How to Use Data Analytics in Ecommerce Fulfilment

Data analytics has become an essential tool for any business looking to stay competitive and it’s no different in the ecommerce industry. 

With vast amounts of data available, companies can gain valuable insights into operations, sales and fulfilment in order to make data-driven decisions that optimise their processes. By leveraging data analytics, ecommerce businesses can streamline their order fulfilment processes, reduce errors and improve customer satisfaction. 

Implementing data analytics in ecommerce fulfilment requires a strategic approach and the right tools and technologies. 

In this article, we'll explore how to use data analytics to improve ecommerce fulfilment and boost your bottom line.

1. Collecting data for ecommerce fulfilment analytics

In order to improve ecommerce fulfilment using data analytics, you must first collect the necessary data.

This involves identifying key performance indicators (KPIs), tracking and measuring KPIs and selecting appropriate data collection tools to analyse and interpret the data.

Identifying KPIs for ecommerce fulfilment

Identify the KPIs that will be used to measure and analyse performance. With so many data points available to track, KPIs will be company-specific, but some common KPIs for ecommerce fulfilment include:

• Order processing time: the time it takes to process an order from the moment it is received to the moment it is shipped.
• Order accuracy: the percentage of orders that are fulfilled accurately.
• Inventory accuracy: the percentage of products that are always in stock when needed.
• Shipping time: the time it takes for an order to be shipped from the warehouse to the customer’s doorstep.

By identifying these KPIs, ecommerce businesses can begin to collect valuable insights that can inform strategic decisions.

Tracking and measuring KPIs

Once the KPIs have been identified, the next step is to track and measure performance in these areas. This can be done using a variety of tools and technologies, such as:

• Warehouse management systems (WMS): track inventory levels, order processing times and shipping times, providing real-time data that can be used for analysis and optimisation.
• Transportation management systems (TMS): track shipments and deliveries, providing data on shipping times, carrier performance and delivery accuracy.
• Inventory Management tools: track, control, and optimise inventory levels and operations to inform strategic decisions.
• Enterprise Resource Planning (ERP): integrate and manage core business processes, such as inventory management, order tracking, supply chain visibility, warehouse management and transportation planning for better coordination, efficiency and real-time data sharing.

By tracking and measuring ecommerce fulfilment KPIs, businesses can identify areas for improvement and make data-driven decisions to optimise their operations.

Data collection tools

It goes without saying that in order to efficiently collect all of this data, businesses need to deploy the right tools and technologies. 

Some common data collection tools for ecommerce fulfilment analytics include:

• Barcode scanners: track inventory levels and ensure accurate order fulfilment.
• RFID technology: track and identify products and shipments throughout the supply chain, providing real-time data on product location and status.

• IoT sensors: monitor warehouse and transportation conditions like temperature and humidity to maintain optimal storage and shipping of products.
• Cloud-based software solutions: allows businesses to aggregate data from multiple sales channels and shipping carriers, providing a centralised platform for data collection and analytics. 

By leveraging reporting and analytics tools, businesses can track key metrics like shipping costs, delivery times, and order accuracy, collecting data and insights across their entire fulfilment workflow.

Using a combination of the tools above, ecommerce businesses can collect accurate and comprehensive data, enabling them to identify areas for improvement in their fulfilment processes. 

2. Analysing data for improved logistics 

Once businesses have collected relevant data for their KPIs, the next step is of course the analysis. With literally hundreds of thousands of data touchpoints available, businesses can identify trends and patterns to improve their ecommerce logistics. 

How to analyse ecommerce fulfilment data

To analyse ecommerce fulfilment data, businesses can use data visualisation tools and intelligence software to make sense of complex data sets by presenting the information in a visual format. By analysing the data, businesses can identify areas for improvement and make data-driven decisions to optimise their logistics processes.

Metrics to focus on when analysing ecommerce data

When analysing ecommerce logistics data, businesses should focus on key metrics such as on-time delivery, order accuracy, inventory levels and cost per order. 

Codept’s platform pulls data into one intuitive dashboard, allowing them to quickly and easily see a snapshot of their business performance: 

Additionally, it is important to monitor Service Level Agreements (SLAs) to ensure that logistics providers are meeting their contractual obligations - they’re important because they provide clear guidelines and expectations between service providers and customers, establishing measurable targets such as response times, resolution times and performance KPIs. 

Using Codept’s solution ensures contracts always exist between etailers and logistics providers, although it’s important to note that Codept is not involved in any negotiations of SLAs.

3. Implementing Data Analytics in Ecommerce Fulfilment

Implementing data analytics in ecommerce fulfilment can bring significant benefits to businesses, such as increased efficiency, improved customer experience, and reduced costs. 

However, it's essential to understand how to use data to improve ecommerce logistics strategies and the best tips for implementing data-driven strategies for ecommerce fulfilment. 

