How Ecommerce Businesses Can Save Money With Address Standardization

Jun 7, 2024

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2 min read

E-commerce merchants not only have to compete for customers with big-box retailers like Amazon but also the entire internet. Encouraging a customer to visit your ecommerce site, browse your products, and click buy is no easy task. The average internet user visits more than 130 web pages every day.

Once you’ve completed the monumental task of recruiting a customer, the biggest challenge is keeping them. And, shipping is critical to customer retention. Consider some of these statistics:

88% of consumers are more willing to purchase from an ecommerce store that offers free shipping.
87% of consumers are willing to shop at online stores that also offer free shipping for returns.
95% of online shoppers expect all shipping issues to be resolved while in transit.

Fast, free shipping has become the standard for ecommerce merchants. However, many online stores are still facing deliverability issues due to incorrect or incomplete addresses. Address errors can lead to delivery delays, lost packages, and frustrated customers.

For merchants, problems with a shipping address can result in increased shipping costs, returns, and even damage to your brand reputation.

Address standardization can help prevent shipping problems before they wreak havoc on your bottom line. Address standardization is the process of verifying that all address records in your database are accurate, complete, and formatted correctly.

Adding a simple API like Address Validator to your ecommerce site makes address standardization easy. And, this affordable tool can save you money — while providing a competitive advantage in a crowded marketplace.

The Cost Of Inaccurate Addresses

It’s impossible to meet customer expectations around ecommerce delivery without the right address data. There are both immediate and hidden costs to your business when an inaccurate address is used — many of which are often underestimated by e-commerce merchants.

Let’s start with the immediate, upfront costs. Studies place the cost of fixing a shipping error at $35 to $70 per error. Some logistics partners will offer address correction, for a fee. For example, smaller packages shipped through FedEx incur an $11 charge for address correction. Larger packages can cost up to $84.

These represent best-case-scenario costs: instances in which you or the customer realize that an address needs to be corrected for a package in transit. It’s more likely that an inaccurate address will fly under the radar — leading to the package being undeliverable.

When a package is undeliverable, the merchant must pay to have it returned and then reshipped. This can add up significantly, especially for e-commerce businesses that ship a large volume of packages. According to a study by Pitney Bowes, the average cost of returning undeliverable mail is $25, not to mention the additional time and effort to research and correct erroneous addresses.

There are hidden costs related to inaccurate addresses, too.

Lost sales: If a customer is unable to receive their package due to an inaccurate address, they may cancel their order and purchase the item from another retailer. This can be even more costly if the customer was planning to purchase a high-value item.
Reduced customer satisfaction: Customers who experience problems with their shipments due to inaccurate addresses are likely to be less satisfied with the business. This can lead to negative reviews and lost repeat business.
Increased customer service costs: Businesses may have to spend time and resources responding to customer inquiries and complaints related to inaccurate addresses. Likewise, employees will have to spend time and resources tracking down inaccurate addresses and contacting customers to get the correct information.

Address standardization can eliminate and avoid many of these immediate and hidden costs.

[Try Address Validator’s ROI calculator to see how much you could be saving!]

Inaccurate addresses impact your logistics partners, too. Delivery drivers have to spend valuable time attempting to locate recipients or returning packages to the sender, which not only incurs extra costs for the shipping companies but also hampers their overall efficiency. This can impact shipping for other customers — many of whom may be your customers.

There are dozens of reasons why an address may be undeliverable. Abbreviations, capitalization, and typos can all cause issues. With an address validation tool, you can ensure all addresses are standardized in the correct format. This can help you not only avoid these costs but reap some specific ecommerce benefits.

Benefits Of Address Standardization

Address standardization offers a multitude of benefits that streamline shipping processes and improve overall operational efficiency.

Address standardization ensures the address format you use to send packages is structured according to specific guidelines and standards set by postal authorities. This is so their tools can parse and sort address information more efficiently.

The goal of address standardization is to make addresses consistent, accurate, and machine-readable, which is crucial for increasing delivery speed, reducing shipping costs, improving data quality, and complying with shipping regulations.

Address standardization tools empower your business to deliver five-star customer service. Logistics is the primary beneficiary of address standardization software. Not only can you ensure address accuracy (leading to more on-time deliveries), but you can also process orders more quickly and automatically using e-commerce systems, reducing the time and effort required for manual data entry and verification.

Likewise, standardized addresses facilitate international shipping by ensuring that addresses are formatted correctly according to local postal standards. For ecommerce sites looking to expand, this can open up new markets for e-commerce businesses looking to expand.

It’s not just about ensuring a package reaches its determined destination. Clean datasets with correct, formatted addresses lead to a faster and more efficient checkout process. Enforcing a uniform and consistent format is also valuable for marketing, customer analysis, and personalized recommendations.

Correctly formatted addresses can help to speed up the delivery process, as they are more easily recognized and processed by shipping carriers. Standardized addresses help logistics companies optimize their delivery routes, reducing fuel consumption and transportation costs. And, address standardization plays a pivotal role in optimizing last-mile delivery, a crucial aspect of the logistics chain.

