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