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A seller’s survival guide to shipping damages, package theft, and more

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When you run an eCommerce business, there are some things you just can’t avoid.

Some are positive, like the joy of making your first sale, or the thrill of getting your first positive review. Others are not so positive. Take shipping damages and package theft as examples. These are challenges that almost every merchant will face at some point of their careers.

In fact, nearly one in ten (10%) packages arrive damaged—and that number jumps to more than two in every ten (21%) when shipping oversized items. When it comes to missing packages, almost one in four online shoppers say they’ve had a package stolen in the three months leading up to March 2022.

These issues happen throughout the year, but they become even more prevalent during the peak holiday season as more packages than ever are being delivered across the country.

To help, we’re going to dive into these issues to find their causes, what you can do to prevent them, and how to best respond to damaged or missing packages.

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Shipping damages

What causes shipping damages?

While there is no sole culprit that causes damaged packages to arrive at your customer’s doorstep, there are a handful of reasons to bear in mind.

  • Too much empty space - In an ideal shipping situation, the distance between your product and the walls of the box should be minimal. But if your eCommerce packaging lacks padding or your box is too big, products could rattle against each other or get jostled while in transit.

  • Not sealed properly - Carriers won’t always hold your packages the same way. They could be unknowingly holding them upside down while in transit. If you haven’t sealed every edge of the box with quality tape and materials, you could be exposing your product to potentially falling out.

  • Not marked properly - Carriers often have no idea what's inside the packages they are delivering. Oftentimes their main focus is to load packages as quickly as possible. So unless otherwise notified, they could accidentally mishandle your packages.

  • Improper handling - At the end of the day, your products are being delivered by humans. People make mistakes and may drop your package by accident, causing it to get damaged. Improper handling is especially likely to happen during the holidays when speed is top of mind and many packages are being handled at once.

  • Water and humidity - Different parts of the country have different climates and humidity levels, which can affect the box and contents you’re sending. For example, if you’re shipping a package from Nevada (a dry desert state) to Florida (a humid and tropical state), the condensation inside of a shipping truck can build, causing the boxes inside to erode. In another instance, your package could be exposed to rain or snow after being dropped off in front of a customer’s door.

  • Rodents - While this is most common for people shipping plants and vegetables or for those delivering freight via cargo ship, it can happen to anyone. You’ll need to make sure that the warehouses, fulfillment centers, and modes of transportation you use are free of any rodents or insects trying to get inside your box.

  • Too much time in transit - The longer your package is in transit and the more hands your package has to go through, the greater the chance of mishandling. It will also be more difficult to track exactly when shipping damages occurred. International shipments have a higher likelihood of being damaged just because of this.

How to prevent shipping damages

So, what are some steps you can take to avoid damages? Here are some best practices to incorporate into your eCommerce shipping workflows.

  • Use better-fitting and water-resistant boxes - Never take a one-box-fits-all approach when it comes to shipping. Instead, use boxes that are only slightly larger than the products you’ll be packaging. This will not only help reduce the chances of your product bouncing around and getting damaged in transit, but it will also reduce your shipping costs, since carriers charge more for larger boxes. There are also boxes that help combat water damage so you can get the best of both worlds.

  • Choose the right in-fill - For some larger products, packing peanuts might be the best option, while air pillows might be better for smaller products. For electronics, you may want to use a molding infill. By contrast, for apparel, you may not have to choose any infill at all. Consider all options for your products, putting protection first, even before cost.

  • Wrap fragile items - For certain products, especially ones that have glass, you’ll want to wrap items up individually. This can mean wrapping up the product in bubble wrap or foam, along with surrounding the product with other protective materials like packing peanuts.

  • Test packages in-house before shipping - Before you sign off on a method to pack your products, you’ll want to check for any shipping damages in your own fulfillment center or business. You can perform drop tests in which you drop your package from multiple angles. You can also simulate deliveries by loading your packages into your own truck and driving the length of what could be a normal last-mile delivery. This could possibly result in you breaking your own products—but will, in turn, save you the trouble and cost of addressing customer claims later on.

  • Label your packages properly - If your product contains glass or any other fragile items, make sure that the box is labeled “fragile” in big, obvious letters. You can use stickers or write on the box yourself. Just make sure that carriers can see it from every angle.

polymailer with sticker that says fragile

  • Educate and train your fulfillment team - You want to make sure that any new or current member of your fulfillment team knows the protocols you’ve set for packing your products. If you’re outsourcing fulfillment to a third-party logistics provider (3PL), you’ll want to make sure that they also know the protocols for each product they’ll be handling.

Who is liable for package damages?

In many instances, the answer to this question is: it depends.

