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October 29, 2024
Should Consumers Be Compensated for Delivery Mishaps?
A survey of over 1,000 U.S. shoppers found that over half (53%) expect money off their next order if a delivery is delayed, 63% expect delivery charges to be waived, and another 54% expect a free delivery code for their next order.
The survey from HubBox, which offers software supporting local pickup points, found that 53% of U.S. orders arrive late, damaged, or at the wrong address.
The top five home delivery pain points were:
- Orders delivered to the wrong house or block, cited by 37%
- Packages left with neighbors they don’t like or don’t speak to, 30%
- Items arriving damaged, 28%
- Late deliveries, 27%
- Having to wait at home for deliveries, 25%
Two-thirds accept that late deliveries are just an inevitable part of the online shopping experience, but 41% question their loyalty to a retailer if they experience late deliveries and 39% are less likely to shop with that brand again. Nearly half (49%) are considering out-of-home delivery collection points to overcome subpar delivery service, while about a quarter (37% of millennials; 34% of Gen Z) will return an item if it is delivered late.
The survey was intended to demonstrate the value of providing alternative fulfillment options, such as local pickup. Sam Jarvis, CEO of HubBox, said in a statement, “Increasingly, as retailers are having to compensate customers for delayed orders, they eat away at already slim margins — and this at a time when the cost of fulfillment is rising and some carriers are charging additional fees for home deliveries.”
The desire for waived delivery fees and other compensation comes as many retailers already absorb postal fees for delivery and returns.
For returns, it’s become increasingly common for retailers to allow consumers to keep an item while offering a full refund to avoid the costs of processing a return.
For delivery shortfalls, compensation reportedly can be attained by complaints to customer service departments. Several articles detail that Amazon is open to offering compensation for falling short of its two-day Prime guarantee. According to Bible Money Matters, compensation from Amazon for delivery problems ranges from a full refund of the item and shipping cost to a $40 Amazon credit after repeated late deliveries, a $5 to $10 Amazon credit, a free month of Amazon Prime, or a 30% refund of the order.
Discussion Questions
Should retailers be generous or stringent about providing compensation for late, damaged, or misplaced online deliveries?
What should the compensation be, if any, for a typical one-day late delivery?
Poll
Loading …BrainTrust
Brad Halverson
Principal, Clearbrand CX
Georganne Bender
Principal, KIZER & BENDER Speaking
Mohamed Amer, PhD
CEO & Strategic Board Advisor, Strategy Doctor
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The honest answer is: it depends. If a customer as paid for delivery on a certain date or a fast delivery for next day and the product does not turn up, then it is more than reasonable to expect special delivery charges to be refunded in full. Packages not arriving or arriving damaged need full compensation for the order. All other things need to be dealt with on a case-by-case basis and retailers can use their discretion based on a customer’s history and their value to the retailer. Retailers need to look after customers, but they also need to protect themselves against abuse of compensation.
The wording of the question is a bit confusing: given that no compensation is required, why aren’t we calling any level of it “generous”? I’m also a little troubled by the impression that many people are more interested in grabbing freebies than getting something on time (of course retailers, who – presumably – control the process are motivated precisely in reverse). So what’s my idea of reasonable? Terms – delivery windows and penalties for non-compliance – should be spelled out in advance, and allow some tolerance for normal delays. If retailers want to offer compensation for issues that may well be beyond their control, then that’s just another unknown to be added into the selling equation.
I don’t care so much about a day late. I care about dented cans, fedEx drivers literally throwing a shipment onto my porch and then telling me that the cost of the broken statue is the retailer’s’ problem, and general slobbishness with an expectation of a tip, to boot. Maybe it’s a miami thing, but it’s bloody awful. I don’t always blame the retailer, but I don’t like to be shunted from the delivery company back to the retailer
it’s just another manifestation of the devolving customer experience, and it’s a shame
A common sense approach is for retailers to state with clarity upfront what items, standards and situations they will compensate for or rectify if deliveries are late, or damaged. Customers too often get placed on a hamster wheel in having to deal with the shipper first, or if talking with the retailer, told without empathy that another item will get shipped out eventually. What the retailer may not understand is a critical deadline was missed (an outfit for a dinner party, a gift intended for a loved one, or something related to a meal or health) causing issues at home or with family and friends. This is where the retailer needs to be generous, listen well before giving a standard response – then take memorable action.
Neil summed it up perfectly. It’s one thing if you pay for fast delivery and the item doesn’t arrive or it arrives damaged, and quite another if it is merely late. Most retailers do not deliver packages themselves so they should not be responsible if you are cheesed off because your order arrived a day/hour/minute after it was supposed to arrive.
The key for a retailer is to manage expectations. If the expectations or promises are to guarantee special delivery scenarios, e.g., same day, overnight or prime, then compensation should be provided. Never make a customer pay for your mistakes. Other non special delivery time delays can be forgiven. Not so for damaged goods.
Certain consumer protections already exist, although compensation for lost work time, usually involves legal action, attorneys, and the possibility of opening Pandora’s box.
When you order an item from a retailer, you’re creating a contract between the two of you. A contract promises delivery, and if you have paid for goods but have not received them, you have rights.
The consumer is protected by the Consumer Rights Act, which states that services should be performed with ‘reasonable care and skill.’
