Dude Where is My Package? The Impact of Missed Deliveries

Have you ever come home expecting to find you package sitting on your porch, only to find a “Sorry we missed you” sticker from the delivery service? Have you ever called off work or stayed home from school to wait for an important package you ordered, only for the courier to arrive while you were in your basement or taking a shower? Or perhaps the courier knocked twice and ran off, leaving behind that dreaded “Sorry we missed you” sticker. Of course you have, we’ve all felt that frustration.

There are roughly over one billion re-delivery attempts that occur in North America annually. This is due to delivery restrictions pertaining to how or where certain packages can be delivered. In some areas, couriers are able to leave the packages on the recipient’s porch when no one is available to sign for the shipment. However, this opens up the chance for that package to be stolen or damaged by inclement weather. In other instances, couriers are not allowed to leave the package on the recipient’s porch because that area might have been flagged with a high occurrence of package theft or the package’s retailer requires a signature receipt upon its delivery.

All of these cases contribute to this huge problem and lack of innovation in this sector.

The mailbox has remained unchanged for over 100 years. More than one hundred years ago in 1915, the tunnel-style mailbox was invented as a result of poorly planned delivery methods. Postal service couriers would often waste nearly 2 hours each day waiting for recipients to come to their doors to collect their letters. Today, letters no longer stress sortation systems or require one-on-one reception across America — packages are the new stressor in the system. So one might wonder why there hasn’t been any innovation to cater to package reception.

We are changing this with our invention, the Mailhaven, which you can read more about here. We are on a mission to change how over 117 million homes receive their packages and we have the perfect team to execute this. Missed deliveries don’t just affect one party, but several: the customers, the couriers, the retailers and the environment.

The Customer

Like I mentioned earlier, most people reading this post are probably not strangers to the disappointment of a missed delivery. When this happens, one is usually stuck with two options: wait until the next day for a re-delivery attempt of the package that you might have shelled out an extra $10 to have it arrive on that particular day. You could end up wasting a couple of hours waiting for the package and might even have to dedicate some more of your valuable time the next day. You might have to wait through a large delivery window, which could ultimately result in the money you spent for faster delivery being wasted.

The other option is to drive to the post office to pick up the package. In a recent UK study, 60% percent of correspondents reported that it takes them 30 minutes to one hour to retrieve their packages. According to a spatial analysisconducted for the Postal Regulatory Commission, 99% of the US population live within 9.3 miles of a post office, 81% live within 3 miles of a post office while only 33% live within 1 mile of a post office. So one can assume that the average American would have to drive up to 6 miles round trip to retrieve a package which they paid to be shipped to their home.

The Courier

I previously stated that there are cases in which retailers require couriers to collect signature receipts upon delivery. This adds an additional time burden to the couriers and increases the chances of a failed delivery at the first attempt. However, to make up for this, some couriers charge retailers an extra fee for this service. The cost of missed deliveries to couriers are immense. It is estimated that every time a courier fails to deliver at first attempt, it costs their company $15. This is a combined total of money lost in customer service, gasoline and transportation costs, manpower, lost space on the delivery van, etc.

This adds up quickly when you consider that in 2014, UPS handled on average 15.3 million packages per day, a 6.4% growth over the previous year. Similarly, in 2015, FedEx handled on average 6.9 million packages per day, a 6% growth over the previous year. Among all couriers, it’s estimated that up 20% of deliveries are not made duringthe first attempt, which means there are several million missed deliveries per day and several million dollars in lost revenue daily.

The Online Retailer

When you shop online, you go to the retailer’s website to pay for the item you want and pay for shipping through the retailer, not through the courier. Naturally, if anything unplanned happens along the way with the delivery, you gave your money to the retailer and they are held responsible. After all, they gave you an estimated delivery date that you may have even paid extra to expedite. Even if you were not at home to receive your package, we are humans and it is natural for us to try to deflect the blame to someone else: the courier.

Missed deliveries affect customer loyalty and the perception of a retailer. A quick twitter search for “missed delivery” shows that some customers get mad at the retailer when they encounter this problem. A recent study performed by Voxware surveyed 500 consumers on their expectations for delivery of items they purchase online or by phone. The study found that 69% of respondents are much less likely to shop with a certain retailer in the future if an item they purchased is not delivered within two days of the date promised. Moreover, “16% of respondents will abandon shopping with a retailer altogether if they receive an incorrect delivery just one time, and 14% will do so if they receive a late delivery just one time.”

Another problem this causes couriers is fraudulent reports of stolen or lost packages. According to the 2013 LexisNexis True Cost of Fraud Study, United States e-tailers on average lose 0.51% of their annual revenue to fraud. On average, 36% of this fraud is attributed to stolen and lost merchandise. So for online retailers, this affects both revenue in different ways and brand loyalty/perception.

The Environment

Our planet is warming at an alarming rate, climate change is real and is likely one of the greatest threats to humanity at the moment. According to the EPA, 26% of all US green house emissions are attributed to the transportation industry, which includes logistics and delivery. Every time a delivery is missed at first attempt, the additional re-delivery attempt or customer driving to the depot contributes to carbon emissions. This would be prevented if attention is paid to curbing last mile re-delivery emissions through innovation and technology, like what we are building at Mailhaven.

Let’s do a quick exercise to estimate annual impact of one billion missed deliveries, which is the current annual average in North America. Assuming a courier performs an industry average 120 package drops per 50 miles at 0.42 miles per package, the amount of carbon emitted per package drop is 181g. The next assumption is that, at the second attempt the package delivery is completed 70% of the time and 30% of the time, the recipient has to travel to the depot to retrieve the package, which is typically 6.4 miles round trip. At one billion missed deliveries annually, the total amount of carbon emitted due to re-delivery is 3,742 metric tons. To put this into a simple perspective, this is the amount of carbon 9,050 trees would have sequestered over a 58-year life span.

Do things get better?

Here at Mailhaven, we believe things do get better. However, before they do, we know that more people will experience this and more money will be lost to missed deliveries due to increased growth in eCommerce, 15% yearly to be precise. This does not necessarily spell all doom and gloom. We believe that if these occurrences increase in frequency, more people will recognize the problem and complain, leading the industry to react to this by welcoming and supporting innovation.

Our hope is to be proactive with our solution and not wait until the problem gets out of hand. We are currently preparing to conclude pre-sale of our next prototypes and we have very few spots remaining. Please signup here if you are interested in being part of the program.

It is a wretched taste to be gratified with mediocrity when the excellent lies before us — Isaac D’Israeli

Thanks to Carly Garcia and Adam Casson for proofreading and editing.