What Failed Deliveries Cost Retailers, and How Pickup Removes Them
A failed delivery is one of the most underestimated costs in ecommerce, partly because it almost never appears as a single line in a P&L. The cost is spread across the operation, so businesses rarely track or manage it as a whole. What does a failed delivery cost, and how much of that can pickup take back? The figures that follow come from the HubBox carrier-neutral pickup network.
On this page
- What does a failed delivery actually cost?
- First-attempt success: home delivery vs out-of-home
- The hidden cost: WISMO and customer-service load
- How out-of-home delivery removes the cost
- Building the ROI case for Finance
TL;DR
- A single failed first-attempt delivery costs an estimated £13.50, once you add up everything a failed attempt sets in motion.
- Out-of-home delivery removes most of that cost because parcels sent to a pickup point or locker are collected successfully far more often than home deliveries in dense urban areas, with 99% of out-of-home orders collected successfully.
- Pickup is associated with an average 18% reduction in delivery-related complaints, reducing the customer-service load caused by WISMO contacts.
- For a retailer shipping 100,000 parcels a year, moving a share of deliveries to pickup could avoid around £196,000 in annual costs.
What does a failed delivery cost?
A failed first delivery costs far more than the redelivery fee you can see on the invoice. Each attempt also accounts for warehouse time and a customer-service contact, and when it all comes to nothing, the parcel is returned to the sender. A single failed attempt costs an estimated £13.50.
The figure is the sum of several factors happening at once:
- Redelivery transport, where the carrier goes back for another attempt. Sometimes more than one.
- Warehouse and admin time spent reprocessing and rescheduling the exception.
- The customer-service contact the failure triggers.
- A return to sender, when the second attempt also fails and the order is usually refunded. Lost goodwill, since some customers who experience a failed delivery won’t order again.
- 7 in 10 shoppers who distrust a retailer’s delivery process won’t shop with them, and 81% abandon if their preferred delivery option is unavailable (DHL, 24,000 shoppers,l;./)
- Failed attempts aren’t the only hidden cost, as porch piracy alone costs UK retailers £376.6m a year (Quadient).
The simplest way to estimate the cost of failed deliveries for retailers is to calculate a per-parcel figure and multiply it by their failed-attempt rate.
First-attempt success for home delivery vs out-of-home
Out-of-home collection succeeds on the first attempt far more often than home delivery because the customer collects at a time that suits them. Home delivery depends on someone being in, and in cities they often aren’t. 99% of out‑of‑home orders are collected successfully. It’s also why the network is efficient at scale, with carriers averaging six parcels per pickup stop, versus one per home delivery attempt.
The structural reason is that home delivery depends on the recipient being at one address during a window they can’t fully predict. If they aren’t in, the attempt fails. An out-of-home parcel waits at a staffed shop or locker with more convenient opening hours. The parcel’s already waiting for them, so there’s no failed attempt to begin with.
WISMO and the customer-service load it creates
Failed deliveries are one of the largest drivers of “where is my order?” (WISMO) contacts, which are the support tickets customers raise when a parcel doesn’t arrive as expected. Each failure tends to generate at least one contact, and pickup reduces them measurably:
WISMO is expensive twice over, as it loads the customer-service team with avoidable, low-value tickets. Each ticket represents a customer whose confidence in the order has already diminished.
Out-of-home delivery cuts both. Collection is predictable and the “ready to collect” notification tells the customer where their order is so there’s no second guessing. Operations and customer experience meet here, because what lowers your cost is also what gives the customer a better experience after they’ve bought.
How out-of-home delivery removes the cost
Moving a share of parcel volume to pickup turns avoidable failures into a saving you can put a number on. At 100,000 parcels a year, a retailer can avoid roughly £19,600 in failed-delivery costs before the WISMO reduction is even counted.
It’s a simple model, where you multiply the parcels moved to pickup by your failed-attempt rate and your per-attempt cost. As a result, you avoid the failed delivery cost while adding the savings from fewer WISMO contacts.
The table below works the saving out across different parcel volumes, using an assumed share of orders moved to pickup.
| Annual parcel volume | Annual failed-delivery exposure | Recovered at 15% pickup shift | WISMO reduction |
| 20,000 | £26,200 | £3,900 | ~18%* |
| 100,000 | £131,000 | £19,600 | ~18%* |
| 500,000 | £655,000 | £98,200 | ~18%* |
For a credible business case, retailers should base the shift rate on the share of customers likely to choose pickup, using a conservative estimate.
Building the ROI case for finance
A business case is easiest for finance to sign off when the assumptions behind it are out in the open and easy to validate. Give the payback as a range rather than a single figure, and build it on the inputs you can stand behind, such as your per-attempt cost, the realistic share of volume moving to pickup and what it costs to handle a WISMO contact.
State each input and show the saving at the low and high end of a sensible range, with the network figures named underneath. Operations teams reach for sourced data for the same reason the finance team signs it off. A number with a method behind it is far harder to argue with than an assertion.
The number you can take upstairs
Failed deliveries cost you money, and because the cost is spread around, it’s easy to miss how much. Put a hard figure on it and the conversation changes. Pickup removes most of the cost, and once that saving is sourced and sitting in front of finance, the case tends to make itself.
See what failed deliveries are costing your operation with a failed-delivery cost assessment for your parcel volume.
Frequently asked questions
What is a failed delivery?
A failed delivery is a parcel that can’t be handed over on the first attempt and has to be redelivered or sent back. Each failure adds redelivery and admin costs, plus a customer-service contact, on top of the original shipping charge.
What is a normal failed-delivery rate for home delivery in cities?
Roughly one in 10 UK home deliveries fail on the first attempt, and more than half of shoppers worry about missing a delivery while they’re out. Pickup removes the problem at its root, since the parcel waits for the customer rather than depending on them being home.
How much can out-of-home delivery save per parcel?
Every parcel moved from home delivery to pickup avoids around £1.30 in failed-delivery costs, based on a 9.7% first-attempt failure rate and a £13.50 cost per failed attempt. For a retailer shipping 100,000 parcels a year and moving 15% of volume to pickup, that adds up to roughly £19,600 annually before any reduction in customer-service contacts is counted.
Does pickup reduce customer-service contacts?
Yes, retailers see an average 18% reduction in delivery-related complaints after adopting pickup, and delivery issues account for 40% of negative customer reviews. Predictable collection and a clear “ready to collect” notification remove the uncertainty that drives most WISMO tickets.
What is WISMO?
WISMO stands for ‘where is my order?’ and refers to customer-service contacts from shoppers chasing an order.
