The most recent US Department of Commerce report shows more than 20% of consumer spending from January to March 2022 happened online, with total retail sales growing almost 8% year over year, and online sales growing by 6.7%.
Experts also project these numbers will continue to grow as $650 billion of non-food spending moves online by 2025. And of this number, $540 billion is predicted to be home deliveries.
Given the growth of online shopping sales, it’s not surprising that package theft, lost items, and packages damaged in transit are also on the rise.
The 2022 Package Theft Annual Report shows 49 million Americans had at least one package stolen over the past 12 months, with the average losses totalling more than $2.4 billion in stolen goods.
The problem exists on the return side too. For every $1 billion in sales in 2021, retailers saw $166 million worth of goods returned, with 10.3% of returns being lost to fraud.
Here’s a deeper look at how merchants can deal with lost, stolen, or damaged packages.
Table of Contents
Why do ecommerce packages get damaged?
Packaging and logistics are complicated operations with many moving parts. As such, there are several reasons why packages may get damaged. Here’s a deeper look into the most common reasons for damaged packages from ecommerce store owners.
Improper or ill-fitting packaging
Eloise Tobler, Ecommerce Manager at Wisetek Store, says she learned the hard way that items get damaged if you don’t adequately pack your cardboard boxes or mailers, and leave too much empty space.
“There’s a number of reasons why your packages may get damaged, but don’t but always be quick to blame the shipping company. It can oftentimes be down to the way you’re packing the boxes yourself,” says Elise.
Tobler advises ecommerce brands to make sure the box is the appropriate size for the item, to use air bags, bubble wrap, and peanuts and other packing material to secure the product tight in the box, and to label fragile products as such.
Zachary McClung, founder of Task Hushy, shared the following story: “We have a friend who is a Shopify merchant. He was using a large third-party logistics (3PL) company to ship his boxes. They were using boxes that were significantly larger than the products he was shipping. If you don’t use boxes that fit the product, they can get damaged.”
Poorly labeled packages
The way you carry a baby is different from the way you carry a toddler, which is different from the way you carry a sack of potatoes.
When people who deliver packages know what is inside, they are more likely to handle them with care.
“Your deliveries may be damaged because the shippers were unaware they were transporting fragile items,” said Brian Case, Director of Ecommerce and Retail at Selkirk.
“Ensure that you place the appropriate stickers on each package to meet the product protection requirements. Providing a nice packaging process with branded wrapping goes a long way toward fostering client loyalty, and it's an excellent method to exert greater control over delivery.”
Grace Baena, Director of Brand at Kaiyo, adds, “It is definitely worthwhile to invest money during your brand's research and development to make sure you have packaging and solutions that work for your products.”
Water or humidity damage
It’s essential to remember that the climate changes drastically from one state to another and one country to another. If you’re shifting something from cold, dry, Utah winter air to sunny and humid southern Florida, you have to account for the changes in climate.
“The most common causes of shipping damage claims are not enough cushioning material, improper handling, water damage and humidity,” says Phillip Akhzar, founder of Arka.
“The best way to prevent shipping damage is to use water-resistant packaging and use form-fitting inserts to prevent internal shifting.”
Another thing to consider is how you seal the package. “Ecommerce packages might get damaged if they are not properly sealed. If the package is not sealed correctly, it can allow moisture or other elements to enter, damaging the contents. If the package is not wrapped securely, it can also come apart during transit,” says Darren Litt, co-founder of Hiya Health.
Packaging not tested
It’s challenging to get packaging right if you don’t test it to make sure it fits properly, is sealed, and can withstand rough handling.
Sometimes packages get damaged because ecommerce merchants or suppliers haven’t done their due diligence researching and testing different product packaging options.
“I advise new DTC brand owners to test shipments by gently shaking a package to check for extra space. A correctly packaged order will never shift around,” says Andrew Browne, Lead Strategist at Browne Box Creative Solutions.
How shipping damages can harm your business
It goes without saying that if the transit of your products from paying customers is interrupted—for any reason—you’ll lose money, customers, and precious time.
Shipping damages can also increase your return rates, a real hassle that affects customer loyalty and the bottom line of your company.
A recent survey of over 7,000 consumers found one of the top three reasons people said they returned items was because it was damaged or defective. Sixty-five percent of consumers said they returned boxes because of damage.
Here are some additional ways shipping damages can harm your business, according to ecommerce merchants and marketers.
High costs of replacing items
If a customer pays for a product, you have to send it to them—no matter what. Your company is responsible for making sure the product gets from your warehouse pallets to their kitchen table. If it doesn’t, you have to spend the extra cash for replacing the damaged shipment.
“Damaged and lost shipments harm business through extra spending. Customers expect a replacement if an order arrives damaged or is lost altogether, says Browne.
