What are delivery exceptions and how should your business deal with them?

A delivery exception occurs when an unexpected event delays a shipment. Even the most sophisticated shipping systems are vulnerable to harsh weather, accidents, or a misspelled address.

These unforeseen delays lead to lost revenue, frustrated customers, and backlogged customer service requests. Accordingly, any business that ships products should have a plan in place to prevent delivery exceptions—and act fast if they do happen.

Coming up, we’ll cover some common causes of delivery exceptions, expected outcomes, and response strategies. But first, let’s start with the basics.

What is a delivery exception?

A delivery exception is any incident that stalls a shipment in transit, potentially delaying the expected arrival date. The recipient is then notified of the issue and given an updated arrival date, if applicable. Delivery exceptions are often unintentional and outside everyone’s control, which makes them all the more frustrating, especially since online shoppers have increasingly high standards for delivery speed.

For example, the COVID-19 pandemic put unprecedented stress on businesses responding to the surge of online orders while millions of people were stranded at home. This led to massive amounts of lost or undelivered packages, both examples of delivery exceptions.

While delivery exceptions are prevalent among e-commerce businesses that rely solely on shipping to get inventory to customers, they can happen to any business that ships products, including retailers, manufacturers, and wholesalers.

According to PWC’s Global Consumer Insights Survey , 41% of consumers are willing to pay for same-day delivery while nearly a quarter of shoppers said they would pay to receive packages within a one- or two-hour window. With this data in mind, it’s never been more important to mitigate the risks of delivery exceptions.

Seven causes of delivery exceptions

Let’s take a look at seven common culprits that can stall an otherwise timely delivery:

1. Incorrect delivery address

If a shipping label contains the wrong address, it can get stuck in a delivery exception. This can be due to the recipient’s address being misspelled or unrecognizable to carriers.

2. Missing or damaged labels

Most shipping labels are scanned via barcodes, but if the details on the label are illegible or the label is missing altogether, the system can’t recognize the package, leading to an exception.

3. Federal holidays

If a package is in transit on a national holiday when USPS and other carriers aren’t operating, the shipping is paused until the next business day. Holidays can cause carriers and post offices to play catch-up, leading to delivery exceptions if shipments are backlogged.

4. Inclement weather

Harsh weather conditions like snowstorms are notorious for disrupting delivery schedules. Unpredictable natural disasters, also known as “acts of God,” such as floods, wildfires, and tornadoes, can make delivery routes impassable, causing shipments to be delayed indefinitely.

5. Lost or damaged package

In the event that a package is misplaced or damaged in transit, the shipper will issue an exception notice to the recipient.

6. Customs delays

International shipping always takes time, but it can especially be a challenge for carriers when packages get held up at customs, causing unexpected holdups.

7. Recipient not present to accept delivery

This type of exception is common for shipments that require a recipient’s signature in order to complete the delivery. If nobody is on location to sign, the delivery may be reattempted the next day.

Three common outcomes for delivery exceptions

No matter which of the above scenarios causes a delivery exception, it typically results in one of the following outcomes, which will inform how your team responds.

1. The shipment still arrives on time

Sometimes, customers receive exception notices as a precautionary measure. For example, if a warehouse is expecting heavy snow in their shipping zone, they may tell customers to expect a 2-3 day delay. Depending on your business, it might be better for customers to be pleasantly surprised than caught off guard when their package doesn’t arrive on time.

2. The shipment arrives late

This is the most common outcome for delivery exceptions. Multichannel Merchant reported that roughly 6% of FedEx and UPS parcels shipped by 100 small-to-mid-sized retailers in 2019 were delayed. 72% of those delays lasted one day.

3. The shipment is returned to the sender

Suppose the carrier can’t complete the delivery (whether that’s because of a damaged label, incorrect address, absent recipient, etc.). In that case, the package may be returned to the sender, who can assess why the package couldn’t be delivered and then reattempt.

How your business should handle delivery exceptions

So your customer received a delivery exception notice. What happens next? Below are three best practices to follow while the package is still in transit:

1. Contact the carrier

Using the tracking number, check online to determine the tracking status of the delivery. In most cases, you’ll be able to see the location of the package in real-time, what’s causing the delay, and an expected delivery date. This will inform how you proceed with the carrier.

For example, if the carrier marked the address as undeliverable, double-check your records to provide the correct address.

2. Reach out to the affected customer

If resolving a delivery exception requires information from the recipient (i.e. a corrected address), you’ll want to reach out right away. Even if the delay is outside the control of both parties, such as bad weather, it’s a good idea to get in touch and explain what’s going on. A simple email thanking them for their patience can turn a negative experience into a positive one.

3. Resend the item or issue a refund

In the event that a package can’t be delivered, contact the customer to resend the item. If the item was broken in transit, issuing a full refund is expected. Depending on the shipping insurance, the cost to replace the lost or damaged package may be covered by the carrier.

These situations should be handled on a case-by-case basis. Put yourself in your customer’s shoes: what would make the situation right?

How your business can prevent delivery exceptions

Delivery exceptions are often unpredictable, but you can still reduce the risk of late shipments by following a few best practices.

1. Don’t rely on manually-created shipping labels

Many shipping exceptions happen because of something as simple as a misspelled address. Fortunately, software can spot those mistakes before they cause any delays. QuickBooks Enterprise has delivery management tools that let you print shipping labels with pre-filled company and customer information so you can fulfill orders faster—and reduce the risk of errors.

Don’t let a typo be the reason you lose a customer.

2. Make sure your SKUs are accurate

Incorrect product information can cause delays with carriers. As such, double-check that all your SKU attributes are correct, especially the weight (including packaging), dimensions, labels, pick-up times, and any specific instructions that carriers should know.

3. Use weather-resistant labels

Standard paper labels can easily be damaged in transit or when they’re exposed to the elements. To reduce this risk, use weather-resistant label slips or simply cover your labels with tape or plastic.

4. Cover your bases with customs ahead of time

If you’re shipping internationally, an order management form that pre-fills customs declarations can minimize the risk of your shipment being held up. It’s also important to assign the proper tariff codes at the SKU level before shipping your products, ensuring a seamless international shipping process.

Final thoughts

No business is fully immune to delivery exceptions. That said, preparing for those unexpected events—and acting fast when they happen—can be the difference between a one-off buyer and a long-term customer.