Consumer Contracts Regulations also provide for a full refund if something arrives late. If there is no specified delivery date, the item must be delivered within 30 days of ordering. No matter whether you purchased the item online or in person, you can get a refund after that point.
However, if you ordered in store for home delivery, for example, furniture or something substantial, you WON’T be protected by the Consumer Contracts Regulations.
If your item arrives damaged, you have rights – even if you’ve signed for it. Damaged label on a box, reading “please handle with care. Fragile.” If your delivery arrives and it’s damaged, you have a right to a refund.
In today’s complex online order-to-receipt world, the retailer is uniquely situated between the manufacturer/supplier and the delivery company. Few retailers can justify or afford dedicated delivery fleets, so they rely on third-party providers. Delivery mistakes will happen- from late deliveries to damaged goods; however, nothing is “generous” about striving to rectify the situation and satisfy customer expectations. Consumers enter into a purchase contract, and retailers offer products with delivery options. Failed service level agreements (similar to supplier programs) should trigger compensation similar to those called out for in the survey. Repeat business requires a proactive approach. While dealing with exceptions is a productivity killer, losing a customer is worse.
Delivery issues seem to be the new returns desk; an important touch point in the customer-retailer relationship. Retailers need to get this right; it’s a loyalty and brand issue. That said, like returns, carte blanche isn’t the right answer here. In cases when the customer is paying for express service or received a damaged or wrong item, the retailer should make this right for the customer 100% of the time. Everything else is up to the retailer to sort out.
If you paid extra for faster delivery (because you have some sort of deadline you need to meet), you should be compensated if the order is late. Likewise, if you pay extra for Amazon Prime, and an order features free next day delivery, Amazon needs to compensate you for failing on its brand promise.
What that compensation looks like may be a debate for another day, but retailers (and their delivery partners) need to meet the expectations they raise when they close a sale.
I think delivery fees should be waived if the package shows up late, even if it’s not expected of the brand. Certainty and reliability are important when it comes to delivery, and so many retailers are now competing on speed. Righting wrongs with money back allows brands to maintain and sometimes build good will.
Mistakes happen. Compensation should be more generous if the delivery mechanism is controlled by the merchant, less so if a third party is.
Mischief managed!
With speed of delivery a point of differentiation for online retailers, and many shipping fees being free as a differentiator or reward for membership, it’s an interesting dilemma.
A credit for a future purchase to compensate for a late delivery or damaged delivery can help customer satisfaction. With product replacement for damage a necessity.
When deliveries are late or damaged for a time-sensitive need or event, credit for future purchase or replacement may not work. You may have lost that customer. A persistent miss between delivery promise and practice can and should be corrected by the marketplace through negative feedback to alert others resulting in declining sales for retailers who consistently miss on their delivery promise.
Retailer marketplaces have made delivery less reliable.
While it may not be the merchant that is delivering late, they do contract with the delivery service that is used. I can’t control that either. So it is only fair that there is some level of compensation if delivery is promised by a set date and fails to show. Same applies for damage and other situations. Again, not my choice as a customer as to who you as the merchant chose to use. Plus, proper packing can also stave off some of the damage, which is another merchant issue. Certainly against abuse but shoppers deserve to receive what is promised in the transaction.
“We keep our delivery promise or shipping is free” might be a good place to start for a policy statement.
Of course paid-for expedited delivery fees must be refunded if a time-slot is missed.
I’m a little bit skeptical about at least one of the stats cited above, though. Respondents say more than half of orders go to wrong addresses, arrive late or are damaged? I think that figure needs to be corroborated with data from the actual delivery services. They track performance pretty carefully. If this were accurate, heads would roll.
I would concede, however that a high percentage of online shoppers have likely experienced some delivery mishaps over time. Some mis-deliveries are resolved using common sense and the cooperation of neighbors. Some delays are due to hiccups in the delivery service which cost just a day or two.
Do all those glitches require compensation from the retailer? I think not. When an item arrives damaged or missing pieces, it should be replaced rapidly. Time-sensitive deliveries, like perishable food or prescription medicines, need special handling, and make-goods should be required when failures occur.
Generous? Stringent? It’s all perception anyway. I’d opt for “righteous.”
The short answer is “Yes.” There should be a type of compensation when the delivery is missed. But, more important is how the customer is informed. If they find out it was late after the package was supposed to be there, then shame on the company. Proactive communication not only makes it easier to apologize but also shows the customer that you are paying attention to them and their package. As for the compensation, it can be something small, like a coupon for a percentage off or a dollar amount on the next purchase. The key is you want the customer to return, so making the compensation apply to a future experience is the point. However, if every time they order, the delivery is late, no compensation will win back the business.
There isn’t an all or one answer here. The margins and service level expectation by category differ widely. In luxury categories, make it a service differentiator. The interesting question is whether it’s possible at mass market retail, especially as we continue to push the envelope in new categories like grocery and perishables. As it is, returns are causing huge profit hits and the general feeling is that in low margin categories, the current return rate for convenience is close to a tipping point of unsustainability, especially for occasional or one-time customers. And with the holidays coming up, should retailers take a hit for a poorly run UPS or USPS? That’s added external risk. Perhaps the risk should be shifted to the providers themselves and in a healthy competitive logistics market, there would be competition not just on price, but reliability and quality of service.