The e-commerce sector is growing rapidly, and webshops are popping up like mushrooms. In every sector, you can now find numerous webshops. The online competition is therefore enormous. On top of that, customers are becoming more and more demanding. They want to receive their package as quickly as possible. It takes a lot of effort and perseverance to build a successful business in such a competitive market. Many webshops are engaged in a real price war. But why? A price war results in smaller margins, causing many webshops to struggle to grow. Fortunately, there are many other ways to help your webshop grow. One of them is the “First Time Right” principle.
What is First Time Right?
First Time Right reflects how well you deliver products or services that immediately meet customer expectations. In other words, the customer is satisfied, and you don’t need to spend more time and energy handling complaints or feedback. By increasing the First Time Right percentage, you can improve the quality of your entire webshop.
Why is First Time Right so important?
A satisfied customer is more likely to reorder from your webshop and/or write a positive review. Reviews have a significant impact on the consumer’s decision-making process. When a webshop grows and needs to process more orders, we often see webshops trying to speed up their operations and processes artificially. Why? To meet the promised delivery deadlines. This leads to increased workload and a higher error rate. Speeding up or making your flow more efficient is, of course, important, but start with the basics! There’s no point in speeding up your flow if it results in a higher error rate.
Oh, a little mistake won’t hurt…
Nothing could be further from the truth! Sending the wrong product not only results in dissatisfied customers or negative reviews, but it also costs you a lot of money. Mistakes need to be fixed, and that takes time and money. Correcting an incorrect pick disrupts the entire operation of your business.
How much does a wrong pick cost?
You might think that correcting a wrong pick is a piece of cake. But if you add everything up, you’ll be shocked at how much time, energy, and money it takes. Here’s an outline of the process for a wrong pick:
A customer places an order for a black sports watch. The order is processed in the warehouse and sent to the customer. However, the customer receives a white sports watch.
The dissatisfied customer contacts customer service. During this contact, customer service needs to determine what went wrong and provide a suitable solution. This typically takes about 10 minutes. After the customer contact, you still need to process the complaint and create a new shipment in the system. This will take about 5 minutes. That adds up to a total of 15 minutes at €40 per hour, which costs you €10.
The new sales order needs to be processed again. We estimate about €5 for shipping costs, €2.5 for handling fees, and €1.5 for packaging materials.
The wrong product needs to be returned. Creating a return label takes 3 minutes, which costs €2. The return label itself costs about €5.
When the return is back in the warehouse, it must be processed by a warehouse worker. This typically takes about 8 minutes, which corresponds to €5.33.
Sending one wrong product costs you €31.33. On top of that, there are the negative reviews. In short, a wrong pick costs you much more than you initially thought.
Learn from your mistakes and track your First Time Right percentage
It’s crucial to track your First Time Right percentage. The First Time Right percentage is the percentage of your orders that are correct the first time. An FTR percentage of 100% would mean no mistakes were made. However, most warehouses still rely on human labor, and humans make mistakes. So, a 100% FTR percentage is a utopia. Still, we must strive for the highest percentage possible. At Webship, for example, we aim for an FTR percentage of 99.5%.
By keeping track of the mistakes made, you can identify patterns and implement the necessary improvements. Involve the entire company, as it’s important that all departments report mistakes. How can you discover patterns? Let’s say every time you need to ship product A, the customer receives product B. This might mean that products A and B have been swapped in location.
There’s more to discovering and solving wrong picks. For example, you might notice that a product frequently gets damaged during transport or that a product is often returned due to being too large. In these cases, you can improve the packaging and product descriptions.
First quality, then quantity.
The impact of the “First Time Right” principle on the revenue of your webshop should not be underestimated. If the FTR percentage is too low, you’ll waste a lot of time and money fixing mistakes. That’s why it’s important to first execute the process well. Once the processes are running smoothly, you can focus on working faster and processing more orders.
Do you want to process many orders properly right away? You can still choose a fulfillment center like Webship. Thanks to our years of experience and our own WMS system, we process your orders with an extremely high FTR percentage. Use our online cost calculator to find out how we can help.
