Holiday season late delivery

The Real Cost of Late Delivery

The order delivery expectation of online shoppers is lucid.

They want it free.

They want it now.

Despite paying a premium price to offer a white glove delivery service to customers, merchants are unable to douse the complaints entirely. In their defense, it seems unfair to be held accountable for delivery issues. Considering they foot every exorbitant charge mercilessly billed by shipping carriers such as FedEx, UPS or DHL, shouldn’t they be absolved of last mile delivery responsibility?

Sadly No.

1 in 3 buyers refuse to shop from a retailer following a negative delivery experience.

That puts retailers in a fix.

You could wiggle out by throwing all the spaghetti on the wall and see what sticks. Of course, that would mean risking repeat buyers dropping off. Not to discount, the associated potential threat to your brand reputation.

Or go all the way, which might result in a huge time sink and detract you from scaling your eCommerce business.

Let’s try cracking this conundrum by understanding the real cost of late deliveries.

Delivery delays: The revenue quicksand

Mapping a buyer’s journey on your eCommerce site is relatively easy. You move around a few signs, smoothen out a couple of bumps and bang ..your buyers arrive at the check out point. Last mile is a lot trickier. You have no clue when the “WOW” turns to “ Uh Oh”. Even tougher is measuring its effect on customer satisfaction.

One of the surest ways to evaluate the cost of late deliveries is by weighing its impact on key eCommerce metrics.


Time and again, inefficient final mile delivery has been linked to customer churn rate. Let’s take a quick look at the impact of late deliveries on the “customer lifetime value” of an eCommerce store. Customer lifetime value refers to the net present value of money you will receive from your customer throughout their lifetime. It is dicey to accurately calculate customer LTV as it is a predictive value based on variable factors. But, estimating the repeat purchase rate and average order would provide a fair estimate of LTV.

For the purpose of calculating LTV and eventually real cost of late delivery, let us consider an apparel store with a moderate brand presence.

Calculating the real cost of late delivery

The real cost of Late delivery

In the above example, crucial factors such as negative social media reviews and damaged brand reputation are not taken into account. When tossed in, they could spell disaster to your store resulting in a downward spiral of your store’s revenue.

In a survey of 300 retailers across the US, Post and Parcel have determined the cost of failed deliveries. The following snapshot of the report goes on to exemplify loss incurred due to delivery issues.

Late Delivery

Rising fuel costs and increase in the published shipping rates have forced merchants to eat into their margins while continuing to dish out expedited delivery experiences for shoppers. An easy remedy to instantly cut down upto 20% of shipping costs would be to conduct a thorough shipping invoice audit and recover refunds for service failures.

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However, claiming shipping refunds for delayed UPS, FedEx or DHL  packages are a poor compensation, barely making up for the losses your business suffers in the form of customer churn.

The following instances of delivery fiascoes go on to reiterate that fact:

  1. A birthday gift reaching the destination a day after the birthday
  2. What if Santa delivers that particular Peppa Pig life-size toy your child has been coveting for months, a day after Christmas?
  3. What if the freight carrier delays the delivery of a very critical part that is of high priority in fixing a commercial jet or a major factory?
  4. What if a bunch of women entrepreneurs organizes a fair to raise funds for breast cancer and UPS/FedEx arrives with the merchandise to be sold, a day late?
  5. Life-Saving medicine. Enough said.
  6. A 5-year-old’s birthday party goodies: balloons, candles, party favors, candies, and snacks delivered an hour late. Can you imagine a birthday party with bare walls and no candles?
  7. Winter gear lost in transit for a remote camp somewhere in Alaska.
  8. A containment of beachwear that fails to make it to the beach for summer.
  9. A series of shipments delivered late for a particular client to his client. And your client loses his contract.

These are instances when the refunds that you recover for delivery errors do not make the cut. They do not suffice to make up for the heartbreak or the panic a customer undergoes. This is when “We outsource our shipping needs to FedEx, UPS or DHL” is no longer enough to pacify your angry customer. Neither are these excuses going to stop them from switching to your competitor.

Plug the hole

After spending an inordinate amount of time, money and energy in pushing the customers through the sales funnel, it would be a shame to lose them after a single purchase.  If your eCommerce store operation is a huge cauldron, you don’t want repeat buyers slipping out of a small delivery mishap hole.

So what do you do?

  1. Man the ungodly weather conditions to get your orders across to the customer?
  2. Knock every door in the neighbourhood until you get your order to the right address?
  3. Camp outside the consignee’s residence until they show up?

No, No and hell no!

With the help of technology (Read Pulse from LateShipment) that offers last mile delivery analytics it is quite simple to craft a wonderful delivery experience.

Here’s what you could do to continue nurturing your shoppers right until your order reaches their doorstep:

Predict the wait: Online shoppers expect their order to be delivered on time. But they are far from being unreasonable. They definitely would not like to stay up waiting for their parcel, when there is an impending delay. Set the right expectation by predicting the orders that are likely to be delayed.

Know where the package is: Keep your shoppers informed of the location of the package at all times. This will help them appreciate your commitment to offer a seamless delivery experience.

Dispatch replacement if needed: Stay in the know of the packages that are suspected to be lost. Dispatch replacement intuitively and handle delivery exceptions even before they occur.

Stay on top of delivery errors: Smart notifications could be sent to your customers on every delivery exception. Keep your customer support team informed on all delivery errors to help them handle customer distress calls with ease.

Manage returns with ease: Go beyond processing returns. Thoroughly dissect the reason for returns. Invite shoppers to give their feedback on returns. Learn, observe and make changes to the process or product accordingly.

LateShipment is an outrageously simple yet intelligent service that empowers retailers with shipment predictive analytics reports to gain complete visibility of their orders and interweave a cohesive brand experience from checkout to order delivery. Would you like to start delivering the last mile experience that your customers deserve?

Revathi Karthik

Revathi Karthik

Product Marketer, Customer Advocate, Unrepentant Book Hoarder

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