As eCommerce Thrives, New Loqate Study Reveals The Cost Of Failed Deliveries

Study highlights the growing importance of address verification in driving customer loyalty and revenue in 2021

Loqate, a GBG solution and the world’s most trusted specialist for location data, today announced “Fixing Failed Deliveries 2021: Stamping Out Faulty Fulfillment,” a new study illuminating the potential for failed deliveries to derail success for retailers in a time of surging ecommerce, domestically and abroad.

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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 percent of retailers reporting an increase in average online order values. At the same time, shoppers have become more comfortable purchasing from global brands, evidenced by rising numbers of international orders reported by 54 percent of retailers. With higher volumes and global considerations, poor address data that leads to faulty fulfillment poses a major threat to success in the form of lost sales and reputational damage.

The Loqate study underscores the expansive shift in online commerce and the critical role address verification will play in delivering a seamless customer experience, achieving brand loyalty and driving revenue in 2021. Key findings include:

Failed deliveries are a growing problem. Ninety-nine percent of ecommerce organizations own up to failed deliveries across some portion of their orders while 24 percent admit more than one in 10 orders aren’t delivered on the first attempt. The costs of failed deliveries are far-reaching. Eight percent 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. Just under half (47 percent) rate the accuracy of physical address data as “critical” for first-time delivery, yet 74 percent 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 realize 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 percent of deliveries are delayed, and 39 percent simply fail. Some businesses utilize internal address verification systems, which may be a cheaper option, but don’t provide the accuracy and reliability of third-party address verification software.

The mobile experience is more important than ever. Forty-six percent of consumers are doing more shopping via mobile phones than they did 12 months ago. However, 38 percent 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 percent abandoned a purchase during the past three months because they struggled to enter their address or got fed up with the checkout process.

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Failed deliveries have a significant impact on customer retention, loyalty and brand perception. Forty-one percent 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, which becomes problematic for brands as nearly all consumers (93 percent) read reviews before making a purchase. Just three negative reviews were reported to drive away nearly six in 10 potential customers.

“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,” said Matthew Furneaux, director of Location Intelligence at Loqate. “With online orders reaching higher volumes than ever, and 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.”