is spent. The costs include fulfillment costs and other service charges you pay to your suppliers or agent, such as storage, quality inspection, and customisation fees.

With over 30 years of logistics experience, Xianchao Logistics began to branch out to serve the dropshipping industry in 2015. With our experience in logistics fulfilment and close relationships with suppliers, our company has risen to help different dropshippers grow their businesses over these years.

We believe that our company’s success and growth will only come with helping our clients grow. For instance, as a reliable dropshipping agent, we believe it is our responsibility to safeguard your business and your interests. Therefore, under no circumstances do we ever disclose your winning products to others.

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