Order errors costing retailers £951m per year

This article is brought to you by Retail Technology Review: Order errors costing retailers £951m per year.

Almost half (47%) of online shoppers have received an order in error, a new survey conducted by Opinipoll on behalf of Breathe Technologies has revealed, potentially costing retailers £951m* each year in fulfilment.

What’s more, almost three quarters (74%) of the consumers that had received an order in error said they had received up to three incorrect parcels in the past year.

The cost of order errors to retailers could soar exponentially over the coming year as the increase in online spending through the pandemic shows no sign of slowing. 64% of respondents said they had increased the amount they buy online since the beginning of the pandemic.

The survey is based on the opinions of over 1,500 consumers to identify the most common pain points around the online shopping process. It found that returns are a deal breaker for consumers, as 91% consider a retailer’s returns policy before making a purchase, and almost three quarters (73%) claim that paying for returns would discourage them from buying from a retailer.

With 30% of consumers claiming to return up to half of their online purchases, and almost 50% returning up to a quarter of parcels, a quick and easy returns process is crucial to attract and retain loyal customers.

Survey respondents also identified delivery as a crucial factor influencing their buying decision, with long delivery times topping the list of frustrations (50%), followed closely by paying for returns (42%) and limited stock availability (38%). In fact, over a third (35%) of respondents claimed they would rather buy elsewhere than wait a long time for a delivery.

Claire Umney, managing director at Breathe Technologies commented, “With bricks and mortar retail being limited by the pandemic, and the increase in online spending showing no signs of slowing, retailers and their supply chain partners must act now to be prepared and forecast accurately to ensure that supply chain, distribution and logistics are able to cope with increasing online order volumes.

“Retail operations should be led by consumer expectations; they need to be agile and have flexibility to scale with demand. Smart warehouse technology and software will provide faster and more efficient services, enabling retailers to forecast product demand, move goods at speed whilst ensuring accuracy, and ultimately have better control over what’s happening within the warehouse.”

Consumers also have high expectations around the refund process, with almost one fifth (18%) of respondents expecting to receive a refund from a returned order within 24 hours, and a further 32% within 48 hours. Despite government guidelines stating that businesses should make refunds within 14 days of receiving goods back, just 4% thought it would be acceptable for refunds to take more than five days. This makes it critical for retailers to ensure returned goods are processed quickly.

However, the research shows that consumers would be willing to compromise for a greener service. 32% said they would be happy to pay for delivery or incur a longer delivery time if their parcel arrived in a combined delivery with other orders, suggesting that retailers could consider working together to meet consumer sustainability expectations and the new realities of online shopping. Free delivery and returns aside, the most popular service consumers would like to see from online retailers is less packaging (44%), followed by paper-based packaging (39%). In fact, 28% said they would be prepared to pay for greener packaging.

Umney added: “The global pandemic highlights just how quickly the retail landscape can shift and businesses must adapt now to future-proof their operations with robust physical and digital automation. Consumer expectations are sky high and to manage these increasingly complex distribution requirements, retailers need end-to-end systems that maximise logistics efficiencies and minimise environmental impact. Put the right systems in place, and not only will you ensure your supply chain, distribution and logistics can cope with increased volumes, you’ll be delivering on your promises and so building your own loyal customer base.”

Breathe Technologies provides expert technology solutions to retail, e-commerce, distribution, and manufacturing workplaces. Its clients include QVC, Pets at Home, Amazon, Yodel, Ultimate Products, WHSmith, Unilever, and Johnson & Johnson.

*Calculation is based on:

• 47% of survey respondents had received an order in error within the last year.
• This equates to 19.82 million people (in the UK aged 16-64 according to Ycharts).
• According to Warehouse Management, 3rd edition pg. 183 and 207 the cost of an error (which includes variables such as cost of recovery of item, put away, repicking, repacking, labour handling, admin, delivery) is conservatively estimated at £48 p/incorrect order.
• With 19.82 million people receiving orders in error this equates to a cost of £951 million to the online ecommerce industry (based on the assumption of a single instance of an order error).