“Both scenarios amount to lost revenue. Some carriers even charge shippers to investigate a lost shipment, which often takes seven to 10 business days to receive an answer. The replacement you send to a customer could have been sold during those seven to 10 days.”
Damaged reputation
Have you ever had this happen? I once ordered a product from a company that I loved. I waited for the package for weeks. When it finally showed up, it was completely shattered.
The company then sent me a replacement package, and I waited for several more weeks. Guess what happened? The item in the second package was also broken.
I requested a refund and never ordered from that company again. Not only did this company not make a sale and lose money on two products, but they lost a customer.
“Shipping damages and lost packages can cause many problems for your business,” says Ben Rollins, co-founder of Axon Optics. “Apart from dealing with the cost of replacing the damaged items, you also have to deal with upset customers. This can hurt your reputation, making it difficult to retain customers.”
Litt adds, “Damaged products and lost packages can hurt your reputation. This can lead to negative reviews and may discourage others from doing business with you in the future.”
Lost time
Not only is it expensive to replace damaged goods and lose customers, but there is an added expense of the time you lose when you spend too much time on the shipping process and supply chain problems.
“If you are constantly dealing with shipping issues, it can take up a lot of your time and energy, which could be better spent on other aspects of your business,'” says Litt.
If you do experience shipping problems, remember the economic principle of opportunity cost. The time it takes you to deal with shipping problems could be better spent focusing on other areas of your ecommerce business.
Instead of trying to deal with it yourself, hire a 3PL company to handle packaging, shipping, and returns for you.
Who is liable for shipping damages?
There’s no straightforward answer when it comes to who is liable for shipping damages. The answer is: it depends.
“When it comes to who’s liable, it’s tricky,” says Eloise Tobler, eCommerce Manager at Wisetek Store. “If you suspect a carrier has damaged the parcel during shipping you’ll need proof, which is hard to ascertain. We’ve had bad experiences with couriers and shipping partners in the past with damaged and missing parcels.
“In most cases, the shipping company may accept liability, but only after a long back and forth period that is partly done in order to get you to stop chasing up the order.”
Rollins also makes a good point about who is liable. He says, “The sender may be liable if the damage is due to an issue with the packaging materials. For example, a brand would likely be responsible if a package arrives damaged because they did not cushion it.”
How, where, and when the package is damaged plays a significant role in who is liable for the damages. As far as accepting most of the liability, there are different schools of thought. Some say the company is responsible. Others say the courier is responsible.
Camp 1: The company is liable
Phillip Akhzar, of Arka, is one ecommerce professional who believes the company is liable.
“Shipping damage can be incredibly detrimental to a company’s brand loyalty. When an item shows up damaged, ultimately, the company is responsible,” says Akhzar.
While Akhzar believes the company is responsible for the cost of lost packages, he agrees that sometimes it’s the courier’s fault.
“Though the courier can be held liable if there is proof the damage occurred while the item was in their possession. Either way, your brand image takes damage too.”
Regardless of whether you accept liability or the courier does, one thing is certain. You have to do everything in your power to serve your customers and protect the reputation of your brand.
Camp 2: The shipping company is liable
The other school of thought is that the shipping company is liable for damages, and the best thing to do is truly vet your logistics provider.
“Your shipping carrier is liable for provable damages that occurred when the package is being shipped. However, this is much more difficult than it sounds, says James Green, owner of Cardboard Cutouts.
“If your packages are showing up damaged consistently, then you need to switch shipping carriers, otherwise you’re going to be consistently replacing products and eating those replacement and shipping costs yourselves.”
You may also want to note the type of freight shipping that your provider uses. The mode of transportation used to get you products from point A to point B may be a good indication of where in the shipping process freight damage is occurring, allowing you to alter your product packaging accordingly or use a different provider altogether.
6 ways to prevent ecommerce shipping damages
The best way to deal with damaged packages is to avoid them in the first place. Here’s a closer look at how brands are working to prevent ecommerce shipping damages.
Switch up your packaging
Bike company Vanmoof was having significant problems with its bikes arriving to customers damaged. CNN reported more than 25% of the company’s bikes were damaged before even being delivered.
As a result, their team came up with an ingenious plan to try and reduce damaged packages. The Vanmoof team redesigned its packaging to include a picture of a television on the outside of the box.
After switching up its boxes, couriers started handling the packages (bikes disguised as TVs) with more care, and shipping damages dropped by 80%.
Use the right packaging
Different products require different kinds of packaging. If you’re selling t-shirts, you can get away with shipping them in a loose envelope or mailer. If you’re selling a desk with a glass top, you need packaging that will secure the desk, protect the glass, and fit the box.
“Brands can reduce damaged orders by using the right packaging (e.g., insulation, molded plastic, foam, or ice packs), says Juliana Casale, Head of Brand and Community at Wonderment.
