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Failed delivery costs to approach £¾billion in 2014: IMRG study

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The cost of failing when it comes to online delivery is expected to add up to almost £¾billion this year alone, according to new IMRG research.

The IMRG Valuing Home Delivery Review 2014 forecasts that failed deliveries across marketplace and multichannel retailers will cost £771m this year. If marketplace deliveries are excluded, the total comes to £473m.

“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,” said Andrew Starkey, head of elogistics at the IMRG . “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.”

The calculation comes from considering the cost associated with these six delivery failure scenarios: failed first delivery that requires a redelivery; failed first delivery resolved when the customer collects; late delivery; lost order with replacement sent; lost order that results in loss of customer goodwill; and undelivered order that’s returned to the sender.

Despite the high cost of missed delivery, the report estimates costs linked to delivery failure may have almost halved in the last two years following innovation in e-retail logistics.

Nigel Doust, chief executive of 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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