If you’ve taken all the necessary steps to protect your package and prevent shipping damages, the carrier can be held liable.

However, if you try to file a claim with a carrier and state that they’re at fault, the carrier will ask you for proof that you did your part in protecting the package. This can be difficult to prove, since taking a photo of every package you ship can be time-consuming and be a significant bottleneck to your fulfillment operations.

Instead, show proof that there was infill inside the box. Or, show your receipt from your supplier proving the product was not damaged before it was shipped. If you have security cameras in your fulfillment center, provide footage of your team doing their part. Whichever way you choose to handle it, filing a claim will take time.

From the customer’s perspective, your business is expected to take responsibility and handle the situation accordingly. This could entail issuing a refund or exchange while you go through the claims process with the carrier or shipping insurance provider in the background.

Package theft

How to prevent package theft as an eCommerce business

Package theft is one of the harsh realities you’ll have to deal with as an eCommerce merchant. Unfortunately, it's also a growing trend. In the U.S. alone, about 49 million eCommerce customers have fallen victim to package theft in the past 12 months. The result is nearly $2.4 billion worth of stolen goods within a year.

But, while you can’t control bad people with bad intentions, you can take a few steps to help limit the risk of someone looking to steal your customer's order.

  • Offer in-person pickup - If you have a retail store in addition to your eCommerce store, offer curbside pickup or in-store pickup. If not, consider sending products to a pick-up location, such as the Post Office, a UPS/FedEx Store, or any other location that’s authorized and partnered with a carrier. This can help eliminate the possibility of porch pirates stealing your customers' orders.

  • Offer signature confirmation deliveries - When shipping high-value items, require signature confirmation upon delivery. This way, all parties are involved in the hand-off process. In the event that someone isn’t there to sign at the time of delivery, carriers will just take the package back to their retail locations. They will then update the tracking status of the package, letting you and your customers know that the package is safe.

  • Offer scheduled deliveries - Your customers aren’t always home and ready to accept packages. In order to limit the amount of time that packages stay outside unmanned, give them the ability to select what time of the day they want their packages. While this will likely result in a higher shipping rate, it can give them (and you) peace of mind. Pro tip: when setting up local delivery on your Wix store, you can enable an option allowing customers to choose a preferred delivery date.

  • Keep package design limited - While boxes with your business’s logos and colors are a great way to build brand awareness, they can also provide a way for potential thieves to learn what might be inside the box. For high-value orders, you’ll want to be more discreet about the contents of your package. Many shipping insurance companies actually require unbranded packaging in order to insure the item.

  • Allow customers to specify to carriers where to drop off packages - The front door or drop-off area may look different from location to location. For instance, some customers may be receiving items at an apartment complex, while others may be receiving them at an office building. Give customers the ability to leave drop-off instructions to limit how exposed a package is to strangers.

Who is liable for stolen packages?

When it comes to stolen packages, customers will likely look towards either your business or the shipping carrier for reimbursement. But, in most cases, if the carrier can show that they delivered the package to the appropriate address, they will not be held responsible. A carrier’s duty is to simply deliver packages, not protect them after they’ve been delivered.

Customers may then point their fingers back at your business. While no laws state that your business is liable for package theft, it is often seen as best practice to simply reimburse or reship another product. If you choose not to, your brand could ultimately take a hit; customers may avoid shopping from you again and/or warn others about their experience.

If you choose not to take responsibility for stolen packages, you’ll want to make sure that it is stated clearly in your shipping policy. You’ll also want to make it easy to access your shipping policy, so that customers know what to expect before making a purchase. (Just keep in mind that taking this approach to your policy could be a deterrent to some sales.)

Shipping insurance: do you need it?

Shipping insurance can be a great low-cost option for merchants who simply can’t afford to cover the costs of stolen or damaged products.

To insure your packages, you’ll need to purchase shipping insurance as an added service before you buy the shipping label. The cost of shipping insurance will depend on the value of everything inside the package. The higher the value of the contents of the package, the more you’ll need to pay for shipping insurance.

If you’re working with a 3PL, you’ll need to make sure automations are set between your online store and their software. For instance, you can set up if-then functions to say “if” product A is ordered on the site, “then” shipping insurance must be added. This will ensure the 3PL’s fulfillment center will automatically add it before they generate a shipping label.

Note: If you’re shipping with USPS, UPS, or FedEx, your package will automatically be insured up to $100. If you purchase shipping insurance from a carrier for a package worth more than $100, you’ll typically have to pay about 3% of the total value of the shipment. If you use a multi-carrier shipping software like Shippo to print your shipping labels, you’ll be able to select shipping insurance at almost half the normal cost.

