The True Cost of a Mis-Shipment

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Mis-Shipments happen to the best of companies, whether it’s sending the incorrect items on the order, shipping product using the wrong shipping service level, or a number of other common order processing mistakes. In fact, even the most professional order fulfillment companies operate around 99.9% order accuracy – which means that even they make mistakes! But have you ever considered the true cost of a mis-shipment? We did, and you might find the results surprising!

What is a Mis-shipment?

Also known as a mis-ship, a mis-shipment is when you send an incorrect item to a customer. While mis-ships are common, they can take a serious toll on your bottom line. The good news is there are ways to improve your order accuracy and avoid mis-shipments so you can keep more of your time and money. Let’s take a closer look at the true cost of mis-shipments and ways to reduce their risk.

Issues with Mis-shipments

Simply put – mis-shipments cost a lot of money. Avoiding mis-shipments at all costs is paramount to running a successful shipping operation. Some of the more common forms of mis-shipments include:

  • Shipping the wrong item(s)
  • Shipping the incorrect amount of items
  • Sending items to the wrong delivery address
  • Delivering the order after the established due date

There are a number of costs that arise each time you mis-ship an order, including:

Double Pick Time

Whenever an inaccurate order is picked and shipped, you’ll lose the money spent on the original pick and ship. If you need to send a replacement order, you’ll also be on the hook for another pick and ship fee. According to our most recent fulfillment pricing survey, each pick and ship will run you $2 to $5 on average and anywhere from 5 to 15 minutes. When you consider the fact that a typical warehouse worker earns $14.97 per hour, this is expensive.

Outbound Shipping Charges

If you send the wrong order to a customer, they shouldn’t have to pay the shipping charges incurred. Outbound shipping charges become your responsibility and can range from $6 to $10 for the ground delivery of a small package to $20 or even more for a larger, heavier package.

Initial Shipping and Return Shipping Charges

Chances are a customer won’t keep the incorrect items and decide to send them back to you. In this case, you’ll have to cover both the initial and return shipping charges, which can be anywhere from $6 to $20 or more.

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Unusable Materials

In most cases, the materials you used to ship the original items will be damaged or destroyed. If you use recycled or standard packaging, your loss will likely be minimal. But if you use custom packaging, you’ll increase your overall loss by at least a few extra dollars.

Return Processing Time

Once your warehouse receives the returned package, it will need to be checked for damage. If the item is damaged, then you’ve lost its’ cost. Plus, you’ll have to spend $2 to $3 to process the return.

Customer Service

Your customer service team will have to investigate and resolve the issue with the customer. Unfortunately, this costs time and money. Let’s say they’re on the phone with the customer for 15 minutes. If you consider the fact that the average call center rate per minute is $1.43, a 15-minute call will cost $21.45.

Additional Incentives

Since you don’t want the customer to be disappointed with your service, you might decide to incentivize them. Maybe you’ll waive all their handling charges. Or perhaps you’ll provide them with a free or discounted item. Regardless, you may spend $10 or more to make them whole.

Customer Dissatisfaction

In a perfect world, a customer will be understanding and ask for their order to be corrected. The reality, however, is that some customers will be completely dissatisfied. In this case, there’s a good chance they’ll ask for a full refund and avoid purchasing from you in the future. They might also leave negative online reviews on sites like Amazon, Better Business Bureau, and TrustPilot, share their poor experience with their friends and family and ultimately deter others from your company.

Ways to Avoid Mis-shipments

Mis-shipments can easily cost your business thousands of extra dollars each year. With these tips, you can ensure timely and accurate shipments that please your customers and allow you to keep more of your hard-earned money in your pockets.

  • Perform Regular Inventory Checks: If you have inventory spread across multiple warehouse locations, issues with picking and inventory management are bound to arise. With quarterly inventory checks, routine cycle counts, and annual inventory audits, you can reduce errors and speed pick up times.
  • Use Barcode Scanners and Robust Warehouse Management Software: Barcode scanners and warehouse management software will inform your team if they’re picking the right items off the shelves in the right quantities. Some scanners will even update your inventory once an item has been picked, assisting with the accuracy of your inventory.
  • Implement Quality Control Checks: Before orders get sealed for shipping, barcode and other technologies can be used to quickly scan the order for accuracy. Then, final quality checks can be made upon labeling the order for shipping, so that orders are processed without error.
  • Create a Good Returns Process: Unless you have a solid process in place, returns can be a nightmare. Your returns process should ensure the items get back to stock as soon as possible and ship the right products to customers within a few business days.

Find a High-Quality Fulfillment Company

The real secret to avoiding mis-shipments is partnering with an experienced 3PL warehousing company that has the experience and resources to get every shipment right, the first time. Interested and ready to learn more? Fill out a quote request form to get matched to the best fulfillment companies for your needs, or give us a call at (877) 486-5236 today!

See below for a visual on the True Cost of a Mis-Shipment:

Mis-Shipments: What do they cost?

 

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