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Address Verification Software Eliminates Hidden Costs

Are Incorrect Shipping Addresses Adding Costs to Your Freight Bill? Use Address Correction Software

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When is the last time you checked your freight bill to analyze up-charges related to problems with incorrect shipping addresses? Address inaccuracies represent an area of hidden cost that doesn’t  get the attention it deserves. Left unattended, the dollars can quickly add up.

One expert, Satish Jindel, founder and president of Pittsburgh-based SJ Consulting Group, estimates that parcel shipping errors add 5-7% in unnecessary costs to a shipper’s annual tab. Given that companies collectively spend some $55 billion a year on domestic parcel services, those mistakes translate into serious money.[1]

How significant are costs related to incorrect delivery addresses? They can be huge and accumulate in several ways.

Automatic Address Correction is Crucial to Cost Control

Say, for example, that a customer accidentally types in an incorrect street address for its ship-to address. Generally, the carrier will fix the issue with the delivery address but you’ll pay for that service. We’ve seen charges that range from $13.00 per package, up to $91.00 in charges for all packages in the incorrectly addressed shipment.

Residential Deliveries Erroneously Classified as Commercial

Another common and costly error occurs when residential deliveries are erroneously classified as commercial deliveries. Again, the carrier may fix it, but at a cost of $2.50 per package. If your company pays for the freight and adds it to the customer invoice, you’ve just lost the opportunity to pass the additional cost to the customer.

Incorrect Shipping Addresses Increase Customer Service Costs

Besides carrier charges, you as the shipper bear additional internal labor costs every time your customer service and shipping department employees have to interrupt their daily routine to resolve the problems that result of inaccurate addresses.

Unhappy Customers and Cancelled Orders

Delivery address problems also lead to frustrated customers, order cancellations, even the loss of a customer. As a company, you want to eliminate any risk that can result in delivery problems. An interruption or delay makes it too easy for that impulse shopper to decide that they don’t really need the product after all. It makes it too easy to lose the business.

Certainly, no company necessarily required to pre-verify shipping addresses, but given the examples above, it makes great sense to build this automated address verification into any supply chain execution workflow.

Pre-empt the Problem with Address Verification Software

The easiest way to prevent the risk of additional charges and lost customers due to incorrect shipping addresses is to add automated address verification software to your shipping system.  Address verification can occur at multiple points in the supply chain execution process, from order creation through shipment processing. Address verification tools are installed on the company’s ERP system or added to your multi carrier shipping software system.

Address Verification Options

Numerous tools are available these days to pre-empt this problem before the carrier arrives to pick up the shipment.  Logistyx postal specialists can help you decipher your options and decide which tools best fit your needs. Considerations:

  • Does your current shipping system allow you to designate shipments as residential or commercial?
  • Does it validate addresses at the street level, city, zip code level?
  • Does your shipping software detect multiple or near duplicate address matches?
  • Does it allow the user to view and/or choose address details?
  • What is the address validation source used by your shipping system? For example, Logistyx Technologies’ address verification solution is CASS CertifiedTM by the USPS®. CASS supplies information verifying the submitted address is written correctly and falls within a USPS-approved address range.
  • Does your multi carrier shipping software require Delivery Point Validation (DPV)? DPV enables you to verify that an address actually exists.

The bottom line? Make sure your shipping software offers an automatic address verification tool. If you suspect that you may be absorbing extra shipping costs due to incorrect addresses on shipments, we can help you identify areas of risk. Contact us today.

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[1] Six Steps To Cutting Your Parcel Shipping
Costs, http://www.shippingsidekick.com/news.wml?id=331, last viewed 2/19/12

Logistyx Technologies is a provider of carrier-agnostic e-commerce fulfillment software and shipping software solutions that enable shippers to manage all their small parcel, LTL postal, regional, national and international carriers on one platform. We also help companies automate their reverse logistics process for greater efficiency and lower cost. 

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