The One Mistake That Costs e-Commerce Businesses Thousands in Revenue
eCommerce businesses need mailing addresses to operate. One typo in a physical address derails an entire order.
Data entry errors are the most common source of incorrect personal information. Yet, eCommerce businesses rely on customers to correctly enter shipping data for hundreds, even thousands, of orders every year.
But, this method of collecting shipping addresses is unreliable. Customers make errors on 47% of the eCommerce forms they fill out. So, it’s unavoidable that you’ll get incorrect personal information.
You may have accepted this as the price of doing business. But should you accept it? Can you afford to?
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How Much do Shipping Errors Cost eCommerce Businesses?
The cost of a bad address goes beyond the bare shipping cost of sending an order twice. It costs time, wages, and potentially future purchases.
Studies have placed the cost of an incorrect address at $35 to $70 per order. For some eCommerce retailers, the cost of a single incorrect address eats up the profit margin of several correctly delivered orders.
Assuming 95% shipping address accuracy, bad addresses cost $175 per 100 orders. This adds up quickly over thousands of orders.
The average profit margin among S&P 500 companies is 10.72%. Based on the average profit margin, it requires $326.50 in sales just to offset the cost of a single $35 shipping error. At 95% shipping accuracy, it requires $1,632.50 in additional sales to cover the cost of bad addresses for 100 orders.
And 95% shipping accuracy is an incredibly optimistic rate. Given that customers make mistakes on nearly half of the eCommerce forms they complete, your shipping accuracy is likely far less than 95%.
Add to this the number of customers that cancel their order rather than have it shipped again, and bad mailing addresses could be eating up a huge chunk of your profits each year.
In fact, this cost could be crippling. But, eCommerce businesses bear the brunt of it every year.
So, if customers are submitting bad addresses, what can e-commerce businesses do about it?
The Costly Mistake that eCommerce Businesses Make
In short, the mistake is failing to verify customer mailing addresses.
eCommerce business depend on shipping data. So, they simply can’t afford to ship to unverified addresses. Customer data decays quickly, which means that even addresses for returning customers can’t be trusted.
Thankfully, verifying physical addresses is quick and easy. And it can be even easier for eCommerce retailers than for other types of businesses.
All you need is a spreadsheet editor and a data provider.
How to Verify Customer Addresses
You’ll either verify addresses at the point of entry, or on the back-end, once you’ve got them in your customer database.
There are reasons for an eCommerce business to use both methods, since they use newly entered data and data from their databases.
Here’s how to verify addresses at the point of entry and in your databases.
Data Integration
Since the most common source of incorrect shipping addresses is the customers themselves, verifying personal information in real time as it’s entered in form fields will raise your shipping accuracy the most.
With data integration, customers will be prompted to fix incorrect entries before proceeding with their order. This eliminates the shipping inaccuracies caused by customer data entry errors, and acts as a gatekeeper for your customer databases.
Integrating data validation into your eCommerce forms is simple, and usually requires very little development.
You’ll connect your customer information collection system to your data provider using an API. Many data provider APIs are implemented using a unique URL. So, you can add data integration even if you have little to no coding experience.
If you have a developer on staff, they can often complete a simple data integration in a few minutes to a few hours.
Once your eCommerce forms are connected to your data provider, new customer addresses will be validated in real time before orders are completed, so you can achieve that 95% (or better!) shipping accuracy.
While you can check just the address for accuracy, by using an API that utilizes multiple data feeds through a data company, you can also check the address for the name or just the last name to ensure that individual has previously reported that address. Thereby increasing your delivery rates even more.
Batch Processing
Batch processing validates and completes the data that you already have in your databases.
This helps alleviate shipping issues in orders from returning customers who may have changed their address without telling you, and improves the reliability of your snail mail promotions and offers.
Batch processing is where your spreadsheet editor comes in.
You’ll need to export your customer lists to a .csv, .txt, or Excel file, so you can edit them in your spreadsheet editor.
This is how you use batch processing, once you’ve exported your lists:
- Make sure each piece of customer information is in it’s own column. There should be a separate column for first name, last name, address, phone number, email address, etc. That way your data provider’s system can gather and verify the correct data.
- Upload your list for processing. Most data providers will have a browser-based interface for uploading lists.
- Your data provider will process your list, append and verify the data, and return your results in a spreadsheet format, usually .csv. It usually takes a matter of minutes to return your results, unless your list is very large. In most cases, batch processing takes a matter of minutes from beginning to end.
- Reload your lists into your database, ready for use.
The process is simple and quick. So, it’s easy to add batch processing to your data management process, and improve your customer data quality.
Adding just one of these data validation methods to your data management system will significantly reduce shipping errors, and save you a lot of money. However, you can easily implement both, reach peak shipping accuracy, and capture even more revenue.
Next, learn more about data validation.
Or, if you’re ready to start verifying your data and saving money, check out the Searchbug data validation tools for business.
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