How can I use address verification to identify commercial versus residential addresses?

At the core of every e-commerce business the need to properly validate a customer’s address is critical to ensure the shipment reaches its destination. This issue is further compounded when it comes to figuring out if a mailing address is commercial or residential. 

The issue stems from shipping carriers charging increased fees for residential addresses versus commercial, alongside their other fees such as redelivery, verification and associated zone pricing. As an example: 

  • UPS charges over $4 per shipment for residential addresses and an additional $17 per shipment for address correction alone. 

With Address Guard, e-commerce brands can automate the process of address verification directly within their online workflow – for a fraction of the cost. Customer mailing addresses are validated in real-time with suggested changes automatically pushed into the order admin area, saving a business time and money. 

When a shipping address is validated, Address Guard is able to identify the RDI and present that as a tag: residential address or commercial address. An e-commerce business can quickly see where their shipment is being sent to so they can have a better indicator of associated fees with their shipping carrier.

Residential Delivery Indicator (RDI)

USPS rdi data

Since the United States Postal Service manages an authoritative US address database, it can tell whether an address can be residential or commercial. They share this information through Residential Delivery indicators (RDI). Residential delivery indicators indicate the location of the delivery address as a residential location. 

While this seems simple, and perhaps not important – there is a reason behind it. The USPS does not charge a higher rate for delivering packages to residential addresses. Whereas as indicated earlier, UPS does charge an additional fee for residential delivery. Knowing the vast majority of orders are going to residential addresses compared to commercial addresses will allow a business to see how much extra they are paying. Changing shipping companies could end up saving a business significant expenses.

As an example, let’s say a business does 2,000 orders per month to residential addresses:

  • UPS charges $4.45 per order (residential fee). At 2,000 orders this means the business is paying $8,900 in surcharges alone. 

Now granted, most businesses will have some discounted rate for larger contracts with UPS but it doesn’t change the fact that online brands are paying significant fees for residential delivery.

Commercial Address without Liftgate Service

A residential address can qualify for these rates if the address complies with the criteria for a Commercial Address. The truck will also have access to tractors-trailers and a loading dock suitable for unloading by pallet jack and forklift. To determine this business addresses can be reviewed and a form can be submitted in order to classify for the classification. When considering to file this form, it’s important to review the requirements with the shipping carrier to determine if the business address will qualify.

Private Carrier ‘Residential’ vs USPS ‘Residential’

Private transport companies will distinguish between residential and business properties, similar to how the USPS verifies address data for its RDI database. However, private transport companies can classify addresses for domestic purposes and businesses for USPS classifications. If the location of certain businesses are classified in terms of “commercial or residential,” it’s more often influenced by the location than by the real usage of the property. The City-level division is divided into ‘zones’ ranging into residential, industrial, and commercial. Sometimes these zones restrict the possibilities for buildings in their respective zones.

Residential Vs Commerifsl zones

Though some zones aren’t always clear and can have multiple purposes such as schools, or research facilities. Let’s take a closer look at how universities handle these differences.

Is a University a Residential or Commercial Address?

University residential vs business address

This question can be answered by a variety of university institutions. Some university campuses may be designated residential addresses for students who usually reside at the campus. Other campuses may be considered commercial addresses because students normally commute to campus. It all depends upon the university or location – particularly in how shipping carriers or or private mail carriers classify the usage of the property, whether they are residential or commercial buildings. This determination can sometimes be confusing within the realm of commercial real estate because it’s not always completely clear if the usage of the property such as a school could in fact be classified for residential deliveries or if it needs to remain slated for commercial delivery only.

Commercial buildings like a retail store, factory, office address, warehouse with a loading dock or lift gate, or any general business location are more commonly thought of when consumers consider the question of “what is a business address?”. A residential property address is a location in which someone lives within a home or private residence such as a house, apartment communities, condo, multifamily properties or where the actual purpose is a residential zone.

Residential or Commercial Address Checker

Address Guard resolved common issues

One of the important aspects of any shipping workflow is to quickly and easily indicate the type of mailing address a customer has and then to let the shipping carrier know of these addresses when printing labels. Depending on how an online business decides to interact with their mail carrier or 3PL, there’s usually an area to select between a: residential address or business address. 

Some mail carriers have software integrated with Shopify, which allow tags to be imported automatically – making the process easier to manage (versus clicking the checkbox each time). When Address Guard reviews a new address via a customer order, it is able to identify between a residential address or a business address.

Address Guard will then append a tag to the Shopify Order indicating the RDI (residential delivery indicator) data associated with the customer’s mailing address. The tag makes it easy for any employee of the online store to quickly see if this shipment is being sent to residential zones or commercial zones – which can help set expectations with the operations team. 

Address Guard Shopify tags

In addition to providing a more efficient means for customer relationship management via the Shopify tags, Address Guard can also prevent deliveries to addresses based on rules setup within the account. These “Address Rules” are associated with workflow management, as a means to automate the process of notifying customers if an online store does not ship to a particular location – such as PO Boxes.

Address Guard P.O. Box check