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Mis-Shipments Are Costing You More Than You Think

Posted by Avery Walts on Aug 4, 2016
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mis-shipment 

Remember those exams that looked nothing like the study material? Hours of studying and memorizing all for nothing. Heck, it may as well be written in a different language. Now imagine that feeling when you open a long-awaited delivery. You open the box to find a product that is nothing at all what you ordered.

Complete disappointment.

Rage ensues and maybe a few tears. Soon enough your fingers are racing for the keyboard to write a scathing review on the seller's page. The return label is printing, and you are ready to send this puppy back and get your money back in full. How could a company, most likely world-renowned at that, send you the wrong package without noticing? Unfortunately, this occurs often. This is what we in the biz call a mis-ship.

What is a Mis-shipment?

A simple Google search leads you astray, offering an incorrect definition and a slew of message boards asking, "(Insert company here) said my item was mis-shipped. What does that mean?"

Allow us to help you. A mis-ship, or mis-shipment, occurs when an incorrect item is shipped to a customer. Ideally, this sort of catastrophe would never happen, but unfortunately we don't live in a world of flowers and unicorns. There are a number of ways to combat the event of a mis-ship, but we all make mistakes. Here are some surprising ways continuous mis-shipments hurt your company more than you think in the long run, but I’ll tell you how to avoid them in this article.

[SkuVault can help you eliminate mis-ships. Try a demo today!]

 

Time Is Money, Money Is Power, Power is Pizza

Thank you, April Ludgate. Returning an incorrect or non-satisfactory package is a hassle for everyone involved. But that's no secret. What's hidden under the surface is the true, lengthy cost of a mis-shipment to companies. The string of transactions is a hefty list.

Let's break it down:

  • For every incorrect order that is picked and shipped, the original pick and pack cost is lost and an additional pick fee is added as the replacement order. That's $2-5 in the hole already.
  • When a customer orders the complete F.R.I.E.N.D.S series box set and instead receives Seinfeld, there's a huge probability they will not want to pay a return shipping fee for something they never intended to purchase. Return charges range from $6-20 depending on size.
  • If the customer simply does not want their purchase anymore, your company will foot the return shipping costs, again from $6-20.
  • Custom packaging from the original product is lost or destroyed, running the bill up once again.
  • Once the returned product is received back into the warehouse, it needs to be inspected for damage, and if it is damaged, the product cost is lost running another $1-3 (dependent on the receiving clerk’s hourly rate).
  • Customer service time is a figure most forget to calculate into the total cost of a mis-shipment. At an average call center rate of $0.75/minute, time is money.
  • Companies may provide additional incentives to please a customer if necessary. This could mean waiving handling fees or discounting the product.

The worst possible outcome of a mis-shipment is customer dissatisfaction. Yes the order is lost, but you also run the risk of losing them as a customer entirely, and hurting your reputation as a valued company in the process. The final solution to solving mis-shipment errors is finding a top-notch fulfillment company and implementing greater software than what's probably being used already.

Company Morale Deteriorates

It's important for a company to act as a fluid, united front. Strive to provide excellent customer service and have the patience to settle customer disputes, but remember those on the inside get frustrated too when something goes wrong. When a company works hard to avoid happenings like mis-ships, it's difficult to digest why mis-ships happen not once, but repeatedly. The negative, or rather disappointed, attitude from one person on a sales team, for example, spreads throughout the staff. It can be hard to bounce back from a bad experience. If morale stays low it can negatively impact the company's drive to perform better and eventually lead to the downfall of a positive reputation.

FBA Benefits and Downfalls

Many merchants have taken advantage of Amazon's feature called Fulfillment by Amazon, or FBA. In this model, the merchant sells their product but allows Amazon to store, pick, pack, and ship their products. But you already knew that, I'm sure.

