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The true cost of misshipments (and how to reduce them)

An image depicting a misshipment with a women receiving red cowboy boots from a package when the image on her phone shows black boots.

You placed an order online, waited for it to ship, and are now eagerly awaiting delivery. When the parcel finally arrives on your doorstep, you open it to find…it’s not what you ordered.

Or worse, your order never arrives at all.

Cue panic, frustration, and less-than-warm feelings toward the brand. Why does my order contain the wrong items? Where did my order end up? How do I get this fixed?

It’s true that mistakes happen in e-commerce. But regular misshipments spell bad news for customer retention and brand trust. Unless you have robust prevention strategies in place, misshipments could seriously erode your revenue.

In this blog, we’re going to explore how you can start combating misshipments at the source – and how a 3PL like Ryder E-commerce can help.

Misshipments definition

What are misshipments?

A misshipment is an event in e-commerce logistics where a shipment or package is sent incorrectly to the end customer. This could be an order being sent to the wrong location, to the wrong customer, or an order which contains the wrong items.

Misshipments can occur for a variety of reasons, such as incorrect labeling, errors during the order fulfillment process, or poor communication between the brand and the shipping company.

In the best case scenario, a misshipment will result in a delay to customers receiving their order. At worst, you might have to offer a full refund – and face the cost of lost customer loyalty.

Because correcting shipping and delivery errors can be very costly for businesses, it’s better to ensure they don’t happen in the first place by having measures in place for preventing misshipments during each stage of fulfillment.

Common types of misshipments

The package is sent to the wrong customer

Failed deliveries can occur for any number of reasons, such as the delivery driver dropping off a package at the wrong house, or parcels being switched so that customers in the same area receive the wrong package. In this scenario, the intended customer could receive a completely different order – or not receive anything at all.

The package contains incorrect items

Even if a package is sent to the right customer, there’s a chance it might not contain the right items. A customer might receive the right garment in the wrong size or color, duplicate items, or the wrong item entirely. This happens when SKUs don’t scan correctly or inventory records are not kept up to date, or because of simple human error during the picking process.

The package is sent to the wrong sorting facility

Once a parcel is dispatched from the warehouse, it gets sent to a parcel sorting facility where it will be grouped together with other packages bound for the same area. Thanks to the huge volumes that pass through these sortation centers, mistakes can happen where packages end up at the wrong facility. For example, a postcode could be entered incorrectly, or a package bound for Glendale, CA could end up in Glendale, AZ.

The package never gets shipped

Although rare, orders can be mis-shipped by not leaving the warehouse at all. With so many parcels flying back and forth for outbound shipping or undergoing the returns process, it’s not surprising that the occasional package falls through the cracks. This is most common when a business or 3PL doesn’t have integrated order management software that passes information along at each stage of fulfillment. If an order doesn’t get shipped – or never gets picked/packed at all – there’s no alert to let the warehouse team know that an order has been missed.

The true cost of misshipments

When an order doesn’t turn up or contains an incorrect item, this is a guaranteed recipe for customer dissatisfaction. But incorrect shipments can have a significant impact on both the sender of the package as well as the recipient, including:

Poor customer experiences

Every misshipment that takes place will lower your perfect order rate, or the percentage of orders fulfilled without any errors. Keeping your perfect order rate high is essential to offer a positive customer experience.

Why? Because when a customer orders, they expect at the bare minimum to receive their package on time and containing the right items. If this doesn’t happen, WISMO (‘Where is My Order?’) and delivery anxiety mean they’re unlikely to buy from that e-commerce business again. These shoppers could also take it upon themselves to leave a negative review to discourage purchases, which is bad for your brand reputation.

Higher operational costs

When shipment errors take place, it’s the brand’s responsibility to fix the situation. Depending on the type of misshipment, this could involve rerouting packages, return shipping costs for incorrect items, and even the full cost of a replacement order if a missing package cannot be tracked down. Over time, the cost of misshipments adds up and starts cutting into your profit margins.

Higher return rates

Although most brands will endeavor to fix a missshipment as soon as it takes place, the customer may not be open to this – especially if they have to wait longer for their order. In some cases, shoppers will prefer to just return the incorrect shipment and get their money back to shop elsewhere. This results in your e-commerce return rate creeping up, which spells bad news for your revenue.

Why do misshipments happen?

Misshipments have become a relatively common occurrence in e-commerce, especially with the increasing pressure for brands to ship and deliver orders as quickly as possible. When a business is grappling with rising order volumes and/or is reliant on manual processes to fulfill orders, misshipments are more likely to take place. Moreover, if misshipment problems are happening on a regular basis, this has a knock-on effect on the efficiency of the order fulfillment process, creating a feedback loop of order errors.

Common reasons for misshipments include:

Errors during the picking process

When an online order is placed, a picking list will be generated for a team member to go around the warehouse picking the items needed to fulfill the order. Depending on how picking sites are configured and whether barcode scanners are being used, the worker could pick the wrong SKU variant of a product – or a totally different product entirely. If there are no robust quality control checks before shipping, then an incorrect pick won’t get picked up until the order is with the customer.

