The Cost of Failed Deliveries and How to Reduce It

£ 750 Million

That is the avoidable costs resulted from failed deliveries according to Andrew Starkey, head of e-logistics at Interactive Media in Retail Group (IMRG). 

Today, thanks to the meteoric rise of the e-commerce sector, the volume of deliveries has increased exponentially, making the “last mile” problem extremely challenging. Every failed delivery attempt adds considerable costs as it necessitates a return trip to the warehouse, storage space, and a 2nd (or even 3rd) attempt. Should the delivery fail permanently, further costs incurred include returning it back to the shippers or retailers. In the UK, the sum of all the situations mentioned costs around US$7.44 per delivery attempt.

And it’s not just the financial losses – failed deliveries result in extremely dissatisfied customers who may never return to the retailers’ site. This ruins the customer service experience of the retailer, which, in turn, crushes the transporter’s reputation. 

The bar for service standards has never been higher, and transporters must improve to close the gap between the customer’s expectations and actual delivery performance. Here are 4 tips to improve your delivery success rates. 

1. Visibility to consignees

It is increasingly important to possessing tracking and visibility capabilities (through modern tech like logistics SaaS) that permits everyone – shippers and consignees alike – to always be kept in the loop. Real-time visibility allows consignees to be constantly updated and aware of the location of their order. They can then make a more informed decision on whether they are able to receive their item or reschedule the delivery instead. Keeping consignees engaged in the delivery process dramatically improves the last mile fulfillment rate. Just by knowing when to expect their deliveries, consignees can make time to receive their parcels. By also providing visibility to their shippers, transporters can reassure that they can reliably deliver a top-notch customer service experience.

It’s also worth noting that with fewer calls from consignees to the operators demanding to know where their parcels are, operators are better able to allocate their time performing more productive or pressing tasks.

2. SMS/E-mail Reminders

Last mile deliveries require open communication and careful coordination between the consignees, the transporters and the retailers or shippers. In the last mile, the transporters are the ones that have to face the consignees. Therefore, it is vital that last mile customer service be responsive and reliable.

Previously, it was a logistical nightmare to have to handle hundreds of calls to reschedule or deal with customer and/or consignee enquiries about the status of the delivery. Today, modern logistics software can automate SMS/e-mail to consignees detailing when to expect their deliveries – and this has dramatically increased the the rate of successful deliveries. One email with delivery details is not enough. SMS and email notifications throughout the delivery process can serve as reminders to consignees as to when to expect their parcels.

3. Time-window Deliveries

Shippers or transporters can offer specific three-hour time windows as options for delivery. This would give the consignee the ability to work with the delivery companies to be in the right place at the right time. It would also give them some form of control over their deliveries and helps to narrow the time when they can expect to receive it. This results in greater customer satisfaction and an increase rate of delivery especially if they have a choice of delivery times to receive their goods at their convenience. 

However, introducing time-window deliveries add a fair amount of complexities to the logistics operations. These complexities could be mitigated with the use of a software like a transport management system which would help to plan the deliveries within a specific time automatically. Falling short of the specific time window would adversely affect the logistics companies’ reputation and having a TMS would definitely ease the entire operations. 

4. Driver-Consignee Communication 

Unfortunately, the information that the logistics companies receive from their shippers (e.g. the consignees’ addresses) may not be complete. In such scenarios, drivers often get stuck in a standstill and are unable to deliver the parcel at hand, severely impeding their delivery speed. However, if drivers are afforded consignees’ numbers directly, they are able to establish direct contact with them to confirm the proper delivery address and other specific instructions (e.g. how to instruct security guard houses in condos) to ensure delivery success. This allows for fast and responsive communication between drivers and consignees without having to trouble the operator. 

As logistics continues to mature, technology-enabled capabilities like SMS/e-mail reminders and providing visibility (of the supply chain) are shifting from being just a competitive advantage to an industry standard. Logistics companies must equip themselves accordingly – growing in parallel with technology – to not just remain competitive, but stay relevant. Ensuring successful deliveries that contribute to customers’ satisfaction is no longer just about the size of the fleet – it’s about leveraging technology to automate and optimize operations. It is the only way forward – the only way to meet the exponentially increasing service standards expected of logisticians of tomorrow.