Digital identity specialist GBG’s 2021 Fixing Failed Deliveries report showed that nearly a quarter (24%) of 300 retailers surveyed worldwide saw more than one in 10 orders fail delivery on the first attempt, despite more consumers working at home at the time. More recently, a study by Descartes, published in March, found that more than two-thirds (67%) of consumers have faced delivery problems, of which failed deliveries are a part. The impact is far-reaching: consumers can be left disgruntled and inconvenienced, tarnishing their relationship with the postal operator or carrier concerned, and even the retailer. This can be particularly devastating in e-commerce. “Often the vendor does not even know, as the consumer will not take the time to write a complaint and will simply turn to another online vendor if they are not satisfied with the delivery experience,” explains Marc Vukovic, business development manager at supply chain technology company Zetes.
According to Citizens Advice in the UK, the problem is getting worse. The organization’s online advice on what to do if a delivery hasn’t arrived was viewed nearly 211,000 times in 2022 and last winter more people than ever reached out about parcel problems. “Our research found that rates of failed delivery remain incredibly high, with half of people who bought something online in the last three months reporting a delivery problem,” says Beth Foley, principal policy manager at Citizens Advice.
And the impact can be wider than just an inconvenienced customer, according to Foley. “Of the people that experienced a problem with their parcel delivery and tried to resolve it, almost half (46%) experienced a further problem, such as a financial loss,” she reveals.
The need for greater accountability and regulation
Foley says consumers are at a disadvantage because their contract is with the retailer rather than the parcel company itself. She is calling for better regulation of the market: “As we often can’t choose which parcel company delivers our parcels, there is no way to avoid parcel companies who fail to offer good service. This reduces competitive pressure for couriers to improve.”
In the latest parcels league table from Citizens Advice, no parcel company scored four or five stars for service, with most awarded just two stars. “This fits with our research into the high rates of delivery problems being reported by consumers,” she says. “Because of the lack of consumer choice and competition, it’s vital that regulation is used to drive up standards in the market.”
Carriers attempting change
Carriers can’t afford this negative image and are trying to change, especially given the negative impact on costs and sustainability. “The last mile represents up to 30% of the order fulfillment cost,” says Zetes’ Vukovic. “The estimated average cost of a failed delivery is as much as €15 [US$16] per delivery, which represents a significant loss of the profit margin made by the vendor as the shipping cost included in the price is usually less than €10 [US$11] for small parcels. Beyond the cost, failed deliveries also have an impact on the environment. A recent study of ours on failed deliveries shows that returned parcels and failed deliveries account for 25% of the total distance driven by delivery trucks, which represents 420,000 tons of CO2 emissions.”
Vukovic says that flexibility to choose the date and time of delivery, as well as its location, coupled with real-time tracking and in-flight delivery options, is essential to reduce failed deliveries. “Another important factor in customer satisfaction in last-mile delivery is to provide visibility in real time and allow the customer to change their delivery options if the truck is late and the consumer cannot wait,” he explains. “Technology is the only way to cope with the pressure of flawless execution combined with increasing volumes and customized options.” But that requires investment, as well as customers using the tools. Royal Mail launched its automatic redelivery service in May of this year to try to overcome the challenge of continued failed deliveries. Postal staff now automatically redeliver parcels the following working day if the customer is not at home for the first attempt.
“Before we launched this change, the majority of undelivered items were collected by customers from one of our customer service points the next day,” says Nick Landon, chief commercial officer at Royal Mail. “Since the change, the vast majority of items are delivered to the intended address on either the original delivery or the automatic delivery without the customer having to travel anywhere. This is more convenient but it’s also much better for the environment. By keeping customers informed of what we are doing, they can also direct us to deliver to a safe place or neighbor to drive up the proportion of successful deliveries even further.
“If a recipient isn’t in, posties are trained to deliver items to a neighbor or a safe place at the original address wherever it’s appropriate to do so,” continues Landon. “Further to this, for tracked parcels customers will receive a notification of the expected date and time of delivery, which gives the customer an opportunity to be at home to accept it or to select an alternative date that is more convenient. In addition, they can ask us to deliver it somewhere else or leave it in their preferred safe place.”
However, it can be challenging getting consumers to take note of delivery times or set delivery preferences for when they are out. At bpost, an initiative initially focused on sustainability has become another way to prompt customers to confirm delivery preferences.
bpost launched a pilot across two Belgian municipalities, Tessenderlo and Chastre, in September 2022, whereby customers receive a digital notification rather than a paper notice of a failed delivery, provided they have shared their email address or are using the bpost app. This has now been rolled out to further locations since June 2023 and bpost’s vice president of marketing, Michel Defloor, expects a national rollout in Belgium in 2024.
