An increasing number of businesses are setting up digital stores as online shopping is constantly on the rise. While the eCommerce giant — Amazon ships more than 1.6 million packages a day, other players are also registering record-breaking shipments day-in-day-out.
To deliver these shipments accurately, companies are strengthening their logistics as it is the backbone of the eCommerce industry. Furthermore, there are two types of addresses that online stores need to process the orders seamlessly: one is the billing address, and the other is the shipping address.
In this guide, we will discuss the difference between billing and shipping addresses. Also, we will dive deeper into the importance, usage, and implications of correct and incorrect addresses.
How Does Online Payment Processing Work?
As online shopping continues to rise, businesses are receiving more payments in digital form. Hence, e-stores need to streamline their payment processing to run their operations seamlessly. To set up an online payment system, you need three parties:
- The merchant (You): Whether you have an eCommerce-only business or adding an online presence to your existing retail establishment, you need a merchant account to receive your payments. A merchant bank accepts the payment and remits it into your account.
- Technology: Two technologies execute the transaction between you and your customers. First, the payment gateway — a bridge that links your website’s shopping cart to the processing network. And the other is a payment processor that communicates with the gateway, ensures that the payor has enough funds, and deposits the money in your merchant account.
- Your customer: Your customer pays for the product or service through credit card, debit card, or alternative payment systems supported by their banks. They are called the issuing banks, and they approve the transactions.
As a business owner, you must do a thorough analysis of how much payment processing fees you will pay to avail above services. So, compare all the available options and choose the one that helps you keep your costs low in the long term.
What is a Shipping Address?
A shipping address is a location where your customer wants you to send the products. This can be either their own address or someone else’s.
Here are some of the reasons your customer may choose a different shipping address other than their own:
- They are buying a gift for someone
- They want the product at their workplace
- They have donated products to an individual or organisation
- They want to surprise family or loved ones
- They are not available at their place temporarily
There can be many more scenarios where your customer wants you to deliver products at a different location than theirs.
What is a Billing Address?
A billing address is an address that is registered with your customers’ bank accounts, debit cards, credit cards, or any other financial instruments they use for their transactions.
The common practice is keeping your residence address as the billing address, but it is not always the case.
For example, you recently bought a place for yourself and had been living at your parent’s place where you had opened a bank account. In this case, your home address has changed but the billing address remains the same until you update it with your bank.
Hence, you need to educate your shoppers to enter the billing address that matches the one that is registered with their bank or credit card. Otherwise, the payment may decline during the verification.
How to Find Your Billing Address?
Most of the time, your current residential address is your billing address unless you have not updated your bank about the change of address.
Whatever the case may be, if you are not sure what’s your billing address, you can find it by:
- Checking your monthly credit card statement (Hard copy or E-statement)
- Logging into your internet banking or phone banking app
- Calling your bank’s customer service number
Difference Between Billing and Shipping Address
Though billing and shipping addresses indicate a physical location, their definition, usage, and implications are quite different. Let’s take a closer look.
Definition
As already discussed, the billing address is where banks or financial institutions send important communications to your customers. Whereas shipping address is the location where you deliver the products shopped by a customer through your platform.
Features
When you fill the checkout form, you would not see any difference between billing and shipping addresses. They both feature almost the same information to be filled in. However, they have different purposes, which we will discuss below in detail.
Verification
The shopping websites use a technology called Address Verification System (AVS) to verify a customer’s billing address. To verify a shipping address, you can either call the customer or install an address validator on your website.
Usage
- Billing address: When a customer purchases from your website, the issuing bank or payment processor verifies their identity through the billing address before authorizing the payment.
- Shipping address: Once you have the shipping address, you can plan your delivery accordingly. It also helps you calculate the shipping charges for the goods to be delivered.
Implication
Having an incorrect billing address can lead to:
- Exposure to confidential information: If your customers have not updated their billing address with their bank, their sensitive financial information can be exposed to the wrong person. It applies to both; individuals and businesses alike.
- Non-verification during online purchases: If the billing information you enter on the shopping portal does not match the address registered with the financial institution, they may refuse the verification and transaction.
