In our last post, we introduced you to a few of the solutions contained in our new eBook on reducing parcel shipping costs. We’re going to continue along those lines this week, and discuss a shipping-cost-saving solution that may seem like a no-brainer: making sure that your mailing labels have a valid shipping address.
The Cost of Invalid Shipping Addresses
All of the big work that goes into your fulfillment center operation is meaningless if the little address sticker on the package is incorrect, incomplete, or otherwise invalid. While this concept may seem obvious, companies still can’t seem to get it right. And, when you don’t get this right, you waste money – lots of money.
According to the USPS Office of the Inspector General, Undeliverable-as-Addressed (UAA) mail costs the USPS about $1.5 billion annually and costs the mailing industry $20 billion. An article from Pitney Bowes estimates that “companies can spend up to $25 per piece of returned mail in ancillary costs related to correcting mistakes and re-sending mail.”
Notably, these figures do not include costs related to customer service and customer satisfaction (or lack thereof).
How Do Address Errors Occur?
So, we see that the lack of a valid shipping address is costly to Etailers and direct sellers, but how does it happen in the first place?
- Incomplete Information. As with many things, it’s often the little details that can cause the biggest headaches. Apartment numbers, unit numbers, and phone numbers tend to get overlooked and, if one of these details is missing, incorrect, or invalid, the package may be deemed undeliverable.
- eCommerce Errors. Another way that address errors occur is due to the customers themselves. Data from EasyPost shows that, when filling out an address form, eCommerce customers make an error 4.7% of the time.
- Miscellaneous. There are myriad ways in which a label becomes damaged or otherwise invalid between the sender and recipient, thus rendering it incapable of being scanned or read.
How to Ensure a Valid Shipping Address
While errors and damage are not entirely preventable, you can greatly improve the quality of your addresses as well as the management of your returns.
A huge first step is to use Delivery Point Validation (DPV) software. Upon examining a mailing list, DPV software ensures that every field is formatted correctly, and that the address actually exists in the USPS database. Errors can be fixed on the spot, prior to label printing. There are many different versions of DPV software available through a host of providers.
With a cost savings of only 1 or 2 percent, this method of reducing parcel transportation spend is not as lucrative as the other items discussed in our white paper. However, ensuring the delivery address quality will certainly provide for a better end-user customer experience and support the critical objective of repeat sales.