The Cost of Failed Deliveries for eCommerce Businesses

The UK has (by quite some margin) the largest e-commerce industry in the European Union. According to the 2014 eCommerce sector report from IMRG (the association of eCommerce), ‘IMRG Valuing Home Delivery Review 2014’, the overall cost of delivery failures for e-retailers in the UK could reach a total value of £771m.

However, despite being such a high figure, the total cost of failed deliveries has fallen 50% in the last two years as a result of innovation in services offered by courier companies (delivery time slot prediction delivers more accurately, delivery points, delivery weekends, etc.).

For Andrew Starkey, Head of Logistics of IMRG, “delivery failures resulting from orders placed with retailers and online merchants each year are more than £1bn in avoidable costs. Recent innovations in B2C have reduced delivery costs, providing buyers with a wider range of carriers, collection services and more information about where and when they can expect their deliveries.”
‘Costs’ within the IMRG study are defined as the following:

• 1st attempt of delivery – requires a new delivery attempt.
• 1st attempt of delivery – pickup by the customer.
• Late Deliveries.
• Order Lost – replacement shipment.
• Order not delivered and returned to the sender.
• Refund for defective product.

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