The overall cost of online delivery failure to UK retailers is expected to be £473 million this year, according to the IMRG Valuing Home Delivery Review 2014. If Marketplace deliveries are added then this forecast rises to £771 million.
However, using like-for-like volumes we estimate that costs associated with delivery failure may have fallen by almost 50% in the last two years – as a result of innovation in e-retail delivery.
The review, supported by delivery solutions provider Blackbay, takes into consideration the cost of a number of scenarios including failed delivery, late delivery, lost orders and returns.
Andrew Starkey, Head of e-Logistics at IMRG, said: “Failed deliveries resulting from orders placed with retailers and marketplace traders each year create in excess of £¾billion of avoidable costs – we cannot afford to allow the pace of innovation to slow. Recent innovations in e-retail delivery have already reduced this cost and provide shoppers with more choice, and more information about when and where they can expect their deliveries.
“Giving the customer the ability to fully engage in the delivery process allows them to make more informed decisions about the service they want and then to help manage the ‘final mile’ – cooperating with the delivery company to be in the right place at the right time. The result is reduced costs to all stakeholders and a greater customer satisfaction.”
Nigel Doust, CEO at Blackbay, said: “Over the past two years we have seen significant improvements in the performance of home delivery, however this report highlights there still remains considerable cause for frustration with an inability for carriers and retailers to provide certainty for every delivery.
“To rise to this challenge, and reduce the enormous costs highlighted in this report, carriers need to respond by finding ways to embrace a consumer relationship and enable consumer control as well as offering a range of alternative delivery services to them. Consumers are demanding that carriers and retailers do better, hopefully retailers and carriers can continue to challenge each other through technology improvements to close the gap between home delivery performance and consumer expectation.”
The review considers the costs associated with six potential delivery failure scenarios:
•Failed 1st delivery – re-delivery required
•Failed 1st delivery – collection by customer
•Order lost – replacement sent
•Order lost – loss of customer goodwill
•Order undelivered and returned to sender