The angry email or call from your customer telling you their order has been lost or damaged is one of the most dreaded for any eCommerce business.
Compounding this is that while, you may be able to control who you ship with, and how well you pack your parcels, the reality is you can’t control how they arrive as it’s impossible to physically deliver your customers orders yourself.
That’s why taking control and protecting your shipments for when things don’t go to plan is essential.
Industry wide this protection is called many names – transit protection, delivery insurance or parcel protection – but regardless of title, it’s a critical consideration for eCommerce businesses of all sizes.
So what is it?
Often broadly referred to as a policy, warranty or insurance, its purpose is to ensure your eCommerce business is protected against the value of your parcels that are lost or damaged in transit.
Whilst couriers do their best to ensure orders are delivered safely, unfortunately, shipping mishaps happen while your orders are collected, sorted at a depot and delivered.
You can’t stop this (but if you work out how, let us know!) but you can ensure that when mistakes happen, your business and customer relationships are protected.
How do I decide on a policy?
Depending on the products you sell and the couriers you ship with, choosing how to best protect your deliveries can be a complex decision and you may want to check out the fine print.
We break it down here and cover the most common options available as well as the factors you should consider before picking a provider.
Where to find protection for your deliveries
Protection provided by your courier
This type of protection is provided by your selected courier i.e. your delivery provider. Most couriers will offer their own protection policy, insurance or warranty for deliveries that have been lost or damaged in transit. With policies varying widely across couriers, it’s crucial to compare and review these with a keen eye for detail. To begin with, you’d want to confirm if your deliveries are protected by default or if you need to opt-in.
Protection provided by your shipping platform
If you’re an online business that uses a shipping platform like Shippit to help you streamline order fulfilment and booking couriers, Transit Protection may be offered as an additional service or option. Shippit offers Transit Protection through a third-party provider as an optional add-on. Depending on the shipping platform, limited protection may be offered by default.
- Check if protection is offered by default or opt-in
- Compare and review the details for your products
Factors to Consider
Get the right type of cover
When it comes down to the types of products you sell, how many different SKU’s you have and the value of your goods, no eCommerce business is the same. With your business needs in mind, it can make more sense to have protection across all your deliveries, for a certain courier or per parcel. Different policies and providers will vary in this respect, so it’s ideal to confirm this upfront.
- Scope matters: do you need protection for all deliveries, certain couriers or per parcel?
Don’t get short-changed: cost vs retail price coverage
Whether you ship lightweight iPhone accessories or expensive personal electronics, it’s really important to differentiate whether you will be reimbursed for the cost price (i.e. the price you pay to your supplier) or the retail price (i.e. the price your customer pays for their order). Some providers will only provide coverage for the cost price for the goods. To avoid being out-of-pocket, we recommend that you opt for a provider that offers retail value coverage. Knowing you can be covered for the retail value will give you more peace of mind if sending a replacement is necessary.
- Cost vs retail price: make sure you know which you’ll be reimbursed for and opt for retail value coverage if you can.
Fragile: Know your product
Assessing the fragility of your products as well as how well you’re able to pack them against potential damage during delivery is key. Moreover, certain types of products such as wine or alcoholic beverages, or items like ceramic and heavy homewares may attract a higher cost to cover. If you do ship items which may be considered high-risk or fragile, you’ll need to ensure they are covered in your policy.
- Make sure high-risk or fragile items are covered in your policy.
Compare value not cost
Remember, the lowest cost policy may not be the best. With a myriad of courier services in the market, each with their own protection policies, comparing how and what you’ll be charged for protection can be overwhelming. Balancing the pros and cons of each policy against your unique business needs and product costs is crucial.
There are a few key areas to consider. Some carriers may offer complementary protection (free of charge), but this may come at the expense of additional fees to file a claim or limited coverage (e.g. on the wholesale price of your goods.) On the other hand, providers that don’t charge a fee to file a claim may require charges upfront to protect your parcels.
Most providers will also charge you based on the declared value of your shipment; but take note of whether this means the cost (wholesale) value or retail value.
- Look for pros and cons in each policy and understand the true cost
Beware of hidden fees
Avoid bill shock when filing a claim for a loss or damaged deliveries by finding out if there are any fees required to process a claim. Commonly known as an ‘excess’, this is a fee you may be required to initiate or proceed with filing a claim.
This fee may be in addition to any costs associated with purchasing or opting into protection for your deliveries. This would be a more important factor if your chosen policy will only cover you for the cost or wholesale price of your order.
- Find out all the fees you’ll need to pay from upfront, to claim fees to your excess
Make sure you’re covered for the right amount
If you’re an eCommerce business that ships goods of high value such as furniture or jewellry, it’s important to ensure that you’re covered for the value expected – even if this means you pay more for comprehensive cover. Depending on the policy or provider, there are varying limits to the total amount you’re able to claim for and be reimbursed.
- If you ship high value goods, ensure they are covered for the amount you expect: beware of coverage limits.
Length of claims process
When you’re focused on selling, following up on lengthy claim processes can be a massive pain point for you and your team. Ideally, you shouldn’t be waiting several weeks or months for closure. You should find a provider that provides short and clear timeframes for when you are notified of the claim outcome and also when to expect for amounts to be transferred to your bank account.
- Ask how long the average claim takes, or even better look for clear claims timeframes
Choosing the best way to protect your deliveries isn’t an easy decision. That’s why we’ve simplified Transit Protection for Shippit’s community of online businesses with one protection plan that offers retail value coverage, $0 fees to file a claim and quick processing – no matter who you ship with. Get in touch with our shipping experts to learn more!