- Delay in receiving important information: In most countries, Government and public organizations communicate on your billing address. In such cases, your important letters may get delayed or lost.
At the same time, a wrong shipping address may lead to:
- Incorrect shipping charges: Since your system calculates the delivery charges based on the shipping address entered by a customer, a wrong address generates incorrect delivery fees. If you have charged less, it may increase your cost and if a customer pays more, it may upset them.
- High costs for your business: Having incorrect shipping addresses result in the shipment returns and so the entire supply-chain reversal. Thus, your labour and shipping costs can increase two to three times.
Delay or loss of shipment: As the shipment goes through the entire logistic cycle again, it reaches the correct destination much later than promised. This could result in either a refund or an angry customer, none is good for your business. Also consider, if the product is perishable, you end up bearing a 100% loss on that order.
Billing Address vs Shipping Address
Here’s the comparison table of the difference between billing and shipping addresses for easy reference:
Importance of Collecting Billing and Shipping Addresses in 2022
Now that we have compared the billing address vs shipping address, let’s understand why it’s important to collect these details and how it can benefit your business and customers.
Faster Checkout
Do you make faces when you have to re-enter your billing and shipping details every time you shop online?
Most likely your customers also hate it. In fact, 25% of the shoppers abandon their shopping carts when they have to re-enter their shipping information.
Apparently, not just your customers but we all want a quick checkout experience.
Even 52% of the eCommerce merchants believe that friction at checkout is the top reason that customers abandon their carts.
Here’s how you can change their checkout experience by providing them options to save multiple billing and shipping addresses in their account so that they can just select the address instead of typing them all over.
Thus, the checkout process becomes faster and it may also help you reduce shopping cart abandonment on your e-store.
More Convenience and Better Experience
Saving your customers’ billing and shipping addresses not only makes the checkout process faster but also provides more convenience to them.
Moreover, when your consumers see their addresses at checkout, they feel more confident about your eCommerce store. This helps you enhance the overall user experience of your website.
Real-time Address Validation
Collecting your customers’ shipping and billing addresses at checkout can help you validate their addresses in real-time. It can allow you to:
- Determine the fastest route to ship your products
- Reduce failed deliveries due to errors in the shipping addresses
- Prevent shipping delays
- Compare and estimate your shipping costs
For this to happen, you need to integrate address verification software in your online store. There are also some free tools you can use to validate addresses.
Collecting Billing and Shipping Addresses Without Affecting Checkout Flow
Checkout is one of the most important parts of your eCommerce site as it directly impacts whether a visitor buys and becomes a customer or abandons the shopping cart.
Therefore, you must collect the billing and shipping addresses while maintaining a seamless checkout process.
Here’s how Nike collects billing and shipping details while providing a simple yet enhanced checkout user experience (UX).
Follow the below tips to collect your customers’ billing and shipping addresses without hindering the checkout flow:
- Take out the distractions: You don’t want unnecessary interruptions like banners, images, or redundant links to ruin your customer’s checkout experience.
- Follow minimalistic design: Keep minimum fields to collect only the necessary information like their name, email address, billing and shipping address etc.
- Allow customers to save details: Include this option in your website so that your customers don’t have to fill in this information repeatedly every time they shop.
- Add live chat or customer helpline number: Consider adding a live chat feature or mention the customer care number in the header or footer section of your checkout so that shopper gets access to immediate help without leaving the checkout page.
How to Use Billing and Shipping Addresses in 2022?
Besides the mainstream usages of the billing and shipping addresses we discussed above, you can also use them to the advantage of your business and customers.
Reduce Costs of Failed Deliveries
According to the USPS Office of the Inspector General, the failed deliveries due to incomplete or erroneous addresses costs $20 Billion to the mailing industry. As a result, carriers charge you for reverse logistics and repeat delivery attempts.
As an eCommerce merchant, you can save these extra shipping costs by ensuring that customers are entering the right billing and shipping information during checkout. You can do that by integrating a real-time address validation system on your website or app.
Fraud Prevention
With the rise in online shopping, the incidents of fraud are also increasing. Juniper Research found that there were eCommerce frauds worth $17.5 billion in 2020 and likely to touch $20 billion this year.
