Failed deliveries cost retailers and consumers the most: IMRG
Failed deliveries cost retailers and consumers the most: IMRG

UK retailers, their delivery partners, and customers are losing £1.6bn a year by getting delivery wrong, according to a new IMRG study.

The Valuing Home Delivery Review 2018, launched at this week’s eCommerce Expo, analyses data from more 200 retailers over the course of 120m orders and deliveries a year, while also surveying 2,200 end-consumers in order to find out how much failed deliveries cost each group.

The study looked at four scenarios: when delivery fails first time and the customer collects, when delivery fails and the carrier redelivers, when the order is late for its delivery window, and when, occasionally, an order is lost.

That cost was measured through the cost of customer service, the cost of consumer time, the cost to retailers in fulfilment and delivery costs, and the cost to the carrier. It found that consumers lose out to the tune of £374.8m, carriers lose £122.6m, and retailers lose £1.2bn a year. Lost orders are the most expensive, costing an average of £147.14 per delivery, mostly attributable to the retailer.

The cost to the shopper

Shoppers, who shop online for a cheaper and more convenient experience, spend money on calls and travel to depot when their parcel needs to be redelivered or has to be collected. On average, it costs them £2.90 for re-delivery, £7.41 to collect from a depot, £2.53 for late delivery and £5.26 for a lost delivery.

The cost to the retailer

It costs a retailer an average £4.90 for a failed first delivery that has to be re-delivered, whilst a pick up from the depot incurs no cost, a late delivery costs the retailer £21.64, whilst a lost delivery costs a whopping £123.61.

The cost to the carrier

For carriers the cost of a re-delivery comes to £2.01, with collection slightly more expensive at £2.74, but less than the £7.41 that it costs the consumer. Failed delivery costs £18.27. Significantly IMRG’s research suggests that no cost is borne by the carrier for a late delivery.

Andrew Starkey head of e-logistics at IMRG said: “Failed first delivery is too dependent on the knowledge of the delivery person and the local knowledge of the postie doesn’t exist in the gig economy. It’s…