The True Cost of Late Deliveries
Updated: Sep 14
Late deliveries are among the most time-consuming and frustrating aspects of e-commerce in the Middle East. This happens both ways for retailers and customers. According to a survey conducted by Softec Technologies, late and failed deliveries pose a substantial cost to more than 65% of businesses.
This is even more frustrating for retailers who use their fleet to make their deliveries and seek to make the next day deliveries without having to impact profit margins.
In this article, we will look at how late deliveries can affect your business and how you can solve them to retain customers and keep your business afloat.
The Human cost of late delivery.
Late delivery of important items like medications or gifts that were to be delivered on a certain date i.e. Christmas or a birthday would frustrate the customer to never order from you again.
Late deliveries cost you more.
Despite spending more to offer your customers the best delivery experience, you will be held responsible for late deliveries done by your shipping courier. You end up spending 20% more on shipping costs and to make matters worse, customers post negative reviews on forums and social media preventing potential customers from purchasing your products.
The impact of late deliveries on key metrics.
Increased Customer Acquisition Cost.
CAC is the cost of convincing a potential customer to buy your service/product. It includes the cost of sales and marketing. The higher the CAC the more you charge the customer for buying your service or product to make a profit. Late deliveries increase the CAC due to the negative customer reviews on forums and social media. this makes your product or service more expensive and unaffordable.
A decrease in Customer Retention Rate.
Customer Retention Rate enables you to know the percentage of customers that will shop with you at the end of a period as compared to the beginning. Late deliveries decrease the CRR of your business since customers will avoid buying from you due to the negative experience.
Decreased Customer Lifetime Value.
CLV is an estimate of how much a business could earn from every customer in their relationship. Late deliveries decrease the Customer Lifetime Value. Late delivery will simply make customers seek other options from your competitors.
Late deliveries are a reflection of the business's internal disorganization.
Late deliveries are a sign of internal business struggles. It could be an indication of a lack of optimization of the supply chain. Streamlining processes and optimally utilizing your resources would lead to faster deliveries.
The reputation of a company is tarnished leading to customer loss and low profit.
There are many ways you can tarnish the reputation of your business. Social media is beneficial to most companies but customers can use it to make or break your business through negative reviews. According to Zendesk, 50% of customers with a bad experience from a business are likely to share it on social media.
How to solve late delivery problems and build your customers' lifetime value.
Manage the expectations of your customers. Ensure that you make deliveries within the stipulated time by planning and making changes as fast as possible if there is potential for delays. If a delay is inevitable, inform your customers in advance.
Hold your shipping partner liable for late deliveries. Claim refunds from your shipping partner in case of late deliveries. However, this will not prevent customer reviews.
Use route optimization software. A route optimization software enables you to create a route plan before delivering the orders for timely delivery.
Monitor your routes and deliveries in real-time using command and control capabilities. After planning your route, you can use delivery management software to execute the plan in real-time.
Keep your customers informed about the situation of their packages. Ensure that you also inform them of potential late deliveries but work hard to resolve this as soon as possible.
Compensate your customers for making late deliveries through discounts and coupons on their next orders. This will help you retain customers and regain the confidence they have in you.
Research the cause of every late delivery and track the performance of your carrier. Make the necessary changes to prevent a similar occurrence.
How can Norma help you build long-lasting customer relationships?
Norma is an AI-based delivery route planner that saves you the hassle of manually planning for 3PL logistics. Norma enables you to automatically create the best route possible using artificial intelligence. It enables optimization of logistics distribution operations, effective delivery management, and daily plans.
Norma makes a very fast analysis of past deliveries enabling you to learn from the past and derive important information to effect timely delivery.
Norma helps you assign the right fleet, optimize route planning, respond in a planned and optimal manner, cut service times, deliver on time and eventually build a long-lasting customer relationship.
How can Norma help logistics companies achieve more?
Using Machine Learning and Evolutionary Computing, two key disciplines of Artificial Intelligence, Norma helps you optimize your daily routes and achieve more as following:
Reduces the number of the fleet by up to 35%
Reduces the number of miles driven by up to 22%
Decreases driving time by up to 18%
Reduces operation costs by up to 26%
Optimize road time by up to 45%
Download our case study “Mylerz Success Story” to find out how Norma empowered Mylerz, the most progressive 3PL courier company in the region, to achieve a 96% delivery success rate.