So when you install an Address Verification System (AVS), you can protect your customers from being victims of these deceptions.
For instance, a cyber thief has somehow got access to the credit card information of one of your customers.
However, they don’t have your customer’s billing address as only the true cardholder would have that information. Without these details, you or any other merchant can choose not to authorise the purchase.
And if they enter a different billing address, you will get an AVS mismatch alert that asks you whether you want to approve or decline this transaction. If you find it suspicious you can deny the order.
Thus, you can prevent such fraudulent activities on your platform and also earn loyalty from your customers.
Sending Loyalty Rewards
You can also use your customers’ billing and shipping addresses to send them greeting cards during festive seasons or on occasions such as their birthdays or anniversaries.
If your eCommerce store has a loyalty program, then you can use these addresses to send the rewards and gifts they earn on your platforms.
This way, you get an opportunity to strengthen your relationships with your customers, keep them connected with your brand, and eventually, have them buy more products from your store.
Types of Address Errors and How to Resolve Them
One of the challenges of selling goods online is the potential for error due to the number of digital touchpoints between an order taking place and getting fulfilled. While some errors may be harmless, billing and shipping information errors have a much greater impact.
Shipping Address Errors and Solutions
According to a study by Addressy, 5% of total deliveries are not delivered on the first attempt. Let’s say you are a mid-sized e-retailer shipping an average of one million packages a year. So taking 5% of the total orders: 50,000 shipments are likely to be affected.
Thus, incorrect or incomplete shipping addresses are quite a pain for online sellers. Let’s take a look at some of the most common errors in shipping details.
Typos
It is very usual for your customers to make typos — typing mistakes or spelling errors — while entering their shipping details such as:
- Name
- Address line 1
- Address line 2
- City
- State
- Country
- Postal code, etc.
Solution:
- Review spelling, street numbers, and zip code manually before shipping
- As shown in the image above, install an address validator on your website that provides real-time corrections to your customers while entering their addresses
Issues on Merchant Site
There may also be some issues with the interface or address forms on your website. For example, Statista had conducted a survey with more than 1000 shoppers regarding the most common problems they face while filling in their shipping details online. Below are the most frequent issues they experienced.
Solution:
- Audit shipping details form on your e-store to check if it has any of the issues mentioned above, and correct them
- Take feedback from your customers about their challenges with regards to your checkout process, especially with the address sections
- Act on the feedback to eliminate any issues highlighted by your customers
Selecting Shipping Address Same as Billing Address by Mistake
Most of the eCommerce sites feature a checkbox in their address form that allows customers to select the shipping address same as mentioned in the billing information. However, some of the customers may tick that box accidentally or without realising that they want their products to be delivered at a different location. This can lead to a failed delivery attempt.
Solution:
- Add a pop up that activates and reminds customers to recheck shipping details when they check the box of shipping address same as billing address
Billing Address Errors and Solutions
In addition to the address errors mentioned above, you may also witness some of the below-mentioned inaccuracies when it comes to billing addresses.
Entering Information in the Wrong Line
For example, your customer may enter the city name in the space provided for state name. While this may not be a significant issue, entering the house or apartment number in the wrong line may result in a failed billing address verification.
Solution:
- You can control such errors by installing an address validator system that recommends corrections in real-time
- Educate your customers about the implications of such billing address errors through your site and email newsletters
Selecting Wrong Address
Let’s say your customer has moved to a new house. They have updated their address with the bank but while ordering from your site they missed out on updating their billing address and accidentally selected the old one. This can lead to a declined transaction and your consumer may get upset thinking it’s an issue with your website.
Solution:
- Remind your shoppers to re-check their billing information before processing payment
- Ask your customers to review and update their details periodically
Tips to Ensure that Your Orders are Billed and Shipped Correctly
In addition to the solutions for each of the shipping and billing inaccuracies, here are some of the tips that can help you bill and ship your orders accurately and efficiently.
Hire a 3PL Partner
As an eCommerce merchant, once you start processing more than 100 orders a month, it’s best to outsource your logistics to a 3PL partner.
A Third-party logistics (3PL) provider manages the logistical processes including managing inventory, warehousing, and order fulfilment on your behalf.
