In recent years, direct-to-consumer e-commerce has experienced an unprecedented surge fueled by changes in consumer shopping behavior, especially from the COVID-19 pandemic. Although the growth of online shopping emerged as a necessity, it has continued to stay around for its convenience. According to the Census Bureau’s Annual Retail Trade Survey, “e-commerce sales increased by $244.2 billion or 43% in 2020, the first year of the pandemic, rising from $571.2 in 2019 to $815.4 billion in 2020.” As a result, the shipping industry has quickly scaled to meet the demand, enhancing logistics and delivery efficiency. This rapid expansion, however, is not without challenges. One recent example of online order fulfillment coming under scrutiny was when Macy’s discovered that an employee had hidden millions of dollars in shipping expenses.
How Did Macy’s Lose Over $150 Million in Shipping Expenses?
A former Macy’s employee was recently found to have hidden between $132 to $154 million in shipping expenses through inaccurate financial reporting over the last three years. Although the expenses seem like a lot for small package delivery, Macy’s reported its total shipping expenses to be $4.36 billion over this same time period. With shipping costs this high, perhaps it’s understandable how the problem was not identified right away.
The events at Macy’s highlight the importance of having internal controls and regular audits of financial reporting. Many companies pay limited attention to shipping and delivery expenses as they can be notoriously difficult to reconcile and they are usually fairly consistent. However, this situation is another reminder of the importance of effective audit and review systems of the shipping costs.
Save Your Company From Potential Losses with ShipHawk Audit
When you see this dramatic news about shipping expenses, you’ll next think about how you can protect your business from similar problems. The answer is ShipHawk Audit. ShipHawk Audit can prevent theft and fraud circumstances like this by continuously tracking and reporting shipping expenses.
ShipHawk Audit provides real-time intelligence through its intuitive user interface with state-of-the-art technology to audit the parcel and LTL freight invoices from carriers. Sometimes carriers will overcharge when they fail to meet the Service Level Agreement (SLA) agreed upon. ShipHawk’s system can help your business catch these discrepancies to file a claim with the carrier in time to correct the expenses.
Josh Jensen, Director of Account Management at ShipHawk, explains that ShipHawk Audit can help businesses prevent hidden expense situations through “independent, supplemental verification of shipping spend” and “visibility through year-over-year trends and performance data reports to spot big variances in shipping expenses”.
By automating carrier invoice receipt and reconciliation, Shiphawk Audit can increase efficiency and identify shipping cost recovery opportunities to save money for your business. Additionally, ShipHawk’s software can analyze carrier performance trends to facilitate contract negotiations with carriers. Take proactive steps to prevent losses for your company and get in touch with a shipping specialist at ShipHawk now for tailored solutions!