The Cost of Failed Deliveries: Why First-Attempt Success Matters

The rapid increase in e-commerce has placed extra pressure on the supply chain and especially logistics providers. An exceptional delivery experience can turn a shopper into a loyal customer. But, what happens when a delivery experience is negative? In this blog, we’ll explore the true costs and implications with failed deliveries and learn how AI can help in mitigating them.

The True Cost of Failed Deliveries

1. Additional Logistics Costs: Each attempted or reattempted delivery is expensive. Every failed delivery leads to additional trips, leading to higher fuel costs, increased driver hours, and wasted operational efforts. Every mile you ship costs you money. Each time an order is sent out for delivery after a first delivery attempt costs increasingly more money. So for a second delivery attempt shipping costs double, and they triple for a third delivery attempt. Moreover, companies do not charge extra from the client which ultimately is paid by the company, reducing their profit margins and straining logistics resources. 
   
2. Storage and Handling Expenses: A failed delivery implies that the product must be returned to origin and needs to complete the logistics journey again from scratch. These expenses are significantly higher for big and bulky items, which demand careful handling and delicate storage. Additionally, handling heavy products also increases the risk of product damage, leading to warranty claims and losses. 
   
3. Customer Dissatisfaction and Lost Sales: Customers expect their order to arrive on time, especially when they have planned their day around the delivery. Approximately 67% of the customers face issues with the delivery of products which ultimately impacts brand reputation and customer loyalty. Many customers may even switch to competitors for future purchases.

Benefits of First Attempt Delivery Success for Businesses

1. Cost Optimization: Achieving high First attempt delivery success rate reduces the operational costs for the businesses. It cuts down the extra expenses like fuel and labor costs which are required for redeliveries. Each failed delivery adds costs similar to that of multiple deliveries along with the hassle of rescheduling and customer communication. Reducing these expenses improves the profitability and bottom line for the business.
   
2. Improved Customer Satisfaction: Successful first attempt deliveries improves customer satisfaction. When customers receive their orders on time, they generally perceive a good reputation of the brand. Studies show that approximately 20% of the customers prefer to order again from the brands providing an effortless first attempt delivery. 
   
3. Enhanced Brand Reputation: High FADR helps in improving brand reputation. This provides a competitive advantage over their competitors. Hence, it should be noted that employees should be treated properly.

Challenges in Achieving First Attempt Delivery Success

1. Inaccurate Customer Address: Primary reason for failed attempt deliveries is inaccurate customer address. Studies show that more than 45% of the failed deliveries are caused by incorrect addresses, missing contact details or unclear instructions. Delivery drivers find it difficult to locate the exact destination without proper address validation. 
   
2. Inefficient Load Planning: Traditional load planning often misses out on route optimization. This in turn alters the order in which a vehicle is loaded. Poorly optimized vehicle capacity and load distribution leads to inefficient routes, increased costs, and unnecessary delivery failures. 
   
3. Customer Unavailability: Another major challenge is unavailability of customers at the scheduled delivery time. This is especially problematic for big and bulky items, where redelivery requires significant resources.
   
4. Low Driver Productivity and Training: Inconsistent driver performance and lack of real-time tracking can result in delays, misroutes deliveries, and overall inefficiency in last-mile logistics. 
   
5. Lack of communication: Poor communication without timely notifications can cause confusion for the customers on their delivery order status. This may increase the chances of unnecessary failed deliveries.

How AI Helps Improve First-Attempt Deliveries

1. Intelligent Route Optimization: Route Optimization is essential for finding the most efficient delivery routes. AI-powered advanced algorithms take into account traffic conditions, delivery windows, and fuel consumption to help reduce costs and identify the best route. It plans the most efficient routes based on promised delivery time slots and real-time traffic conditions. 
   
2. Dynamic Delivery Scheduling: AI-powered solutions provide customers the flexibility to choose convenient delivery slots, improving the likelihood of first attempt delivery success. Additionally, AI can predict customer availability based on past behaviors and suggest the best time slots available. 
   
3. Automated Customer Notifications: AI-powered logistics platform provides timely updates via whatsapp, SMS, or email which prepares the customers for delivery, reducing missed attempts. AI-driven systems can send reminders and even allow customers to reschedule if needed.
   
4. AI-powered Address Intelligence: AI-driven address intelligence verification helps identify incorrect or incomplete addresses before the driver has left for delivery. Therefore, helps in reducing the failed attempts due to location errors. 
   
5. Geofencing and Geocoding: It allows businesses to create virtual boundaries around delivery zones. Alerts can be triggered to notify when the driver enters or exit these areas, helping to keep deliveries on track. Geocoding identifies the exact lat-long of the delivery address to increase delivery success rate by reducing errors linked to incorrect locations.
   
6. Driver Productivity Tracking: AI-powered dashboards help track driver performance and their adherence to the prescribed routes. This also identifies areas for improvement and provides requisite feedback and training to drivers to enhance their productivity.
   
7. Efficient Resource Allocation: AI optimizes vehicle and driver allocation, ensuring that right resources are used for heavy shipments, and lighter vehicles are used for lighter shipments. This reduces delays and improves overall delivery efficiency.

Managing failed deliveries is more than just finding the causes but is critical for cost savings and customer satisfaction. The future deliveries lies in precision, personalization, and predictive intelligence—all of which are made possible through AI. Organizations need to adopt AI-powered solutions such as route optimization, geocoding, real-time tracking, address intelligence to enhance first-attempt delivery success, reduce operational inefficiencies and build lasting relationships.