eCommerce

How Data Quality Affects Tax Calculations, UX and Deliveries 

by Jennifer Dunn

Data Quality and Address Verification

This post comes from our friends at Addressy

Retailers are constantly focusing on new ways to improve ROI to grow and expand their business. At the center of this strategy is data, and the quality of that data can often lead to high costs and reputation damage if it is incorrect – putting an enormous cost on retailers. 

Data quality describes the accuracy of your information, and whether it is fit for use. When we say quality, what we mean is the qualitative value of the data – how useful it is for its intended purpose. For example, if you capture a customer’s address data accurately in the checkout, this data can then be used to ensure that the parcel is sent to the correct location, and that any further communications you send are received. On the other hand, if you capture an inaccurate address in the checkout, how do you know that the item to be shipped to the customer will arrive? Chances are, it won’t. Poor address data can only lead to trouble but not just in delivery… 

The Pitfalls of Bad Data

For example, consider the financial implications. Firstly, if you don’t have the correct address data for your customers, you could be throwing away thousands of dollars on sales tax returns. Today 45 US states levy a sales tax, and each one has different legislation, rates, and restrictions. Capturing an inaccurate address means you are at risk of overcharging your customer, or worse, undercharging them leaving the retailer to foot the tax bill. Besides revenue risks, inaccurate address data leads to increased customer frustration. Imagine having to pay more than you were expecting or paying less initially and then having to pay the full balance at a later date – when you don’t necessarily have this money at hand. 

Poor quality data will also result in issues identifying customers – particularly those who could be spending a lot on your services. Understanding a 360-customer view is getting more important as brands battle steeper competition. And what about the cost and effort of having to resolve data issues later down the line? All of this adds up to a substantial sum. 

Now back to delivery… a recent Addressy global research study – Fixing Failed Deliveries: Improving Data Quality in Retail – collected data from over 300 retailers and over 2,000 online consumers across the US, UK and Germany discovering that 1 in 20 online orders never even reach their intended destination –  a shocking figure for retailers.  

65% of retailers say that failed or late deliveries are a significant cost to their business, and this is unsurprising when we consider that failed deliveries cost retailers approximately $200,000 per year on average. Costly redeliveries, refunds and discounts all play a part in this cost.  

The research also found that it doesn’t even matter if it’s the courier, not the retailer that’s to blame for the failed shipment. 78% of consumers still hold the retailer accountable. This is a dangerous issue for retailers in an age where shoppers vent their frustrations on social media and online review sites. All it takes is for one angry customer to complain to your online audiences and the message of a poor user experience exponentially amplifies to thousands – all of whom will form an opinion based on one failed delivery.  

Consumers also get frustrated when having to manually enter their address details. In fact, when confronted with problems entering their address, 34% of shoppers said they would look for the item from a different retailer. As competition increases across the industry this is a problem that retailers can’t afford to ignore.  

So, what’s the real issue? Well, according to 80% of retailers, online shoppers don’t realize that they are the cause of the fractured data. This could be down to a range of factors, such as a lack of concentration, tiredness or a simple typo they haven’t noticed.  

How to Overcome Inaccurate Address Entry and Other Data Problems

However, the customer isn’t completely to blame. With the right technology, the issue of inaccurate address entry can be overcome, drastically improving the quality of internal data for everything from deliveries to tax calculations. Not only do 64% of retailers who have added address verification see a reduction in failed deliveries, but 53% show an improvement in accurate registrations.  

By making the checkout process quicker and easier for the customer, and ensuring that only accurate address data is captured, the user experience is vastly improved, saving the customers time and money. With better data quality, retailers can make better business decisions positioning them for greater ROI, growth and expansion. 

Read Fixing Failed Deliveries: Improving Data Quality in Retail in full to learn more about the real cost of data quality and the impacts it has on both retailers and customers.  

About the Author

Chris Boaz is Head of Marketing at Addressy.

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