“There is no way to avoid shipping damages and lost packages entirely, but it can be minimized through proper packaging and good customer service handling,” says Chad Brinkle, founder of High Country Off-Road.
“The best way to protect your products from shipping damages and lost packages is using packaging supplies that are sturdy enough to handle the shipment process. Packaging supplies like bubble wrap, foam sheets, and air pillows are a good starting point.”
Kaleigh Moore, freelance ecommerce and retail writer, advises ecommerce companies to also “mark boxes with a “Fragile” sticker.
Improve communication
Preventing damaged packages is one part of the equation for ensuring orders get to customers intact. But, another huge piece of the puzzle is finding ways to reduce lost and stolen packages.
Brinkle suggested hiring a shipping company you trust and having clear communication with the company on expectations.
“Before placing an order, it is important to discuss it with the shipping company. This way, you can determine what it takes to ship the product and what will happen if something goes wrong,” says Brinkle.
Casale added that it’s also critical for brands and shipping companies to communicate with customers.
“Combat stolen items by sending up-to-the-minute shipping and delivery communications. Ideally, set up SMS, so the customer sees the notification and scoops up the package ASAP,” Casale says.
There are several order notification apps that integrate well with Shopify. These apps will help protect your shipments, inform your customers of deliveries, and lower costs from potential damages or theft.
Track and insure your packages
It’s challenging to know what went wrong in the shipping and logistics cycle if you don’t track your packages.
Moore advises ecommerce brands “set up detailed tracking via integration.” This means investing in a tracking app that integrates with your order system.
Rollins agrees with Moore: “Once you’ve shipped your products, track them so you can keep an eye on their whereabouts. This way, you can quickly resolve any delays or issues with your shipment.”
There are also times when things go wrong and a shipping disaster is out of your hands. For this, there’s insurance.
“Shipping insurance can help you recoup the costs of any damaged or lost packages. This is a great option to have if you’re shipping high-value items,” says Rollins.
Provide robust delivery options
Packing your products yourself and shipping them through the mail aren’t your only delivery options.
In fact, many shoppers prefer an in-person shopping experience. According to eMarketer, shoppers spent $72.5 billion through click-and-collect fulfillment options in 2020. These numbers aren’t going down, and experts project the buy online, pick-up in store (BOPIS) market will be worth more than $140 billion by 2024. After all, packages can’t get damaged or stolen if the customer comes to the store and picks it up.
If your store only operates online, you may want to consider a local delivery system. Local delivery is a stellar way to personalize delivery experiences to the needs of customers in your region. You can also build relationships with local delivery services and set expectations.
Partner with a great shipping company
Even if you’re a small ecommerce brand, it’s essential to partner with a shipping and logistics company that has its processes ironed out. If you’re a bigger ecommerce company or an enterprise, partnering with a 3PL company is essential.
“Choosing a reputable and reliable shipping company reduces the risk of damage to your packages. Their staff members are trained to handle packages properly, and they have the resources to get your parcels delivered safely and on time, without risking mishandling fragile packages,” says Rollins.
Shopify can help you reduce shipping damages
If you’ve been experiencing higher than normal shipping problems (e.g., damages, theft, or loss), now is the time to look into better shipping options.
The good news is Shopify has a large list of 3PL shipping partners. Take a look at the 3PL systems that integrate into Shopify and streamline the order, fulfillment, shipping, and returns processes.
Shipping Damages FAQ
How do you find a good shipping company for your ecommerce store?
There are many different types of shipping services out there, each with its own pros and cons. Choose a service that offers great customer service, can meet the demands of your scaling business, and is willing to share liability for damages.
When looking for a good logistics company, make sure it has a track record of delivering orders on time and in good condition. Ask them for their metrics so you get a better look into how well and with how much care they handle packages.
Another good way to find a shipping company is to check their online reviews and ask other ecommerce brands who are doing a good job.
What else can ecommerce brands do to limit shipping problems?
The best thing for ecommerce brands to do to limit shipping problems is to partner with a professional shipping company.
It’s also essential to research and evaluate your packaging and shipping materials and processes. Make sure you have the right materials to protect your items based on what the items are, where they are being shipped, and how they are handled.
Other ideas include tracking your packages, insuring your packages, labeling your packages correctly, and sealing your packages.
Should ecommerce brands get package insurance?
As a quick review, package insurance covers the cost of lost or damaged packages, ensuring that customers receive their products.
Deciding whether or not you should invest in package insurance depends on what kind of items you sell and whether or not the costs make sense.
If you sell high-ticket items, then package insurance is a good bet. Package insurance is also a great way to protect your brand’s reputation and ensure customer satisfaction.
Another option is for merchants to partner with companies that offer insurance to your buyers. In this instance, the buyer can purchase a small insurance policy and cover their bases.
