I’ve spent a lot of time thinking about the data retailers use to make delivery decisions.
One thing has become increasingly clear: we’re still measuring delivery too narrowly.
For most retailers, the conversation around delivery cost starts with price-per-parcel. Carrier rates are compared, negotiated and reported on because they’re easy to understand and easy to benchmark.
But the carrier rate is only one part of the cost.
A shipment can leave the warehouse looking profitable and quickly become margin-negative once failed deliveries, surcharges, customer service contacts and compliance issues are taken into account.
The problem is that those costs are rarely connected.
And if you can’t connect them, you can’t see the true cost of serving a customer.
The challenge is that these costs are often owned by different teams, recorded in different systems and measured against different KPIs.
The metric we're missing
Retailers have no shortage of delivery data. Tracking events. Carrier invoices. Customer service contacts. Returns. Claims. Customs information. The challenge is that most of this data lives in different places.
Operations teams might see a delivery delay. Customer service sees the WISMO enquiry that follows. Finance sees the refund or replacement. Weeks later, an invoice reveals an unexpected surcharge.
Each team sees part of the story.
Very few systems connect those events back to the original order and show what that delivery actually cost the business.
That’s the visibility problem I think the industry needs to solve.
Because when retailers only measure price-per-parcel, they’re optimising one component of delivery while potentially missing several others.
For a logistics leader, the more useful question is therefore not simply “What did this parcel cost to ship?” but “What did it actually cost us to successfully serve this order?” That shift sounds small, but it changes how carrier performance, delivery exceptions and customer experience can be evaluated.
The four drains on delivery margins
When you look beyond the carrier rate, there are four areas that can significantly increase the true cost of delivery.
1. Execution
A failed delivery is rarely just a failed delivery.
There can be additional delivery attempts, depot handling, customer communications, carrier investigations, refunds and replacements. Each one adds cost.
According to Citizens Advice research from 2025, more than a third of UK online shoppers experienced a delivery problem in a single month.
Most retailers can report delivery performance at a network level. They know their overall success rates.
But a more useful question is:
What did this specific failed delivery cost us?
For example, imagine a retailer sees a 2% failed delivery rate across a high-volume operation. At first glance, that may look like a service-level issue. But if every failed delivery also creates a second delivery attempt, a customer service interaction and a percentage of refunds or replacements, the financial impact can be considerably larger than the carrier’s original delivery charge.
Without that connection between operational performance and financial impact, execution failures remain operational problems rather than profitability problems.
This is particularly important when comparing carriers. A carrier with a lower base rate may not actually be the better-performing or lower-cost option if it generates materially more failed deliveries.
It’s also why the lowest rate on a multi-carrier shipping comparison isn’t automatically the lowest cost: a cheaper carrier that fails more often can cost you more once the follow-on work is counted.
2. Surcharges
The carrier rate is rarely the final carrier cost.
Fuel adjustments, peak charges, oversized parcel fees, address corrections and other carrier-specific charges can all increase shipping spend.
The difficulty is that retailers often discover these costs after the shipment has happened.
By the time an invoice arrives, the margin has already been lost.
A carrier might look competitive based on its base rate, but that picture can change significantly when surcharge behaviour is included.
To make better decisions, retailers need to understand the full cost associated with a carrier and service, not simply the number on the original rate card.
This becomes particularly important during peak periods, when carriers may introduce or increase peak-related charges and retailers are simultaneously processing some of their highest shipment volumes.
During peak, the carrier with the cheapest rate card is often not the one that gives the best total outcome for a given shipment profile.
3. Compliance
Cross-border eCommerce has added another layer of complexity.
Incorrect customs data, inaccurate product classifications, missing documentation and tax errors can all create additional cost.
But these issues are often fragmented too.
Operations sees the shipment delay. Finance sees the penalty. Customer service sees the customer complaint.
The connection between all of those events and the original order is often missing.
From a product angle, that matters. This is a core job for delivery management software: trace an issue back to its origin and show its full cost, so each team sees more than its own slice.
For an enterprise retailer shipping across multiple markets, this connection becomes even more important. A problem with one product classification or customs data field can affect thousands of shipments, not just one order.
The earlier you catch these issues, the more you can prevent the cost instead of reporting it after the fact.
4. WISMO
“Where is my order?” remains one of the most common reasons customers contact retailers.
Each interaction might appear relatively inexpensive in isolation. At scale, the cost quickly adds up.
According to industry estimates, a retailer receiving just 500 WISMO contacts per week could spend between £117,000 and £208,000 a year handling entirely preventable enquiries.
Many of these contacts have nothing to do with a delivery failing. They happen because the customer is uncertain: they don’t know where their order is, what a tracking update means, or what happens next.
