The true cost implications of failed deliveries

The true cost implications of failed deliveries

UK e-commerce retailers typically lose more money because of lost or failed deliveries than their US or German counterparts, according to a new report from PCA Predict.

PCA Predict polled over 300 retailers in the UK, US and Germany, and found that British e-commerce retailers lost out on £183,000 a year through lost or failed deliveries, compared with £155,816.06 ($216,171) in the US and £107,538.30 (€121,804) in Germany.

The report, which was published this morning (1 February), found that over the last year alone, the average cost of per failed delivery to a retailer was £12.89 ($17.78). “UK businesses in particular suffer from this,” said PCA Predict, “with 5.6% of orders not arriving at their destination, and an average cost of failed delivery to the retailer of £14.35 ($19.23).”

Meanwhile, UK shoppers also suffer disproportionately from late or failed deliveries, with 73% affected, compared to just 66% of shoppers from the US. German customers are comparatively better off with 48% of customers suffering a negative delivery experience.  78% of total consumers expect the retailer to resolve a delivery issue, whether it’s the retailer or the courier that’s at fault.

The report found that following a failed delivery, 54% of retailers will refund the delivery charges to the customer, 54% will pay additional costs for redelivery, and over a third (38%) will offer the customer a discount as an apology.

Chris Boaz, ‎Head of Marketing at PCA Predict, said: “If you consider that one in twenty of all online orders don’t make it to the intended recipient first time, these costs quickly build up. Failed deliveries not only carry cost implications, they can also cause significant damage to the retailer’s brand reputation, resulting in loss of repeat custom and failure to attract new customers.”

“To mitigate against the issues caused by incorrect address data, retailers need to implement verification solutions that allow customers to provide as accurate data as possible. It’s essential that online retailers facilitate a streamlined user experience that ensures customers can go through the checkout process with ease. Removing this friction from the checkout process will play a huge part in fixing failed deliveries, to the joy of both online retailers and customers.

Cost of failed deliveries per region:

Average Total US UK Germany
Number of orders per year 227,834 278,109 228,524 176,345
% of failed deliveries 5% 4.7% 5.6% 4.6%
Cost per failed order £12.81 ($17.78 / €14.51) £11.95 ($16.58) £14.33 £13.13 (€14.87)
Total failed delivery costs / year £143,530.74 ($199,127 / €162471.70) £155,816.06($216,171) £183,132 £107,538.30 (€121,804)

 

The full report can be downloaded here.

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