You wake up to find a flurry of online orders. Unfortunately, a few of them will be undeliverable. In fact, more than a few… According to a recent study by shipping integration firm EasyPost, 4.7% of customers make errors when filling out shipping forms. Among the most common? Typos and formatting mistakes that render an address unidentifiable by the carrier, multiple addresses returned, and the lack of street names.
Address Verification Systems have been around for years. Most small businesses, however, roll the dice because this additional service costs money. The lack of true AVS, though, can cost more if you force ship packages that are returned. Money is also lost when orders are canceled due to the inability to verify the address (much like when you cancel orders because of AVS mismatch on credit cards).
How much do bad addresses cost?
Shipping a package to a bad address carries bigger costs than you think. Factor in the costs of:
- postage (it’s typically not refundable)
- labor (to process and pack the order)
- losing the sale
- losing the actual product
- losing the customer
It is estimated that even for low-dollar orders, shipping to bad addresses can cost up to $70 in the long run.
It’s the carriers’ fault, too.
Not all carrier databases have mirrored data. In order for an address to be verified, it first has to exist in the carrier’s database, and there are more than 120 million home addresses in the US alone. This is another reason why etailers should offer rates from at least two carriers; some addresses are deliverable by one, but not by another.
It is surprising that, according to EasyPost, USPS’s shipping address database is updated only once a year, and that it’s the local postmasters’ job to report changes and additions. UPS and FedEx use different methods, but they have their own set of issues. Case in point: For years, I had to use FedEx to ship packages to one of my relatives. Any other carrier would return the package, sometimes several weeks later. Even though the address is correct by all government agencies, USPS still struggles verifying it for delivery.
While address problems run US-wide, West Virginia residents and businesses see an error rate of more than 38%, followed by Alaska and Mississippi (greater than 19%). The state least-prone to problems is Colorado (5.07%). Rural addresses pose the biggest threat of returned mail.
Should my store use real-time AVS?
Many of the big etailers use address verification during the checkout process. It adds another step, and potential wait time if systems are busy. That, we know, can affect conversions. On the upside, though, the highest percentage of orders will be deliverable, and fewer customers will experience processing delays and order cancellation due to back-and-forths to confirm the proper address.
Small business owners and managers should determine the costs involved, including potential customer loss, when considering implementing AVS in the shopping cart. A moderate-volume store experiencing that 4.7% hit of bad addresses would fare better reducing the risk.