Shipping Protection

Why Merchants Can't Afford to Skip Out on Shipping Protection

Aaron Sullivan
November 11, 2022

It’s likely that you or someone you know has been impacted at some point by a porch pirate or another delivery disaster. In fact, ValuePenguin reports that more than 40% of consumers have been the victims of porch piracy, with the average loss totalling $106 per household. 

When delivery issues happen — whether it’s from theft, damage, or loss during the delivery process — customers become frustrated and often blame the retailer that sold them their item. In fact, 72% of small and midsize businesses say that shipping issues like theft, loss, and damage have negatively impacted their customer reviews in the past year.

Source

While customers can take protective measures like installing doorbell cameras, signing up for delivery alerts, or having a package delivered to a more secure location, merchants can also take action to offer customers peace of mind that their package will be delivered. 

If, however, merchants choose to stick with the status quo, they risk losing customers to competitors who are meeting customer demand and have chosen to protect customers from package theft, damage, and loss.

What is shipping protection?

To consumers, delivery may be considered the pinnacle of the purchase process. But for merchants, delivery is an opportunity to improve margins and nurture loyalty. 

By protecting customers from package loss, damage, or theft, shipping protection gives merchants some control over otherwise uncontrollable factors that negatively impact their bottom line and their brand. Similar to product protection, shipping protection turns a customer pain point into a positive brand interaction. Shipping protection gives customers peace of mind that their delivery will be successful, and it helps merchants reduce operational overhead, save on replacement costs, and efficiently address customer needs.

Shipping protection benefits merchants and customers alike

C+R Research reports that 84% of surveyed consumers are planning to shop online and have a package delivered this holiday season. Shipping protection programs can ensure that 100% of those deliveries — especially during the holiday season — are protected from delivery disasters.

Shipping protection offers merchants the opportunity to:

  • Reduce operational overhead by offloading shipping issue resolution from their own customer support
  • Mitigate replacement costs and guarantee they’ll never again eat the cost to replace a product that’s lost, stolen, or damaged in transit
  • Resolve issues with technology in seconds or minutes — rather than days or weeks

Likewise, shipping protection takes the customer worry out of package delivery by:

  • Protecting packages from loss, damage, and theft
  • Offering peace of mind so customers can purchase with confidence
  • Meeting customer expectations about a promised delivery

Merchants can’t afford to ignore shipping protection for customers

Modern customers are selective with the brands they buy from; they’re looking for value, convenience, and peace of mind for every purchase they make. Merchants that offer shipping protection to their customers are building trust and giving customers a reason to shop with them again. 

Perhaps more importantly, merchants who offer shipping protection understand the risks of running an ecommerce business and aren’t leaving anything to chance.

Porch piracy is on the rise

The pandemic standardized online shopping, and there’s no sign of it slowing down. The rising number of deliveries brings with it an increased likelihood of package theft.

More than half of consumers say they've experienced package theft.

From July 2021 to March 2022, the percentage of surveyed customers who had experienced a package theft grew to more than half (to 54%, up from 40%). Porch piracy is common throughout the US, with the highest rates of package theft happening in Alaska (29%), Delaware, Nevada, and New York (all three at 27%). 

Customers blame the merchant

When a delivery issue arises and a customer fails to receive what they’ve ordered, they often turn to the merchant to make it right. That’s partially because many delivery companies take no responsibility for a package once it’s been delivered; they advise customers to get in touch with the seller, effectively shifting the responsibility to the merchant. Even those that offer support 

Without shipping protection in place to protect customers from theft, damage, and loss, merchants open themselves up to unnecessary — and preventable — issue resolution overhead and damage to their brands.

Product replacement costs hamper merchant profits and growth

Any time a package goes missing, the merchant is on the hook to make it right with a replacement, and the costs quickly add up.

On average, the value of packages that are lost due to theft is $112.30.

On top of the cost of replacing lost products, merchants are also saddled with the cost of customer support and shipping issue resolution. Growth-minded merchants can’t afford to let these combined costs impact their bottom line.

A single bad experience motivates brand abandonment

With so many ecommerce options available for every customer need, building loyalty is crucial to merchant success. It doesn’t take much for a customer to jump ship and go to another brand:

53% of surveyed customers across the US and UK say they’re willing to leave a brand after only one bad experience. 

Simply put: failing to address customers’ everyday needs with value-added services like shipping protection could mean less profit, more customer churn, and overall stagnant growth.

DIY shipping protection isn’t scalable

While some merchants might recognize the value of shipping protection, not all take the best approach to creating an effective and successful program. They think creating an in-house shipping protection program provides greater control over issue resolution and related costs. But sadly, they’re mistaken.

In-house shipping resolution is complicated

An in-house program is rife with complexities that are hard to predict and often expensive to overcome. The merchant is responsible for claim intake, logistics, customer service, and replacement costs, including delivery fees. On average, claim resolution is an operational cost of $5.

In-house shipping resolution workflow

Outsourced shipping protection is worry-free

Outsourcing a shipping protection program to a trusted, modern provider eliminates complications and allows merchants to focus on creating a delightful customer experience that builds loyalty and drives repeat purchases. The provider handles all claim intake, logistics, customer service, and replacement product costs. 

Shipping Protection creates a virtuous cycle

Create a delightful customer experience with shipping protection

Merchants have a chance to take ownership of one of the most challenging aspects of ecommerce by incorporating shipping protection into their customer checkout process. 

Shipping Protection by Extend can reduce costs related to issue resolution, give customers peace of mind, improve the customer experience, and protect brands from irreparable damage. And because it’s built on digitally native, customer-first technology, implementation is a breeze. 

Click here to learn more about Shipping Protection.
Aaron Sullivan
Aaron Sullivan is senior content marketing manager at Extend. He specializes in writing about e-commerce, finance, entertainment, and beer.

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