The £183,000 price tag of failed deliveries

The well documented surge in online shopping has resulted in an unprecedented demand for deliveries over the past couple of years. Retailers and transport operators alike are now faced with an intense pressure to satisfy customer expectations of faster, more convenient and ever-more personalised delivery options. For retailers who are struggling to keep up with the demand there is a hefty price to pay, with PCA Predict research revealing that UK small to medium ecommerce retailers are losing a whopping £183,000 a year in costs relating to failed or lost deliveries.

These findings are sourced from a poll that included more than 300 retailers in the UK, US and Germany, and more than 2000 consumers. The report found that from a failed delivery, 54% of retailers will refund 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. In total it was revealed that the average cost to UK retailers for one failed delivery was £14.35, and when 5.6% of orders fail to arrive, it quickly adds up, eating into profit margins.

Not only does this have an impact on costs and profit, but failed deliveries can also affect customer loyalty and the cost doesn’t take into account the time spent processing refunds, arranging redeliveries or the cost of damage to the retailer’s reputation. After all, 78% of shoppers expect the retailer to sort any delivery issue, regardless of whether it’s the retailer or the courier that’s at fault, leaving no margin for error or lack of visibility. Retailers must take responsibility of their supply chain and delivery process to ensure they can satisfy their consumer’s delivery needs.

The solution

An all-encompassing and frictionless process is crucial if retailers want to meet consumer needs, reduce costs and stay competitive. Retailers must embrace intelligent technology such as telematics and advanced routing systems, to ensure delivery fleets operate smoothly and with the upmost efficiency and offer consumers choice and convenience to minimise if not eradicate, the risk of failed or lost deliveries. With the Descartes’ scalable Route Planning solutions and home delivery optimisation software, transport operators can transform supply chain performance in this way, to maximise fleet performance and deliver an enhanced customer experience.

Status and location data fed back to the transport operator in real-time allows fleet managers to see where specific vehicles are and enables them to compare this to where they should be. As such, new jobs can be added in real-time or corrective action can be taken to proactively re-route a vehicle ensuring that no deliveries are missed, committed delivery times are kept or the customer is warned in advance the driver is running late to minimise failed deliveries at source

Collaboration within the industry is another key factor in releasing the efficiency and fleet performance required to ensure there are no failed or lost deliveries, and compliance with the DVSA’s Earned Recognition pilot will help. Descartes’ Smartanalysis solution is specifically configured to meet the KPIs required by the DVSA’s pilot, allowing transport operators to achieve Earned Recognition status easily and simply, offering a reduction in roadside checks and the associated time lost during these stops and the knock-on effect on the committed delivery schedule

Delivery windows of hours or even days are still common. Offering consumers a narrow delivery window with choice and convenience so they are more likely to be available to accept delivery is vital. This approach to deliveries, combined with compliance with the DVSA’s Earned Recognition pilot, gives transport operators the opportunity to streamline efficiencies through more intelligent routing, achieve Earned Recognition status, and reduce the costs and time spent on deliveries. All factors key to providing a seamless delivery operation capable of meeting customer demands, ensuring minimal deliveries are lost or fail, and the £183,000 per year cost, is greatly reduced.

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