Loqate has launched a report highlighting the potential for failed deliveries to derail success for retailers. The company’s new report, “Fixing Failed Deliveries 2021: Stamping Out Faulty Fulfilment,” is set against the backdrop of booming eCommerce. Loqate is a trusted location intelligence service. It helps business reach customers across the world, with a single global API for address verification.
The pandemic-driven shift from in-person to online commerce presents both opportunities and challenges for retailers. Online orders are reaching record-setting volumes with 69% of retailers reporting an increase in average online order values. At the same time, shoppers have become more comfortable purchasing from global brands. This is confirmed by rising numbers of international orders reported by 54% of retailers. Higher volumes and global considerations, poor address data that leads to faulty fulfilment poses a major threat to success. This is represented in the form of lost sales and reputational damage.
The Loqate study underscores the expansive shift in online commerce. The critical role address verification plays in delivering a seamless customer experience, achieving brand loyalty and driving revenue in 2021. Key findings include:
Failed deliveries a growing problem
Failed deliveries are a growing problem. 99% of eCommerce organisations own up to failed deliveries across some portion of their orders. While 24% admit more than one in ten orders aren’t delivered on the first attempt. The costs of failed deliveries are far-reaching. 8% of domestic first-time deliveries fail, costing retailers an average of $17.20 per order or $197,730 per year.
Businesses are aware of the importance of data quality. 47% rate the accuracy of physical address data as “critical” for first-time delivery. Yet 74% of businesses point to bad address data as the cause of up to a quarter of their deliveries failing. The same proportion of businesses agree that customers often don’t realise a mistyped address can cause a failed delivery. In those instances, address verification can provide a vital fail-safe.
Addresses aren’t always properly verified. One-third of study respondents either don’t verify address data or leave it up to the courier. When addresses are inaccurate or incomplete, 41% of deliveries are delayed, and 39% simply fail. Some businesses utilise internal address verification systems, which may be a cheaper option. However, they don’t provide the accuracy and reliability of third-party address verification software.
The mobile experience
The mobile experience is more important than ever. 46% of consumers are doing more shopping via mobile phones than they did 12 months ago. However, 38% complain that ordering from a mobile device is more difficult, particularly when entering information. Of the consumers who used a smartphone to shop online, 27% abandoned a purchase during the past three months. This was because they struggled to enter their address or got fed up with the checkout process.
Failed deliveries have a significant impact on customer retention, loyalty and brand perception. 41% of consumers place the blame for late deliveries on retailers. The effect of negative reviews and comments on brand reputation cannot be overstated. One in ten consumers will post a negative review on social media. This becomes problematic for brands as nearly all consumers (93%) read reviews before making a purchase. Just three negative reviews were reported to drive away nearly six in 10 potential customers.
Adding costs of failed deliveries
According to Matthew Furneaux, Director of Location Intelligence at Loqate. “Whether it’s refunding delivery charges to the customer. Paying for redelivery or offering customer discounts as an apology, the costs of failed deliveries can quickly add up.
“With online orders reaching higher volumes than ever, international purchases and deliveries accounting for a substantial proportion of customer sales. Access to accurate data and proven address verification technology is crucial to business success.”
The Fixing Failed Deliveries 2021 research was commissioned by Loqate and conducted in December 2020 by Censuswide. The study captures the perspective of 304 retail executives and 3,040 consumers in the US, UK and Germany.
Enterprise Times: What the means for business?
The COVID-19 pandemic has pushed many more consumers around the globe to buy products and services online. It has simply accelerated a trend that was already well underway. People are relying more on eCommerce and expect fast and seamless purchase journeys – from checkout to delivery,
Delivery has always been the Achilles heel of eCommerce. A Capgemini Research Institute report from 2020 confirmed industry common knowledge. Retailers have traditionally failed to recoup all the costs associated with delivery. At the same time, they have to meet consumer expectations for better and faster last-mile delivery services while mitigating the associated profitability risks. The proliferation of free shipping offers, particularly during sales season will be difficult to maintain.
Although this is an interesting report, it is a bit thin on possible solutions for retailers. Yes, address verification software is one way to overcome issues of inaccurate data and obtain verified address data across digital touchpoints. This could be from online forms and checkouts to CRM and third-party logistics databases. Retailers will also have to explore ways to reduce delivery costs, possibly through automation. Otherwise, failed deliveries will continue to hit retail’s already thin margins.