Order confirmation in eCommerce requires two address confirmations, both the shipping and billing address. They can be the same address, but they can also be different. The two addresses serve different functions in an eCommerce store and should not be confused.
In this brief guide, we discuss the differences between billing and shipping addresses and why modern eCommerce sites must be aware of those differences to conduct successful business in online retail.
What is a Billing Address?
A billing address relates to the payment used in the transaction. Whether the payment is a debit/credit card or an online payment vendor such as PayPal, there is an address attached to the payment method.
Businesses that use a billing address do so to verify the use of the card as well as route their bank statements and receipts to a specific location. When the party that pays for an item is not the same as the one that receives it, billing addresses become important.
What is a Shipping Address?
Put simply, the shipping address is where the merchandise will be shipped to. This address is certainly significant for businesses that ship products to paying customers as this is the information they provide to the mail carrier.
Customers can update their shipping address whenever they need to and will provide the current address at checkout.
How are Billing and Shipping Addresses Used Differently?
There are a few reasons that the shipping address and billing address might be different. The majority of orders will simply use the same address twice, but businesses with certain billing procedures and customers buying merchandise for someone else may need to differentiate the two.
Gift Merchandise
Customers who want to buy your products for someone else will use their payment information as the billing address but their intended recipient as the shipping address. This means that companies in industries that are more likely to sell products as gifts should anticipate using separate addresses more than the average business.
Common businesses that frequently use separate billing and shipping addresses include sites that sell flowers, candy, candles, gift cards, toys, baby and wedding supplies, and more.
Address Formatting
Sometimes, the address that the credit card company has on file is slightly different than the one used to ship orders. For example, the difference between “apartment” and “unit” or a person’s salutation can create small differences between the two addresses.
Business Credit
Businesses that use a credit card or business account to buy supplies or products may be shipping their supplies to different locations than their billing address. In this case, the billing address may refer to the company headquarters or the card owner while the shipping address refers to whoever is receiving the supplies.
The Importance of Correct Billing and Shipping Addresses
Both incorrect shipping addresses and billing addresses present unique problems to an eCommerce business. In the case of an incorrect billing address, payment software declines the transaction. The addresses have to match with the address that is on file to authorize the payment method before the money can go through.
In that way, errors with the billing address are easy to spot because the payment simply won’t be processed. Shipping address errors are often subtler and more costly. No matter who is at fault for the error, your fulfillment process bears the brunt of the cost.
How Do Shipping Address Errors Occur?
Customer error is the main way that a shipping address error can occur. It can happen when they enter something incorrectly, spell an address wrong, or even enter information on the incorrect line of a form. Examples include writing the apartment number in the address line or the city and state in the first line of the shipping address.
However, incorrect shipping addresses are not always the customer’s fault. They can also happen when personnel at your fulfillment center type the shipping label incorrectly or otherwise list the wrong address. This could be an address that actually exists, which means the carrier may deliver the package to the wrong person. More likely, it will be an address that the carrier will determine is an error.
This means that shipping address mistakes can directly cause your fulfillment process to break down. Items could be lost, misdelivered, or at the very least, delayed until the problem is sorted out. Shipping address issues are more costly than billing address errors because they can cause items to be returned, repackaged, and reshipped.
Sending a replacement item to the person who paid for the merchandise but never received it or reshipping the same item to the correct address will completely negate your profit margins on that transaction.
Verification Difference
Verification is different for shipping and billing addresses. Online shopping portals can verify an address such as a billing address by matching it to the payment information. However, the shipping address is not usually verified online.
Benefits of Preventing Errors with Billing and Shipping Addresses
Getting the billing and shipping addresses right has many benefits for your eCommerce business. These include:
Optimizing Billing – To keep your cash flowing and your merchandise leaving the shelves, you have to maintain proper billing procedures. Using the right addresses prevents service interruptions and delivery exceptions.
Improving Client Loyalty – The wrong address for a holiday gift or important purchase can cause your customers to lose faith in your brand. Your fulfillment process dictates your brand’s reputation.
Cutting Costs – Undelivered and misdelivered items represent a costly and unnecessary expense for your eCommerce business. Correct billing and shipping addresses save money by preventing these costs.
Enhancing Marketing – Paper mail marketing is still a valuable practice, even for eCommerce businesses. Many studies compare the effectiveness of paper marketing favorably to email marketing. In other words, many people (sometimes as many as 87%) still prefer direct mail marketing over telemarketing or digital marketing.
Keeping your customers informed of offers and personalized marketing opportunities through the mail can be profitable. But it’s only possible with correct shipping addresses.
How a 3PL Can Help
Software solutions can greatly reduce the risks, and therefore the costs, of shipping and billing errors. These programs verify correct addresses and also fix incorrect ones before they wreak havoc on your fulfillment process. Ecommerce businesses would be wise to verify these addresses at least twice before shipping, at which point mistakes are still relatively cheap.
A 3PL company knows how to install and use verification software that ensures billing and shipping addresses go out correctly. Many even offer to pay for reshipping or order delays due to incorrect addresses. Billing and shipping addresses are important enough to consider these services when budgeting for your business’s fulfillment process.