Using data to improve ecommerce fulfilment 

One of the primary benefits of using data analytics in ecommerce fulfilment is the ability to improve strategies at the core of ecommerce businesses. 

For example, businesses can use data to identify the most popular products and ensure that they have adequate inventory levels to meet demand. They can also track shipping times and delivery rates to identify areas that need improvement, as well as identifying shipping partners that consistently provide on-time delivery (and avoiding those that don't!)

Codept Tender can help businesses make informed decisions on what logistics service provider to partner up with that best matches their assortment needs; businesses can search, find and integrate the right service providers for fulfilment and last mile delivery.

Furthermore, businesses can leverage data to optimise shipping routes and modes of transportation, reducing costs and delivery times. For example, Codept Carrier Optimisation allows fulfilment/ logistics service providers to define different rules according to the location of the end customer.

Tips for implementing data-driven strategies for ecommerce fulfilment

Implementing data-driven strategies for ecommerce fulfilment can be challenging, but there are some best practices to increase success rates:

• Define clear goals: Before collecting and analysing data, businesses should define their goals for implementing data-driven strategies. For example, a business might want to reduce shipping times or improve inventory management. Defining clear goals will help businesses focus their efforts and measure success.
• Choose the right tools: There are numerous data analytics tools available, and businesses should choose the ones that best fit their needs. The right tools should provide the necessary features for data collection, analysis and visualisation. 
• Train employees: Implementing data-driven strategies will require a shift in how employees work. They will need to learn how to collect and analyse data and use the insights gained to make informed decisions. Providing training and support will be crucial to ensure that employees are equipped to use data analytics effectively.

Codept's solution provides comprehensive data analytics for ecommerce fulfilment, from inventory management to shipping and delivery. Our API connects multiple data sources and provides etailers and 3PLs with an overview and visual presentation of all data points combined, creating one source of truth for business performance. 

From here, businesses can quickly and easily understand SLA status, warehouse performance, order execution and more, allowing them to identify what’s working well and where there is need for improvement. 

Examples of successful data-driven strategies

Giants both inside and outside of ecommerce have used data-driven business models to accelerate growth and skyrocket their market share!

Amazon

One of the most well-known data-driven companies in the world, the company uses data analytics to personalise product recommendations, optimise its supply chain management and forecast demand. 

By analysing customer data regarding behaviour and preferences, Amazon can offer a personalised experience to each user, improving customer satisfaction. In turn, this increases customer loyalty and leads to an increase in sales - Amazon's data-driven approach has helped the company become the world's largest online retailer.

MYCS

MYCS is a fast-growing, innovative furniture company. Founded in Germany, it offers customers in 5 European markets personalised furniture delivered straight to their doors. Given the cross-border last mile and fulfilment, they needed a modern, standardised and reliable technology platform to enable them to reorganise and update their logistics infrastructure.

Powered by Codept, MYCS managed to streamline data from four separate technology integrations into one intuitive platform, allowing them to easily create custom-fit shipping labels after packing AND transmit all shipping data, including the created label, to the carrier shortly before shipping. This streamlines fulfilment and enables them to connect rapidly with new logistics partners as they expand into new markets.

Read the full case study here.

Contorion

Contorion is an online hardware shop for professional tools and workshop equipment. The ecommerce retailer offers 500,000 products from over 200 brands especially for small and medium-sized businesses in the construction industry. With its headquarters in Berlin and a second location in Düsseldorf, it operates in Germany, Austria and France.

Previously limited to only two drop-shipper connections at one time, Contorion’s data exchange from the initial contact with a dropshipper, to the product assortment’s online activation and the interface’s go-live took quite some time, proving to be a real growth blocker for the business.

Through enabling a one-time supplier integration with Codept, Contorion relieved themselves of supplier-specific configurations and are able to see the full lifecycle of data associated with every order and every dropshipper, quickly and easily. In addition, the entire dropshipping processes are less error-prone, thanks to secure data exchange.

Read the full case study here.

The importance of big data in ecommerce fulfilment

Big data analytics in any business can provide valuable insights to improve operations and profitability across several touchpoints:

Mitigating Risk and Fraud

Businesses face several risks, including theft, legal liabilities, and staff safety concerns. Data analytics can help in identifying risks and taking the necessary preventative measures.

Enhancing Security

Security and fraud analytics play an essential role in preventing the misuse of physical, financial, and intellectual assets. Firms can use analytics to recognise potentially fraudulent behaviour, predict future activity, and trace perpetrators.

Streamlining Operations

Poor operations management can lead to several costly challenges, including negative impacts on customer experience and brand loyalty. 