A 3PL will save a ton of time as you can efficiently delegate your logistics and shipping activities to the people who are experts and experienced for these activities.
This helps you focus on your core business activities instead of managing supply-chain, and also improves your shipping accuracy.
Here are the three ways a 3PL partner improves your shipping accuracy:
- Improved inventory management: A 3PL allows you to monitor inventories at each fulfilment centre and sync it with your online store. This can help you order inventory proactively and avoid probable stockouts.
- Optimised picking and packing process: Some of the most frequent fulfilment mistakes occur during the picking and packing stage. Since the third-party logistics providers have state-of-the-art technology and industry expertise, they help you minimise such errors.
- Right fulfilment centre technology: An established 3PL provider like Pack & Send have warehouses and fulfilment centres at multiple locations. Hence, with the right tools and automation, they route your orders through a fulfilment centre that benefits the most to you and your customers.
Automate the Order and Shipping Management Processes
With a constant rise in online orders and limited manpower, human errors are also bound to increase. There are two ways you can deal with this challenge: either hire more people or automate your order fulfilment.
Here is a solution: Your third-party logistics partner can provide a warehouse management system (WMS) that allows you to automate processes that simplify the work of an order picker and increase their speed and accuracy. Simultaneously, they also take care of the packaging, shipping, last-mile delivery, and so product returns.
Thus, you can leverage the expertise of your 3PL partner to increase your shipping accuracy, and keep your entire focus on what you the best i.e. growing your business.
Save Addresses to Customer’s Account
Nearly 80% of people use the same address 80% of the time they shop online. So when you allow your customers to save their address on your eCommerce store, it benefits both.
For example, a customer purchased from your website for the first time and you delivered the product to the given shipping address successfully in the first attempt.
In other words, the delivery location is correct. Now, chances are that in future this customer would order at the same address eight out of 10 times he shops from you. Hence, your customer can simply select the address which has a successful delivery record.
Thus, you can save customer’s time and reduce billing and shipping address errors by installing such a feature on your online shop.
Wrapping Up
Although the billing address and shipping address both refer to a location or place, their purpose and significance are different. Correct shipping details can help you plan your shipments, deliver the products to your customers on time, and reduce the costs associated with the failed deliveries. Whereas, a correct billing address protects your customers from identity theft and online fraud.
Similarly, the consequences of errors in these addresses also vary. An incorrect shipping address may end up in a failed delivery attempt, and raising the reverse logistics charges. And a mismatch in billing address can lead to a declined transaction. In both cases, your customer gets upset. Hence, it is wise to educate your customers about the importance of these addresses and follow the tips to reduce the billing and shipping address errors, shared in this guide.
Frequently Asked Questions (FAQs)
What is a billing address used for?
The banks or financial institutions use the billing address to send all the account related communications to their customers. Whereas eCommerce merchants use the billing addresses to verify customers’ identities for a secure transaction and send copies of invoices to their shoppers.
What’s a Shipping Address?
The shipping address is the details of a location where your customer wants you to send the products purchased from your online store. This address can be your customer’s place of residence or work, or it can also be someone else’s address.
Does Billing Address matter?
Yes. The billing address is very crucial when it comes to online shopping. Failing to update your bank about your address change can result in difficulties like identity theft or financial fraud. It is also recommended that you educate your customers to keep their billing addresses updated at all times.
Does the billing address have to match the credit card?
Yes. The billing address must match your registered address with the bank or credit card provider. If it doesn’t match, the payment issuing bank may deny the verification of your identity and your purchase order may decline.
Is the billing address the same as the shipping address?
The billing address and shipping address can be the same for most of your customers, but it is not always the case. Sometimes, it may also happen that a person wants the products to be delivered to a different address than theirs. It may also happen that your customer has moved to a new place but they have not updated their bank.
What happens if you enter the wrong billing address?
If you enter a wrong billing address while shopping online, your bank may refuse to verify the transaction and your order may get declined.
What’s my shipping address?
Your shipping address is the location where you want to receive the products that you bought online.
How to check my billing address?
You can check your billing address on your bank account or credit card statement. You can also call your bank’s customer service or check it by logging into your online banking account.
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