The Ripple Effect of One Bad Delivery
Every late, missed, or damaged delivery triggers a domino effect that goes far beyond the shipment itself. Call center volume rises, IT teams scramble to fix systems, billing processes slow down with more refunds, and, most importantly, customers lose trust.
Veho and Supply Chain Dive’s recent survey of more than 150 retail supply chain leaders reveals a striking statistic: 27% of fast deliveries generate negative feedback.
Delivery satisfaction has never been just about speed. It’s about execution.
A failed delivery doesn’t just frustrate one customer, it risks brand reputation at scale, especially when bad experiences go viral.
Why Narrow KPIs Mask the Real Cost
Too often, companies measure success using narrow KPIs like cost per delivery or on-time rates. While important, those metrics don’t capture the hidden expenses of failure. Drey Hilton of Veho warns:
“When you lower your delivery expense, you often see customer service and IT costs go up. Companies think they’re saving money when in reality they’ve just shifted expenses somewhere else.”
The reality is that the total cost of shipping extends far beyond the initial cost of the shipment. A failed delivery incurs incremental costs from customer support, refunds, lost sales, and customer churn. This is why at Veho we reframe delivery ROI as “Return on Shipping.”
A Better Way to Measure
In order to measure the true cost of shipping, brands should expand their measurement framework to include both cost drivers and revenue drivers tied to the shipping experience:
Cost Drivers
- Annual Parcel Spend: The total yearly spend on shipping parcels, representing the baseline logistics cost.
- Order Replacement & Reship Costs (driven by defect rate): Additional costs incurred when defective or delayed shipments must be replaced or reshipped.
- Shipping Related Customer Support Costs: Expenses tied to handling customer inquiries, complaints, and issues caused by shipping problems.
- Reputation Costs tied to Poor Delivery Experiences: Hidden costs from lost trust, negative reviews, and potential churn due to subpar delivery performance.
Revenue Drivers
- Conversion Rate via Faster Delivery Promise Date: Boost in online purchase rate when customers see shorter, more reliable delivery windows offered.
- Net New Annual Orders from Conversion Rate Optimization: Additional yearly orders gained from improved checkout conversion rates driven by better shipping.
- Repurchase Rate from Superior Customer Experience: Higher likelihood of repeat purchases when customers enjoy fast, consistent, and hassle-free delivery.
- Net New Annual Orders from New Repeat Customers: Incremental orders added each year from customers who return to buy again thanks to improved delivery experiences.
How to Avoid the Trap This Peak Season
To protect brand equity during peak season, companies need to:
- Invest in exception management: AI and real-time tracking can identify problems early and allow for quick fixes before customers are impacted.
- Diversify partners strategically: Tech-enabled carriers can scale faster, manage exceptions better, and deliver reliably at a lower cost.
- Communicate proactively: Customers forgive delays if they’re informed and empowered with options. Silence, on the other hand, kills trust.
When brands measure and manage the true cost of delivery, they stop playing defense, and start turning the last mile into a driver of customer loyalty.
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