After you’ve selected shipping insurance, if the package you send gets damaged or goes missing, you can file a claim with the insurer. You’ll have to provide detailed information about the package, including any photos if available. Once the insurer processes the claim and approves it, your business will be reimbursed for the value of the package. The speed of the claims process will depend on who your business is insured with.

Products that shipping insurance doesn’t cover

Keep in mind that there are some items that many shipping insurance companies don’t cover. These include:

  • Certain electronic devices, such as TVs, computer monitors, and other items with large screens

  • Personal or financial documents like passports, deeds, money orders, gift cards, cash, coins, securities, etc.

  • Certain types of glass like stained glass, float glass, or plate glass

  • Hazardous materials, as specified by the carrier

  • Tobacco products

  • Certain foods

  • Vehicles

  • Live plants or seeds

  • Live animals

  • Perishable cargo

  • Stone and ceramic items

  • Neon signs and other neon products

  • Specific fragile items

If you’re unsure if shipping insurance will cover your products, be sure to contact the insurer you plan on working with ahead of time.

When to use shipping insurance

Given that carriers will usually cover packages with a total value of less than $100 automatically, it’s best to reserve shipping insurance for your high-ticket items.

For example, you may choose to insure:

  • Furniture

  • Jewelry

  • Musical instruments

  • Cameras

  • Shoes and apparel

  • Appliances

Look at your past data to determine if the risk (and cost) of a missing or damaged product outweighs the cost of shipping insurance.

Alternatively, see if customers are willing to pay for the cost of insuring their order by adding the cost of insurance to your total shipping price. Just keep an eye on how this higher cost affects conversions.

How to respond to shipping damages and package theft

The truth is, even if you take all the necessary precautions to protect your products from shipping damages and package theft, you can’t fully eliminate either issue.

When you encounter these situations, how you respond can be just as vital. Your response can impact a customer’s perception of your brand and the health of your business moving forward. Some important steps include:

  • Communicate to customers quickly - Customers who report a damaged or stolen package are not happy, and rightfully so. They will not have the same patience as other customers, so you must prioritize these inquiries and respond quickly.

  • Take responsibility - Whether or not you believe it to be the carrier’s fault, when speaking to the customer, you’ll want to take responsibility for what happened. You can work with your carrier in the background, but avoid arguing with your customer to avoid putting them on the defensive and losing their trust.

  • Get as much information as possible about the package - Be sure you get as much information about the package from all parties involved. This means gathering information from the customer (such as pictures of the damaged package), information from the carrier (such as where the package is in its journey), and from your own fulfillment team to better track down the issue.

  • File a claim with the carrier or shipping insurance - If you’ve gathered all the necessary information and feel as though you have enough to file a claim, do so with your carrier or shipping insurance provider. Keep in mind that filing a claim can take a bit of time depending on where you bought shipping insurance from. You likely won’t want to keep your customers waiting while working through the process.

  • Initiate a refund or replacement quickly - In order to provide the best possible customer service, initiate a refund or replacement as soon as possible. Depending on the severity of the shipping damages, you may be able to give a partial refund and allow the customer to keep the product. If you really want to win back the customer, it may be in your best interest to send a replacement with express shipping.

  • Incentivize future orders - As part of your way to make things right for your customer you may also consider giving them a discount on their next purchase or free shipping on their next order. By doing this, you’re not only showing good faith but can additionally incentivize another purchase.

  • Log the shipping damages and package theft for future reference - This is one of the most important steps you’ll need to take. Keep a detailed record of shipping issues in order to identify if certain carriers are more prone to shipping damages, if certain addresses are more susceptible to package theft, and/or if certain customers are reporting more issues than others. You can then make more strategic decisions going forward.

Don’t let shipping issues bring your business down

Getting your eCommerce website up and running can be a beast of a project. But getting your shipping and inventory management to be smooth is an entirely different animal.

Shipping damages and package theft are two things that you’ll, unfortunately, need to prepare for.

Other shipping issues you could encounter:

  • Delays when boxing items

  • Storing your packages

  • Tracking shipments

  • Late delivery

  • Handling shipping rate increases

  • Getting the right documents for international shipping

On the bright side, there are plenty of opportunities to turn a negative experience around—even if an issue arises. And, the steps above should help you to mitigate issues, and thereby gain an edge above other, less-prepared competitors.

Allison Lee headshot

Hasan Nabulsi

Content marketing manager, Shippo

Hasan Nabulsi is the Content Marketing Manager for Shippo, where he specializes in providing a wide range of information to help eCommerce small business owners ship smarter and better. To learn more about how to use shipping as a competitive advantage for your eCommerce business, visit the Shippo blog.

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