Inventory management problems

If your business doesn’t have real-time visibility into its inventory levels or SKU counts, it’s very difficult to keep track of how much inventory you have or what picking location it belongs to. This increases the likelihood of poor order accuracy due to SKUs being stored in the wrong place or unavailable.

No order management software

An Order Management System (OMS) allows businesses and 3PLs to manage and track orders across multiple channels and each stage of the fulfillment process. It also automates time-consuming, manual tasks such as data transfers and routing orders to the nearest fulfillment center. Without an OMS, human errors are more likely to happen. Parcels might be packed incorrectly or sent to the wrong carrier.

A powerful order management platform is also necessary to help you manage more complex orders, such as split shipments. When an order is split into more than one package, there are more shipments to keep track of during the order fulfillment process, and therefore a higher likelihood of misshipments without the right software.

Poor communication with carriers

Once a package leaves the warehouse and is in the hands of parcel carriers, a business or 3PL has no control over the shipping experience. But when a package goes astray or is delayed, the customer is going to demand answers directly from the brand.

If a business doesn’t have good communication lines with the carriers they use, it’s much harder to rectify misshipments when they happen – or prevent misshipments from happening in the first place. This leaves the customer bouncing back and forth between the brand and the carrier trying to get answers, which leads to customer dissatisfaction.

Package theft

Unfortunately, rates of so-called ‘porch piracy’ have grown in tandem with e-commerce sales, which has caused misshipments to become more frequent. If a customer’s order is delivered but the package is taken before they can receive it, this is going to be perceived as a failed delivery. If the parcel carrier maintains that the delivery took place, it’s up to the sender to ship a replacement order at their own expense.

How to avoid misshipments

1. Implement quality control checks

Having final quality checks for every package before it leaves the warehouse ensures that you’re avoiding preventable reasons for misshipments. Things to consider as part of quality checks include:

  • Does the package contain the correct SKUs?
  • Are the items packaged properly to avoid damage in transit?
  • Is the package correctly labeled?

2. Utilize barcode scanners during the picking process

Manual picking is responsible for a high rate of misshipments, because warehouse staff can’t always tell whether they have the right SKU or not. By equipping pickers with barcode scanners, they can check every pick against their picking list to confirm that it’s the right item and the right SKU variant. This helps to save time during the picking process, as pickers don’t need to check hard-copy picking lists for accuracy.

3. Invest in order and inventory management software

Even seemingly minor mistakes, like typos in shipping addresses or SKU codes, have the potential to lead to misshipments later on. Streamlined inventory and order management systems pull information directly from the customer order itself, enabling you to avoid human error and have a single source of truth across systems.

4. Maintain communication with your parcel carriers

No matter how many shipping carriers you work with, it’s important to develop good relationships that help you to troubleshoot shipping and delivery problems effectively. If issues can be identified early on, this means your brand or the carrier can step in to resolve it before it goes on to become a misshipment.

5. Partner with a 3PL

While fulfilling orders in-house can make it easier to coordinate white glove services like custom packaging or inserts, getting orders out the door in a timely manner becomes a bigger time commitment as your business grows. Incorrect shipments are more likely to happen if your infrastructure and technology is unable to keep pace, which puts even more pressure on your operation to play catch up and process returns.

A reliable 3PL partner like Ryder E-commerce by Whiplash can help you to reduce misshipments through:

Advanced order and inventory management systems

Ryder Ecommerce’s proprietary e-commerce technology platform makes it easy to avoid misshipments by conducting regular inventory checks in real time across warehouse locations. Easily view, filter, and pause orders to rectify mistakes or set up custom notifications to monitor your operation, even at a distance

Seamless e-commerce integrations

When customers place orders at your online store, you need to have confidence that those orders will be transmitted quickly and accurately to your warehouse. Ryder E-commerce maintains native integrations with major e-commerce platforms including Shopify, so you can feel confident that no orders will fall through the cracks.

Automated picking processes

Mistakes during picking are one of the biggest contributors to high misshipment rates. Our LocusBot system helps to remove human error from the picking process by guiding our pickers to the right location and SKUs required for each order, increasing order accuracy and speeding up the fulfillment process.

Productive carrier relationships

Ryder E-commerce maintains close partnerships with both national and regional parcel carriers to not only get you the most competitive shipping fees, but maintain oversight of every single order that leaves our warehouses.

Misshipments happen. The response is what matters.

No e-commerce brand is infallible. But every misshipment that takes place likely represents another customer that’s lost to a competitor. When another vendor is just a click away, brands need to work on executing the perfect e-commerce delivery experience to retain customers and build loyalty. Not only that; when misshipments do happen, your brand should have the workflows and communication lines to jump into action and save the relationship. Learn more about how Ryder E-commerce can help you combat misshipments by contacting us today.

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