Failed deliveries cost retailers GBP771m in 2014

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Lost items, failed postage and returns cost UK retailers millions.

Failed online deliveries are likely to cost UK retailers and marketplace sellers £771million this year according to a new report.

IMRG’s Valuing Home Delivery Review 2014 suggests that the cost of failed deliveries from retailers alone, due to scenarios including failed delivery, late delivery, lost orders and returns, is expected to be £473million.

Combined with orders placed with marketplace sellers, this figure rises to £771million.

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However, using like-for-like volumes, the report estimates that these costs have fallen by almost 50% in the last two years thanks to innovation in e-tail delivery methods. The report was supported by delivery solutions provider Blackbay.

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, chief executive officer 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.”

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