Embracing address standardization not only boosts productivity and customer satisfaction but also establishes a solid foundation for business growth and success. And fortunately, there are easy ways to ensure your package reaches its delivery point.

Implementing Address Standardization

Any business that manages a large volume of customer data and outgoing shipments can benefit from implementing address standardization.

Address standardization starts with address verification to mitigate the risk of incorrect addresses or an international address to which you don’t deliver. Address validation or verification ensures that the recipient’s name, street name and number, city, state/province, zip/postal code, and country are all correct.

The easiest way to implement address standardization and validation is to use a software tool like Address Validator. Address Validator is one of the best Shopify apps for flagging and correcting undeliverable addresses. This app reduces instances of failed deliveries to improve customer satisfaction, save merchants redelivery costs, and decrease support tickets from customers trying to resolve a wrong address.

Look for a tool that can easily integrate with your ecommerce platform. Most address standardization solutions can be integrated with Shopify, Magento, and WooCommerce via API. This makes it easy to automatically standardize addresses as customers enter them during the checkout process.

Once you integrate the address standardization solution with your ecommerce platform, you should update your customer database. Address standardization involves validating and correcting addresses based on a standardized format recognized by the most common mail carriers and logistics partners.

For instance, the USPS address guidelines are as follows:

Always put the address and the postage on the same side of your mailpiece.
On a letter, the address should be parallel to the longest side.
All capital letters.
No punctuation.
At least 10-point type.
One space between city and state.
Two spaces between state and ZIP Code.
Simple type fonts.
Left justified.
Black ink on white or light paper.
No reverse type (white printing on a black background).
If you are using address labels, make sure you don't cut off any important information.

Ultimately, you will want to follow a format that contains all the necessary components, including street names, house numbers, postal codes, and city names, in the correct order. Eliminate any suffix or extraneous information that could cause the package to be miscategorized.

Address standardization plays a vital role in improving data quality, enhancing the customer experience, and optimizing logistics. It’s an indispensable tool for ecommerce sellers aiming to streamline their shipping and data management operations.

Cost Savings With Address Standardization

Address standardization has enormous potential as a strategic solution for cost savings.

Of course, there are the direct cost savings of avoiding undeliverable packages and shipping errors from poorly formed addresses. Consider this: evidence shows that over 4.5% of the time, a customer makes an error filling out their address on an ecommerce site. If you ship one million packages each year, that could equate to more than 45,000 errors on shipping forms. The costs to remedy or resend all those packages can seriously eat into your profit — not to mention prevent meaningful customer retention.

There’s a hidden cost to not using address standardization. Frustrated customers are less likely to return to your business to make another purchase. That means the marketing budget you spent towards customer acquisition has a limited lifespan. And, your business is missing out on the loyal customers that fuel sustainable growth. Ultimately, you could be leaving a big revenue opportunity on the table.

Address normalization has hidden cost savings too. Keeping an accurate, well-formatted list helps every person who uses your CRM, from your sales people to your marketing team. Every person has the best possible information in order to work productively and efficiently.

Complying with the format set by the United States Postal Service can also help mitigate the risk of fraud. Address standardization can make it more difficult for fraudsters to create fake accounts or use stolen credit cards.

And, by ensuring that shipping labels contain accurate and properly formatted addresses, businesses can prevent additional surcharges at the post office due to address correction services.

Whether you operate a main street business or manage a large-scale distribution center, embracing address standardization will lead to immediate savings and position your business for sustainable growth.

Best Practices For Address Standardization

Address standardization can be a labor-intensive process when you first start, but tools like Address Validator can help. Here are some best practices for address standardization:

Follow postal authority guidelines: Use the USPS Addressing Standards as a reference for formatting your address fields.
Enter data consistently: Ensure that your e-commerce platform enforces standardized address formats, e.g. by using dropdown menus for states and countries to prevent misspellings and inconsistencies.
Validate addresses: Verify and standardize address fields in real-time as customers enter their information during checkout. These tools can automatically correct errors and ensure addresses conform to postal standards.
Regularly cleanse your data: Set up a schedule to regularly correct any existing address inconsistencies or errors. Consider using address validation software to batch-process your customer data periodically.
Set up the right address fields: Ensure that your e-commerce platform has separate fields for each address identifiers (e.g., street address, street number, city, state, postal code) to facilitate easy data entry and validation.

If your e-commerce business operates internationally, be aware of and adapt to different address formats and standards in various countries. Use address validation services that support global address standardization. You may also want to consider incorporating geocoding services to convert addresses into geographic coordinates. This can help with location-based services, mapping, and further accuracy in delivery.

Final Thoughts

Address standardization should be practiced for business owners of all sizes. Address standardization ensures that your street addresses are all formatted properly and accurately. Tools like Address Validator make the process of checking and collecting valid street addresses easy — ultimately saving your business time and money. Learn more about Address Validator by signing up for a free trial.

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Ellie Ho

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Content Marketing Specialist

November 12, 2024

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5 min read

How Ecommerce Businesses Can Save Money With Address Standardization

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