(From Supply Chain Standard, June 2012)
GLIT – goods lost in transit – is an increasing problem as online shopping grows and less than honest customers find it can be an almost foolproof way for acquiring a few extras. What can retailers and carriers do?
A survey by the University of Essex earlier this year suggested that, as a nation, we have become rather more dishonest lately. Eight out of ten are happy to keep any money they find in the street, compared with six out of ten in 2000, while two-thirds of under-25s are happy to lie on a job application.
It is the same when it comes to home delivery: dishonesty, it seems, rules. According to Richard Higginbotham, head of marketing at Transactis, surveys suggest that no more than one in 1,000 parcels should go missing somewhere between despatch and delivery, However, for some products, some areas and some people, that figure is more likely to be one in 100 and sometimes even one in 10. “A lost parcel claim is 40 per cent more likely for someone who has previously claimed that a consignment has gone astray, “ he says, “while a quarter of claims concern people who have a lost parcel rate of one in 10.”
Postcode black spots
It is a problem with which carriers are all too familiar. Drivers regularly report that a delivery address appears to be an empty house, while most depots will be aware of postcode black spots. Carriers are frequently blamed for lost or damaged goods and many have implemented systems to provide evidence of delivery – such as City Link’s drivers photographing front doorsteps or “safe” locations where the goods have been left to prove they were delivered.
Collecting a signature on delivery isn’t always the answer as returns fraud is rife. One case involved a firm in Lancashire selling good copies of Timberland boots from a market stall. Paying £20 or so for a pair of boots in a market would perhaps suggest to buyers that these were not genuine, but a surprisingly large number of shoppers bought boots from the Timberland web site (which offers “free returns”) for anything up to £150 or so and then returned a fake pair to the company saying that the boots did not fit and claiming a refund. Result – a pair of genuine boots for the price of fakes.
There is very little that retailers on the receiving end of such scams can do as dishonest shoppers simply claim that the fake boots were the ones they received in the first place and so it is a case of one person’s word against another. Shoppers can argue that the fake items were substituted before despatch, by the carrier or delivery driver, or on the return journey and it is virtually impossible for the seller – or indeed carrier or delivery driver – to prove otherwise.
Such fake substitutions are also well known in the jewellery trade – paste returned for diamonds – and in the world of expensive electronics: rather more sophisticated than yesterday’s returned “television” proving to be no more than a box of bricks, today’s plasmas are substituted with old car windscreens instead.
Returns frauds aside, the Interactive Media in Retail Group (IMRG) calculates that every “lost in transit” order costs retailers on average £35, made up of servicing customer calls and investigating the claims, handling replacement goods, redelivery and lost margin since delivery insurance covers only the cost price of the missing items. Small wonder then that few retailers bother to investigate or even track “lost” items costing under £20: far cheaper simply to send out a replacement and cut your losses. If they did monitor these missing items they might be in for some surprises.
Richard Higginbotham cites the case of a “group of individuals” who repeatedly ordered electric kettles from various online retailers and subsequently claimed the goods were never delivered. The kettles cost under £20, so there was little investigation just a repeat despatch. However, this enterprising group was amassing assorted kettles which were then sold at weekly car boot sales at a discounted price. It was, it seems, a “nice little earner” until Transactis analytics actually revealed that the “group” lived in close proximity and seemed to have a penchant for ordering kettles every day.
“Most retailers are desperate for new customers,” says Higginbotham, “and will believe a new customer making a first claim. There is also a tendency in call centres to behave as if the customer is always right. It is when you start checking against multiple records and share data on claims with other retailers or carriers that patterns start to emerge. The only indication of theft may be persistent claims from a particular address.”
Such analytics also highlight carrier routes and postcodes which are prone to “goods lost in transit” – but it isn’t always the “sink estates” which are hotbeds of crime. There was the case of the perfectly respectable and very irate GP who rang a call centre to complain that his case of wine had been “lost” yet again. But he didn’t hang up quite quickly enough and the operator overheard him say to a colleague: “Ha, great – they fell for that one again…”
With online shopping currently accounting for 17 per cent of UK sales, and expected to reach almost 25 per cent by 2016, finding ways to identify when goods really are “lost” in transit has to be a priority for retailers and carriers alike.