Analytics can help in designing, regulating and streamlining operations to improve efficiency, effectiveness, and meet customer expectations across the entire buying journey:

• Fast, reliable and affordable delivery options with real-time tracking updates (next day, if not same day, delivery is preferable)
• Efficient customer support 
• Flexible delivery options
• Hassle-free returns

Personalisation & Service

Companies must be responsive to quantitative data to deal with today's digital-savvy customers. Advanced analytics is the only way to respond in real-time, leading to personalised interactions that make the customer feel valued. Big data can predict customer opinions and consider factors like location to deliver personalisation in a multichannel service environment.

Big data analytics in ecommerce fulfilment

In particular, big data in the ecommerce space can help businesses streamline specific aspects of the ecommerce fulfilment process:

• Optimise Inventory Management: By analysing sales data, businesses can determine which products are selling well, helping them to optimise inventory management by ordering more popular products and reducing stock of the slow-moving ones. This can help reduce storage costs and minimise the risk of overstocking or stockouts.
• Improve Order Processing: By analysing order data, businesses can identify trends in customer behaviour, such as preferred payment methods, delivery options, and product preferences. This information can help them optimise order processing by offering personalised recommendations and promotions, reducing cart abandonment rates and improving overall customer satisfaction.
• Streamline Fulfilment and Logistics Processes: By analysing order data and warehouse layouts, businesses can optimise processes, for example, picking and packing, by grouping frequently ordered products together and reducing the time it takes to fulfil an order. Codept can help businesses to better visualise their data stemming from different data points and software systems, all on one platform, for example, what products are often ordered and might need to be prioritised. 
• Enhance Shipping and Delivery: By analysing shipping data, businesses can identify bottlenecks in their shipping and delivery processes and optimise them for speed and efficiency, reducing shipping costs, speeding up delivery times and improving customer service levels. With Codept, carrier optimisation is a core part of our solution, meaning 3PLs or etailers can choose the carrier that should fulfil an order depending on the recipient's address or the weight of the package. Not only do customers benefit from enhanced shipping and delivery every time, they might also even see advantages in reduced costs of goods.
• Manage Returns and Exchanges: By analysing return data, businesses can identify the reasons for returns and exchanges, such as product defects or customer dissatisfaction. This information can help them improve their products and customer service and reduce the rate of returns and exchanges. Easy access to this data also makes the returns process more efficient, especially when paired with Codept’s premium returns trigger that can automate part of this process. Handling returns correctly and make it easier for customers to return something will increase customer retention in the long run.

The power of big data and data analytics

According to a study on the benefits of big data analytics, businesses harnessing data collection and analytics see better strategic decisions, improved control of operational processes and a better understanding of customers, all culminating in increases in revenues and reductions in costs.

Using Codept for data collection and analysis

Our software solution provides a comprehensive platform that supports data collection for ecommerce fulfilment. The Codept Dashboard displays inventory and delivery tracking, shows SLAs and present warehouse performance.

With this, you can see an overview of business health across various touchpoints along the logistics journey, allowing you to gain valuable insights into your fulfilment performance. 

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FAQs about Data Analytics in Logistics

Is it expensive to implement data analytics for ecommerce fulfilment?

Implementing data analytics for ecommerce fulfilment can come with a range of costs, depending on the tools and resources you choose to use. There may be expenses associated with collecting and analysing data, such as investing in software, hiring analysts, and training staff. 

However, the benefits of implementing data analytics for ecommerce fulfilment can ultimately outweigh the costs by improving operational efficiency and customer satisfaction. Our one-time integration offers a cost-effective and seamless solution which frees up in-house IT resources for businesses.

How do I know which data analytics tools to use for ecommerce fulfilment?

There are a variety of data analytics tools available for ecommerce fulfilment, and choosing the right tools can depend on the specific needs and goals of your business. 

It's important to identify the key performance indicators (KPIs) that are most relevant to your business and determine which tools can help you collect and analyse data to track these KPIs. It may be helpful to consult with experts or conduct research to identify which tools are best suited for your business.

Can data analytics improve shipping times and reduce costs? 

Yes, data analytics can be a powerful tool for improving shipping times and reducing costs in ecommerce fulfilment. By analysing data related to order processing and delivery times, businesses can identify areas for improvement and optimise their operations to further increase efficiency. 

Additionally, data analytics can help businesses better forecast demand and manage inventory, which can help to reduce the cost of holding excess inventory or running out of stock.

What are the risks of not using data analytics for ecommerce fulfilment?

Without data analytics, ecommerce businesses may struggle to identify inefficiencies in their processes, leading to decreased efficiency and customer satisfaction. Businesses may also miss out on opportunities to optimise their inventory management and forecasting, resulting in elevated costs and lower profitability. 

Ultimately, the risk of not using data analytics for ecommerce fulfilment is falling behind competitors who are using data-driven strategies to improve their operations and customer satisfaction.