That’s a real service cost sitting on top of deliveries that otherwise count as successful.
Again, the issue comes back to connected data.
If customer service information sits separately from delivery data, it’s difficult to understand how delivery performance is affecting cost-to-serve.
For a large retailer, this distinction matters. A shipment can be delivered successfully and still create cost if the customer contacts you twice because the last mile delivery tracking was unclear, or a delivery promise changed without being communicated.
Price-per-parcel doesn't tell the full story
When these costs are considered alongside the carrier rate, a more accurate picture of delivery profitability emerges.
Cost-to-serve = Carrier Rate + Execution Drain + Surcharge Drain + Compliance Drain + WISMO Drain
That’s the number I think retailers should be focusing on.
Because the cheapest carrier isn’t always the lowest-cost option.
A slightly pricier service might mean fewer failed deliveries, fewer customer contacts and less surcharge exposure, and a lower overall cost-to-serve as a result.
But retailers can only make those decisions when they can see the complete picture.
It changes how you evaluate carriers, too. Rank them on the relationship between cost, service performance and customer impact, rather than on rate or headline success alone.
For example, if Carrier A costs 20p less per parcel but generates significantly more failed deliveries and WISMO contacts, while Carrier B costs slightly more but consistently delivers first time, the cheaper rate may be creating a more expensive customer journey overall.
This is where product and technology need to evolve
For me, the opportunity isn’t simply to give retailers more dashboards.
The industry already has plenty of data.
What it needs is a better way to connect that data.
Technology needs to bring together carrier performance, tracking events, customer contacts, surcharge activity and delivery outcomes at order level.
That means moving from reporting on individual events to understanding the relationship between them.
Only then can retailers move beyond reporting on what happened and start understanding why it happened and what it actually cost.
That’s also where AI becomes increasingly interesting.
The opportunity is not another dashboard showing that delivery performance has declined. It’s technology that can help explain what is driving that decline, quantify the potential impact and identify where intervention could make a difference.
Moving from visibility to action
Visibility is important, but knowing there’s a problem isn’t always enough.
The next stage is helping teams identify risk and act before it creates additional cost.
AI has the potential to analyse large volumes of delivery data and identify patterns that would be difficult for teams to spot manually.
For example, it could help identify when an order is at risk of generating a customer service contact, allowing retailers to communicate proactively rather than waiting for the customer to ask where their order is.
It could help teams identify and prioritise delivery exceptions, reducing the time spent manually investigating delays and disruptions.
For cross-border shipping, it could potentially help validate shipment data and flag missing documentation or potential classification issues before a shipment enters the network.
None of this is about adding AI for its own sake. The point is to cut the manual investigation and help teams act on delivery issues earlier.
This intelligence is most valuable at the point the delivery decision is made. If the data shows a carrier or service fails more often for a certain destination, parcel type or delivery profile, that can shape the next carrier choice instead of just showing up in a report afterwards. That’s the difference between using data to explain yesterday’s performance and using it to improve tomorrow’s shipments.
The future is order-level intelligence
One of the biggest opportunities for delivery technology is a delivery management system that gives a connected view of every order.
A retailer should be able to understand the journey of a shipment beyond whether it was delivered successfully.
What carrier costs were associated with it?
Were there unexpected surcharges?
Did it create a customer service contact?
Was there a compliance issue?
Did the delivery experience require intervention from an internal team?
And ultimately:
What was the total cost of serving that customer?
Historically, answering that question has been incredibly difficult because the information sits across multiple systems and teams.
But as delivery networks become more complex, understanding those connections will become increasingly important.
At enterprise scale, this becomes less about analysing individual parcels and more about identifying patterns across thousands or millions of orders. Which carriers are creating the most avoidable cost? Which services generate the most WISMO? Which markets have the highest exception rates? Where are surcharges consistently eroding margin?
Those are the questions that can turn delivery data into a genuine commercial advantage.
Looking beyond the carrier rate
Price-per-parcel isn’t going away.
It will always be an important part of how retailers manage delivery spend.
But it shouldn’t be the only number that matters.
The retailers that will be in the strongest position over the coming years will be those that can see beyond the original carrier rate and understand where delivery margin is actually being lost.
That means connecting operational performance with financial outcomes.
Connecting delivery events with customer behaviour.
And increasingly, using technology and AI to identify risks early enough to do something about them.
The future of delivery optimisation isn’t simply about finding the cheapest rate for an order.
It’s about understanding the total cost of serving that customer and having the intelligence to act before small delivery issues become significant drains on margin.
For logistics leaders, that means changing the question from “How much did we pay to deliver this parcel?” to “What did it really cost us to serve this customer, and what could we have done differently?”
That is a much more useful measure of delivery performance.