Address Verification in E-commerce

When consumers can order items with a single swipe or tap on a smartphone, it's easy to overlook what an undertaking it is to ensure that thousands of orders get from A to B.

But as seamless as e-commerce shopping feels in this day and age for consumers, it only takes the smallest hiccup to derail a perfect delivery - like an incorrect or incomplete delivery address.

In addition to being one of the biggest causes of failed deliveries, address errors undermine the relationship between a brand and a customer, requiring complex support or additional information to fix. In the worst case, brands may have to ship replacement orders or issue refunds, which results in avoidable losses of revenue.

Fortunately, incorrect addresses can be prevented by ensuring that every delivery address is properly validated prior to shipping. In this blog, we're going to explore why address verification is so important in e-commerce fulfillment, methods to validate addresses, and some tips and tricks for managing address validation without headaches.

What is address verification?

Address verification is the process of validating address data provided by customers in scenarios such as finance, e-commerce fulfillment, and customer relationship management. Validation allows businesses to ensure that:

• An address exists
• An address is deliverable by the postal service
• An address matches other customer information given.

Address validation can involve several methods and technologies to ensure data accuracy, including manual checks, API integration, and checking official post service databases.

In e-commerce, bad addresses lower e-commerce shipping accuracy and increase the likelihood needing to ship replacement items or offer refunds. Proper address verification plays a key role in ensuring the timely and successful delivery of online orders, ensuring customer satisfaction with their shopping experience. In sum, it's one of your best tools to combat undelivered packages.

Why does address verification matter?

Prevent shipping errors and delays

In e-commerce, having correct address information is vital to ensure that packages arrive on-time at the right delivery destination. An invalid address or missing information is one of the biggest reasons or late or failed deliveries. Parcels will need to be returned to the postal service or 3PL, pending more information being given by the customer. With around 20% of addresses provided to a website involving at least one error, address verification helps e-commerce merchants to avoid a world of headaches during shipping.

Reduce cart abandonment at the checkout

Clunky or lengthy processes to validate addresses before purchase can cause customers to reconsider their purchase altogether or choose another vendor. According to Baymard Institute, a long or confusing checkout process is responsible for 18% of all abandoned carts in e-commerce. For example, if shoppers are struggling to enter their street address correctly at the checkout to get past an address check, they may decide it's too much hassle and abandon their cart.

Increase fraud prevention

E-commerce fraud is growing problem, with fraudulent activity estimated to cost merchants globally more than $48 billion in 2023. While sophisticated prevention tools continue to proliferate, the simplest methods can still be the most effective.

Fraudsters often rely on non-deliverable addresses, such as abandoned properties, in order to create fake customer profiles to initiate chargebacks or claim refunds. Address verification allows businesses to both check address validity and compare the address provided at checkout with the address on file with the credit card issuer. This makes address validation an easy way to combat chargebacks and credit card fraud via bad addresses.

How does address verification work?

There are several important components to address verification, including:

• Removing typos from an address, such as street names or suburbs/towns.
• Supplementing addresses with additional information not supplied by the customer, such as a zip code or apartment number.
• Standardizing address layouts and formatting, such as abbreviations or re-ordering house and apartment numbers.

By cleaning up the address data being supplied by customers to match the layouts used by postal carriers, address validation dramatically reduces the likelihood of failed deliveries due to incorrect addresses or simple human error.

Methods of address verification

Address validation can take different forms in e-commerce, depending on the sophistication of the technology being used by the business. It can be as simple as a team member manually cross-checking a provided address with a postal service database, or software that automatically checks address information as it's entered at the checkout to identify whether the address exists.

Manual validation

Manually verifying addresses requires operations teams to confirm the accuracy of a delivery address, one order at a time. This is an incredibly time-consuming process which may work for emerging businesses, but isn't practical for high-volume shippers who are receiving hundreds of orders each day. However this can be useful in cases where an address has been flagged by an API or platform as requiring an extra check.

Postal Service address verification

Carriers such as the United States Postal Service, FedEx, and UPS make their own address validation tools available to both businesses and consumers. This allows shippers to input an address to determine that it's valid and deliverable ahead of shipment.

Address Verification Services (AVS)

AVS systems are commonly used in e-commerce for the purposes of fraud prevention, rather than for shipping accuracy. An AVS will check the billing address provided by a customer at the checkout against the address the credit card issuer has on file. AVS helps prevent fraud by ensuring that the provided address matches the one associated with the payment method.

API integrations

APIs like Shippo and EasyPost allow for real-time validation via third-party address verification services by tapping into postal carrier address databases to verify addresses. This streamlines verification by only needing to use one system, as opposed to checking multiple carrier databases.

Tips for managing address verification

Use a reliable address verification tool

To save valuable time, invest in a proper API or address validation system that can flag or rectify address errors before they go on to disrupt shipments. Look for a solution that integrates with numerous parcel carriers or shipment optimization software to leverage their address validation tools.

Ryder's proprietary technology platform, incorporates in-app address verification via shipping label providers for all U.S. domestic shipments. This makes it possible to flag invalid address at the time an order is placed, giving time for correction before shipment.

Ensure 'good' address practices

Although you might be using multiple postal services, there are certain common formatting requirements that are consistent between carriers:

• Street details i.e. Roads, Drives, Avenues should be abbreviated e.g. Rd, St, Ave. etc.
• States should be abbreviated i.e. CA instead of California
• Apartments and Suite Numbers should be entered on the first address line and use correct abbreviations. For an apartment use Apt. 3 or #3. For suite, use Ste. 3 or #3.
• Requiring a phone in addition to a verified address for the purposes of returns processing.

Set up alerts for unverified addresses

It's important to note that not every address verification system will be able to auto-correct bad address data, especially for international shipments. Instead of manually checking each order the ensure that the address has been verified, check to see whether your order management platform allows you to set up an alert to notify you in the event that address verification is skipped or incomplete.

The Order Rules functionality in the Ryder’s platform makes it easy to set up a real-time alert in the case that an address goes unverified, or trigger a rule that pauses orders with unverified addresses before shipment until they are corrected. This makes it possible to proactively catch orders with potential address problems and prevent delayed or missed shipments.

Educate customers on the importance of address accuracy

Consider placing a pop-up or a notice at the checkout notifying your customers about the importance of ensuring their address is entered correctly to avoid shipping delays. Provide clear guidelines for how their address information should be provided, such as abbreviations and which address line street or apartment numbers should be entered in. It's a good idea to include a link to your postal carrier's online address validation tool as well, so that customers can enter their address and copy-paste with the right formatting requirements.