“The prime driver was sustainability, but once you start communicating digitally you can use that communication to ask customers for their delivery preferences and ask people what we should do with their failed parcel if they are not at home,” says Defloor. “So it has a spillover effect on failed delivery.”
Communicating with the customer
Getting consumers to take notice of these communications is essential to overcome the failed delivery challenge. Descartes’ executive vice president of industry, Chris Jones, says it’s vital that delivery companies communicate constantly with customers to let them know where their parcels are. “It’s incumbent on the delivery organization to manage the consumer,” he explains. “The customer engagement lifecycle means that from the time someone buys, you are communicating to them what and when things are going to happen. If you tell the consumer when to expect their parcel and consistently remind them, then you stand a better chance of not having a failed delivery.
“This is all powered by logistics data,” he adds. “Is it in the warehouse? Is it on the van? Did the van leave on time? What time is the van going to be there?” If businesses also incorporate customer feedback, this can help improve the likelihood of a first-time delivery next time, Jones suggests. “Any kind of feedback you can get from the consumer is really beneficial as this can then become part of the record. When you take it that far, you end up getting better customer scores as they see you are paying attention to them and allowing them to provide feedback.”
This is an area, he says, where many companies are failing. “Some are using that sort of data but it’s a mixed bag. You have folks like Amazon who ask on every delivery, ‘How did we do?’ Others are asking for delivery instructions but it’s not everyone, or they do it at a thin level, and most of the major carriers don’t provide any real-time updates, just a couple of status notifications.”
Yet there’s huge opportunity for more. “It’s not close to what is possible,” continues Jones. “The technology exists. It’s not rocket science anymore and most have GPS. It’s about connecting those dots and deciding, ‘Do I want to use delivery as part of my customer experience?’ The answer should be yes.”
Making the customer more responsible
One way of improving failed deliveries is to change the accountability and perception around them, as many consumers are quick to blame the carrier for not turning up. “It’s about turning the delivery from an opinion to fact,” says Jones. “So as a retailer or a delivery company, if you go to the customer you take a GPS picture of the [closed] door, it is then a delivery failure due to the customer not being there. It’s no longer an opinion that the driver didn’t turn up, it’s a fact that they did. That changes the dynamic.”
bpost is also trying to prompt the consumer to take greater accountability. “There are several messages you can use to increase the awareness and the sense of responsibility of receivers,” says Defloor. “To work on failed delivery, we work on convenience drivers and sustainability drivers. It’s about raising awareness of the impact on them and society so that they try to avoid it,” he says. “It’s about the ‘What’s in it for me?’ element. That’s what makes people take action rather than them having the impression it doesn’t matter if they are home or not.”
Defloor says bpost looks at the customer journey to understand where it can be improved, which sometimes is as simple as education around why it’s important to set delivery preferences. “It’s about creating awareness of the process and then of the benefit,” he says. “Sometimes people don’t set their preferences and if we ask them why not they say it’s because they didn’t feel they needed to. They are always at home or live next to a pickup point so don’t feel it’s necessary because they think it will just get delivered to the pickup point if they aren’t in.
“But when we tell them the item will go back to their distribution center and then the next day it will be delivered to the pickup point, then they understand the convenience and sustainability benefits of setting their delivery preference for parcels to go to the pickup center if they aren’t in.”
Addressing correctly
Another big cause of failed deliveries is incorrect addressing. bpost has been running an address-focused trial since April. “A surprisingly large number of people ordering online give the wrong address or the wrong house number, and that will also lead to failed deliveries,” says Defloor. “We are testing a way that as soon as we receive a parcel, we send an email to the consumer saying we will deliver tomorrow and will deliver at X address, so if you are not going to be at home set your preferences and if the address is not right change it now.”
Failed deliveries remain a huge challenge, but it seems that prompting consumer behavior change by increasing accountability – accompanied by tools such as real-time routing updates, delivery preferences and other communications – gives customers the tools to help reduce failed deliveries themselves. “It’s facilitating them in doing that. Once they feel that responsibility, we should give them the means to fix it,” says Defloor.
This article originally appeared in the September 2023 issue of Parcel and Postal Technology International. To view the magazine in full, click here.