India shipped nearly 4 billion ecommerce packages in the last fiscal year (FY23), and in the next five years, that number is projected to surpass 10 billion. While this growth represents a promising future for online retail, it also poses a host of challenges for the ecommerce industry to confront; one of them is the surmounting issue of courier-initiated returns.

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Courier-initiated returns occur when an order delivery fails, forcing the product to make a round trip back to the warehouse. Such returns can be a logistical nightmare for e-commerce businesses and are often triggered by what we call 'risky orders.'

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These risky orders come with a certain degree of uncertainty. It could be due to incorrect delivery addresses, incomplete contact information or pesky address typos. However, since manually identifying and addressing risky orders is costly and time-consuming, many e-commerce companies choose to ship them despite the inherent risk.

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Now, the problem is that these risky orders take a substantial toll on a company's revenue, significantly eating into the profitability of e-commerce operations.

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Here’s how e-commerce businesses lose money dealing with these risky orders:

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• Forward & Reverse Logistics Costs: Risky orders lead to double shipping expenses for sellers when returned, once from the warehouse to the customer and again from the customer to the warehouse.

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• Stuck inventory: With such orders, while the seller pays double the usual logistics, he also loses money while the inventory remains stuck in transit.

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• Increased probability of damage: If the order contains any fragile items, the seller loses more money as it is expensive to ship fragile items back and forth.

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• Double Operational cost in order processing: Risky orders cause double order processing expenses, including staff time and quality checks, when the item is resold after return.

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Unfortunately, more often than not, e-commerce companies accept it as an unavoidable cost of doing business.

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But what if it doesn’t have to be? What if there was a tool that could smartly analyze customer data to identify risky orders and take action? What if there was a way ecommerce companies could save money instead of losing it on risky orders resulting in courier-initiated returns? Well, with Eshopbox, there is. Eshopbox offers a valuable solution for such challenges through its innovative Risk Score feature.

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In this blog, we will delve into what the Risk Score is and how it tackles last-mile challenges for ecommerce brands.

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What is Risk Score?

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The Risk Score feature is a sophisticated tool developed by Eshopbox that leverages data analysis to assess the probability of a failed delivery for each order. It considers various critical factors and assigns a risk score to orders, categorising them as high, medium, or low risk based on the likelihood of delivery failure.

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Here's how it works:

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There are three main components to risk score: data analysis, risk categorisation and sending alerts. When an order is received, Eshopbox conducts thorough data analysis to categorize orders based on their risk levels. Subsequently, it promptly sends alerts to the seller, enabling them to take proactive and preventive actions.

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Data Analysis

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The Risk Score feature analyses a multitude of data points associated with each order, including:

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• Previous Delivery History: It considers whether the customer has experienced delivery issues with past orders.

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• Customer Behaviour: It assesses the customer's behaviour, such as their response to delivery notifications and order confirmation alerts.

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• Customer Details: It checks the customer details, such as delivery address, phone number and email address, to see if the information is complete and valid.

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Risk Categorisation

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Once the data analysis is complete, the feature categorises orders into three risk levels:

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• High Risk: Orders with a significant probability of delivery failure are categorised as high risk. These orders often have red flags, such as incomplete address information or a history of unsuccessful deliveries.

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• Medium Risk: Orders with a moderate likelihood of delivery failure fall into the medium-risk category. While not as critical as high-risk orders, they still require attention to ensure successful delivery.

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• Low Risk: Orders with minimal chances of delivery failure are classified as low risk. These are typically expected to be delivered successfully without significant issues.

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Notifying Sellers

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High-risk orders are flagged for immediate attention, and an email is promptly sent to notify sellers to take the required action.

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This proactive approach enables e-commerce businesses to take necessary actions before shipping, minimising the chances of delivery failures.

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These actions may include:

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1. Verifying and updating delivery details to ensure accuracy.

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2. Confirming order details with the customer to resolve potential issues.

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3. Cancelling the order if no response or information is received from the customer.

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However, If no action is taken on an order on hold due to high risk for more than 24 hours, Eshopbox will automatically release and process it. What’s more, is that you can even configure this 24-hour auto-release window to suit your business requirements.

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How can Ecommerce Brands Leverage Risk Score?

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With Risk Score, e-commerce businesses can complete the last leg of order fulfilment with utmost certainty. But that's not all Risk Score can be used for. Here's how ecommerce businesses can harness the power of Risk Score for their benefit:

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1.  Reducing Failed Delivery Incidents

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By categorising orders as high, medium, or low risk based on various data points, the Risk Score feature empowers e-commerce businesses to focus their attention on orders with a high likelihood of delivery failure. High-risk orders can be flagged for immediate action, reducing the frequency of failed delivery attempts and increasing the likelihood of successful deliveries.

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2.  Saving Reverse Logistics Cost

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Failed deliveries result in courier-initiated returns, which are both costly and resource-intensive. The Risk Score feature minimises such returns by highlighting orders with a high risk of failure. E-commerce brands can intervene proactively, rectify issues, and prevent unnecessary returns, resulting in cost savings.

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3.  Controlling Delivery Re-attempt Costs

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Unsuccessful deliveries not only consume additional resources but also escalate costs related to courier fees, fuel, and labour. Without the Risk Score feature, e-commerce businesses face a higher rate of delivery re-attempts, negatively impacting profit margins. By identifying and addressing high-risk orders, this feature helps minimise unnecessary re-attempt costs.

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5. Customer Retention and Satisfaction

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Customer satisfaction is a cornerstone of success in e-commerce. A failed delivery attempt not only incurs additional costs but also results in dissatisfied customers. Negative customer experiences can quickly spread through social media and online reviews, deterring potential buyers and eroding trust in the brand. The Risk Score feature is instrumental in preventing such occurrences by identifying high-risk orders and taking pre-emptive measures to ensure successful deliveries.

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6.  Protection Against Fraud and Malicious Activity

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Beyond improving delivery success rates, the Risk Score feature adds a layer of security by identifying high-risk orders for potential fraud. It helps e-commerce businesses safeguard against financial losses and reputational damage caused by fraudulent transactions and malicious activities.

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7.  Efficient Resource Allocation

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Not all orders carry the same level of risk. The Risk Score feature allows e-commerce brands to allocate resources more efficiently by focusing on high-risk orders. This targeted approach streamlines order fulfilment operations and maximises efficiency.

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8.  Data-Driven Insights

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The Risk Score feature provides valuable insights into customer behaviour by analysing various data points. These insights can be leveraged to refine marketing strategies, optimise inventory management, and enhance overall business operations.

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Wrapping Up

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At the end of the day, the e-commerce industry demands precision and efficiency in order delivery. The cost of failed deliveries extends far beyond financial losses, making them a challenge that brands cannot afford to ignore.

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While the Indian e-commerce sector has experienced remarkable growth, it's essential for businesses to have access to top-tier shipping and delivery services that can address risky orders.

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Eshopbox Shipping, equipped with features like the Risk Score, offers a competitive advantage in order delivery. To unlock the full potential of Eshopbox Shipping and explore how it can elevate your e-commerce operations, reach out to our sales team.

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