Last updated - December 11, 2023
Sellers who sell goods under the FBS (Fulfillment by Seller) model have 3 tasks under their control: to accept an order for processing, to complete and pack it, and to deliver it. Recall that under FBS, the logistics service of the marketplace is responsible for the delivery of orders to buyers. For merchants who have chosen the DBS (Delivery by Seller) scheme, the area of responsibility expands. In addition to picking, they deliver shipments to buyers. Failure to perform one of these operations affects the seller’s rating (store rating).
When selling goods under the FBS model, you must comply with the PSD KPI. Under the DBS model, complying with the PSD and PDD is very important.
PSD, PDD, and Delay
PSD is the promised shipment date of the order to the sorting center, pickup point, or delivery service. After confirming the order, the seller sees this date in his personal cabinet. The marketplace sets or calculates the PSD, considering the data on the merchant’s warehouse operation.
The second indicator is PDD – the promised delivery date of the order to the buyer. Marketplaces calculate PDD when they have the following information:
- The date the order was shipped and received at the sorting center
- Timing on sorting
- Timings for the last mile
The marketplace knows the FBS sorting and delivery speed of the goods because it sends the order to the customer in-house. In the DBS scheme, this information is read from the data the merchant fills in about the warehouse and delivery service in his personal account.
The third indicator correlates with both PSD and PDD. It is a delay. A merchant may delay the shipment of an order, fail to meet the agreed time slot or violate the delivery deadline. Unlike the previous two metrics, this one has a negative context and indicates a problem and its nature in the warehouse or delivery service.
The seller`s task is determining which KPIs will not violate PDD and PSD and using the new KPI system to rebuild his warehouse.
Data Analytics for Better Fulfillment
Data analytics provides valuable insights into order processing times, transit durations, and delivery performance. Real-time monitoring and predictive analytics enable proactive management of delivery schedules, minimizing delays and enhancing customer satisfaction.
Data analytics is crucial in monitoring order accuracy and optimizing quality control processes. By analyzing historical data and customer feedback, merchants can identify patterns or trends related to incorrect or damaged orders. This information can be used to implement targeted improvements in packaging, labeling, and handling procedures, ensuring that orders are fulfilled accurately and with high-quality standards.
Data analytics also offers valuable insights into inventory levels, demand patterns, and SKU performance. By leveraging these insights, merchants can optimize their inventory management processes, ensuring that popular products are adequately stocked and readily available. This proactive approach helps minimize stockouts, improve product availability, and reduce order cancellations, ultimately increasing customer satisfaction.
Fulfillment KPIs for Selling Goods via FBS and DBS
In order not to violate the order shipment date, the warehouse must:
- Proper manage the inventory, and in case of zero balance for a particular SKU, notify the merchant
- Confirm and therefore accept the order
- Assemble and pack the order
- Transfer the order for delivery and send the marketplace its new status – shipped
One of the frequent reasons why PSD is not fulfilled is that the employees do not update the merchandise balances in time. The product is listed as “in stock”. Consequently, it is open for sale but not present in the warehouse. Nevertheless, it is possible to prevent the order from cancelation. If the merchant manages to transfer the goods to the warehouse for picking up in 1-1.5 hours, everything will be OK.
On average, the entire cycle should take 12 to 24 hours from the status “accepted for work” to “transferred for delivery”.
Another aspect affecting PSD compliance is assembling the order according to the marketplace’s requirements and avoiding over-sorting. This is not a qualitative or quantitative metric. It is a prerequisite. If the marketplace staff cannot read the barcode at the pickup point, the shipment will not be passed on for delivery and will be returned to the merchant’s warehouse. The result is the same – the merchant has violated the shipping deadline.
Now, knowing that over-sorting and miss-packaging are serious errors and that it should take no more than 24 hours for the warehouse to process an order, the merchant can approve the warehouse conditions for all orders. To further enhance efficiency and accuracy, partnering with a reliable fulfillment and warehousing company can significantly alleviate these concerns.
It is possible to customize the work of the warehouse infrastructure for these conditions in a 24-hour warehouse with a working schedule of 7 days a week. Setting up API integration between the warehouse system and the merchant’s personal account on the marketplace is desirable. In this way, the merchant automates the transfer of balances and statuses.
Let us repeat that in the FBS model, you have no influence on delivery KPIs because logistics is managed by the marketplace. That’s why some sellers switch from FBS to the DBS model if there is an economic benefit. This way, they can approve their delivery KPIs to comply with the PDD.
Conclusion
For you, the KPI system and set values are not an axiom that cannot be refuted but rather a compass that sets the direction of growth. If you manage to shorten the interval, thereby making shipment and delivery faster – great. But the opposite trend (multiples of the delay) will lead you to where we started – PSD and PDD violations, which means low rankings, falling sales, or blocking.
We assume you’re asking: where to start? We recommend analyzing your own or third-party fulfillment, FBS, and DBS logistics. In the analysis, use data on the dynamics of growth and decline of your ranking, as well as those KPI values you learned about in this article. If you find deviations, for example, in the contractor’s warehouse, try to revise the terms of cooperation with him or change service providers, but using new knowledge.
