How Brands Can Combat Damaged or Stolen Packages 

The popularity of online shopping has been growing for years: a recent study found that 69% of American adults made an online purchase in 2018, and of those, 25% made at least one online purchase monthly, with 16% making weekly purchases.

As online shopping becomes more popular, so does package theft

Given the rise in online shopping, it’s not surprising that package theft is also growing. Data from the U.K. shows a 22% increase in package theft between 2016 and 2019, and a 2019 U.S. survey showed that 36% of shoppers had experienced at least one stolen package, with 56% reporting that they knew someone who had a package stolen. And especially during the holiday shopping season, when orders for electronics and other high-value gifts soar, “porch pirates” are a growing problem.

• Now that so many retail outlets have closed their doors to in-person shopping because of COVID-19, many shoppers have turned to online stores. But while shipping volumes have reached near-holiday levels, there’s also been a massive shift in online shopping patterns:
• An April 2020 survey of more than 30,000 Canadians showed that nearly 3 in 10 people had purchased items online that they would ordinarily have bought in-store.

• A May 2020 survey found that 25% of U.S. respondents had purchased hygiene products (such as toilet paper) online, 25% had made an online grocery order, and 24% had ordered household cleaning products.

While there’s little doubt that fewer people are ordering high-value items or making discretionary purchases, the shift towards ordering lower-value goods hasn’t reduced package theft. The opposite is true: One recent study found that claims for stolen packages increased by 131% between February and March and that March had more claims for theft than in any previous month, including the holidays.

Why so many damaged packages?

Another unfortunate side effect of COVID-19 is the sharp increase in damaged packages. But why is this different when shipping companies handle high volumes of packages yearly during the holidays?

It’s simple: while shipping companies can plan (and staff) for the holiday rush, with COVID-19, they didn’t have a chance. It’s the perfect storm of delivery disaster. Combine greater-than-normal demand, fewer drivers, and less space on trucks with retailers (many of whom are selling online for the first time) shipping items that would usually be purchased in-store, resulting in a nearly 20% increase in damaged packages between February and March 2020.

Who is liable for damaged or stolen packages?

When a package is stolen or damaged, the retailer or seller will either issue refunds to consumers or agree to replace the item. Amazon’s A-Z Guarantee program sets the standard here, and even purchases made from their retail partners will almost always be refunded or replaced if the package goes missing.

Some businesses may also try to shift responsibility to the shipping or delivery company, requiring customers to file a claim with the shipper before issuing a refund for missing or damaged goods. For consumers, this can be a frustrating experience, especially when packages go astray: first, they need to wait for a set period (to ensure that the package is truly lost), and then, because tracking often mistakenly shows that packages have been delivered, in some cases they must also try to prove that they did not receive the package.

What about package insurance? Some online platforms offer buyers a chance to purchase insurance at checkout. For merchants, many major shipping carriers such as UPS, USPS, and FedEx offer optional shipping insurance for an additional fee; other carriers have more limited options. For example, if you’re shipping with FedEx, be aware that their liability for lost or damaged packages is capped at $100. FedEx will only increase liability if the package is packed and shipped at a FedEx location. Even then, the maximum declared value that FedEx will accept for specific items (including jewelry, artwork, collectibles, and antiques) is $1,000.

How can brands best respond to this current situation?

Offer a range of delivery options.

The most effective way brands can combat the problem of stolen and damaged packages is to offer customers different ways to receive their products. Here are some of the most common:

• Click and collect: Many customers shop online but still want an in-person shopping experience. Right now, the best way to provide that is with click and collect (also known as curbside pickup or buy online, pickup in-store). Click and collect offers customers a chance to support local businesses, allows merchants to maintain physical connections with customers, and removes the risk that a package will get lost or damaged in shipping.
• Local delivery: Another option is for brands to implement a local delivery system. Merchants coordinate with local delivery rather than relying on a third-party shipping provider. Local delivery is ideal for online brands that may not have a physical storefront, for brands that operate in verticals where delivery is expected (think fast food), and for brands that want to keep their staff employed by using them to deliver orders.
• Package insurance: Brands can add package insurance for shipped goods at checkout. This may work well when brands can’t offer click-and-collect or local delivery, but who should cover the extra costs? In an environment where customers are likely to consider every purchase carefully, adding these fees at checkout could lead to increased cart abandonment. It’s not ideal, especially at a time when every sale is essential. A better choice may be to absorb the costs yourself, and the short-term financial hit may lead to greater customer loyalty and repeat purchases over the longer term.

Communicate with customers

In a world where COVID-19 has forced brands to change their business models rapidly, transparent customer communication has never been more critical. As brands pivot and shift in reaction to the evolving lockdowns and regulations, here are some strategies to consider:

• Provide a comprehensive FAQ, and be transparent about shipping costs, timelines, and policies. Unsure about where to start? Look at the questions or customer feedback you’re getting most often.
• Offer an online chat feature or include a Contact Us form with a clear statement about when customers will receive a response. Given the pressure that delivery companies face now, assume that at least a few of your shipments will go missing or be damaged in transit. Make it easy for your customers to find information about what they should do if this happens. Above all, don’t make it the customer’s responsibility to track down missing packages
• Add banners or headlines on your website with essential shipping information. Keep these short, clear, and easy to read, and update them as needed.

What else can brands do to limit shipping problems?

What else can brands do to limit shipping problems? Contact your shippers so that you understand the current delivery expectations and give customers a realistic timeline for when their package will arrive. If multiple location parcel management is an option, consider making it standard, at no added cost to customers. This will help build trust in your brand.  

If your store is new to online shopping, reduce damaged parcels using the proper packaging to ship your products. In addition, consider reducing the inventory available for shipping. This may help streamline your processes and ensure that the bulk of what you sell can be shipped in the same boxes or envelopes.

Ultimately, it’s the retailer’s responsibility to ensure customers receive their merchandise. Unless you have good reason to suspect fraud, your brand may be better served by going the extra mile for your customers and not expecting them to do the legwork when a shipment goes missing or is damaged. No one knows how much the retail landscape will change in a post-pandemic world, but it will likely take some time before business returns to normal. While this may hit your bottom line in the short term, it’s also an opportunity to build exceptional customer relationships to help your brand survive and thrive in the months and years.