FBA is loaded with benefits, such as:

  • Eligibility for free shipping and Prime two-day shipping
  • Sell on international markets to Canada and Mexico
  • Amazon customer service and returns
  • No minimum on number of units sent
  • Shipping fees included in cost for storage space and orders fulfilled
  • Items $10 and under offered at lower fulfillment costs and free shipping

Merchants can have a successful lifespan using FBA as long as their shipments are successful as well. Although Amazon is producing the shipping part, the product has to arrive correctly and unharmed. If merchants cannot deliver on their end of the bargain, they risk losing all the benefits listed above. That means less recognition globally, bad customer reviews, loss of free shipping for customers relying on that feature, and an overall loss in customer loyalty. You don't know what you've got 'til it's gone.

[10 tips for better warehouse inventory management]

Loss in Seller Fulfillment Power

Last year Amazon rolled out yet another feature for it's sellers. This one is called Seller Fulfilled Prime. Merchants with consistent sales have the ability to flag their product listings as eligible for Prime two-day delivery. Previously sellers using FBA took the #1 spot in the Prime delivery race.

Again, let's look at the benefits:

  • Members of Amazon Prime view the prime flag, a.k.a your product visibility will skyrocket
  • Complete stock control without sharing stock with Amazon
  • Easy return processing with automated return authorizations
  • 'Ship by region' which allows Prime-flagged products to be shipped as Prime products to customers only in the seller's region

However, in order to qualify for Seller Fulfilled Prime merchants must have a quick on-time ship rate and cancellation rate, valid tracking rate, and a high customer satisfaction rate. So if mis-ships occur kiss the coveted Prime badge goodbye. Mis-shipments automatically decline your eligibility to sell on Prime. Mis-shipments will undoubtedly get your company knocked off the list after achieving Prime. Your company would lose the broad spectrum of customers provided by Prime, which could eventually lead to the failure of the company as a whole whose very existence may rely on Seller Fulfilled Prime perks.

What Goes Up, Must Come Down

It's a long climb to the top, and no one gets there without hurdles. The last thing a company needs is for a string of mis-shipments and customer complaints to bring them down amongst the competition. Building a bad reputation early hurts a merchant's marketplace gains in the future. It's difficult to bounce back after a dampening customer review is spread through the seller grapevine. It's normal to suffer a few hiccups, but don't let the hiccups overtake your business.

Mis-ship and SkuVault 

To reduce the risk of human error in shipping processes, we have integrated with a number of shipping platforms to make mis-ships a thing of the past. In-house we use a number of features all designed to make every facet of your company and warehouse management streamlined and stress-free. Additionally, our cloud-based technology reduces human error by managing inventory electronically rather than manually. The internet continues to be a replacement for human interaction.

Here's a rundown of some of our features great for eliminating mis-shipments.

  • Our inventory management keeps an accurate count of your quantities, which reduces mis-picks,  mis-ships, out of stocks, and undersells
  • Purchase orders and receiving ensures your company always receives accurate quantities
  • The replenishment report keeps your warehouse fully replenished, re-ordered, and updated
  • Real-time quantity updates ensures quantities sync across marketplaces which increases sales
  • Tracking FBA so you know where inventory is at all times, reducing the chances of incorrect shipments
  • Interactive wave picking creates an efficient route for pickers by filtering orders by date, shipping method, or SKU using real-time calculations to ensure the correct product is chosen for packing and shipment
  • Quality control eliminates customer complaints by catching low quality or incorrect products before they're sent out. Mis-ships no more!
  • Minimize picking hours and shipment errors by utilizing assembled products, physically bundling products together instead of getting one product and not the other

So What Does This All Mean?

Mis-shipments are bad, but not uncommon. Michael Jordan didn't make his high school varsity basketball team and went on to become one of the best players of all time. Just the same, Amazon didn't make it to where they are now without hiccups in the beginning and hiccups still today, but they thrive as one of the top marketplaces for selling goods in the world.

It's feasible to stay afloat with a few mis-ships, but the key is remembering how actions within a company and actions outside to customers affects business overall and down the road. Sell products with an efficient plan like FBA or Seller Fulfilled Prime while maintaining a professional demeanor in customer disputes and staff support. Easy sailing ahead.

Optimize Your Supply Chain with SkuVault WMS. Request a demo.

Topics: Amazon, eCommerce, eCommerce Businesses, Inventory management, warehouse management