Apr 27, 2023
Kelli is the content marketing strategist for Order Protection.
As eCommerce sales continue to soar, brands must consider the importance of protecting their customers' purchases during the shipping process.
When items are shipped, they can be exposed to a variety of risks, including damage, loss, or theft. This is where shipping protection comes in—it offers a way for eCommerce brands to protect themselves and their customers from the financial impact of these risks.
This peace of mind has proven valuable to consumers and brands alike—a study by PYMNTS found that 78% of customers would actually be more inclined to make bigger purchases online if offered warranties or protection at checkout.
In this article, we'll explore everything you need to know about shipping protection, from what it is and how it works, to why it's important for eCommerce brands and whether or not it’s worth offering to customers. Whether you're a new eCommerce business just getting started or an established brand looking to optimize your shipping practices, this guide will provide you with the knowledge and tools to protect your business and your customers.
What is shipping protection?
Shipping protection is a service that eCommerce brands can offer their customers to safeguard their purchases during the shipping process. Essentially, it's a type of insurance that covers the cost of lost, damaged, or stolen packages, and is typically offered by online retailers or shipping companies. When customers purchase shipping protection, they can file a claim if they experience issues during the shipping process, and the shipping protection will cover the cost of the lost or damaged item, as well as any shipping costs that were paid.
By offering shipping protection, eCommerce brands can provide customers with a sense of security and confidence in their purchase, which can lead to increased customer loyalty and repeat business. It also protects eCommerce brands from the financial impact of lost or damaged items, which can add up quickly and have a significant impact on profitability.
Benefits of offering shipping protection
Shipping can be a risky business, with items being lost, damaged, or stolen during the shipping process. These issues can have a significant impact on eCommerce brands, as they are responsible for ensuring that their customers receive their purchases in good condition.
According to a survey by the National Retail Federation, the average value of a lost or stolen package is $141. Additionally, a report by Shippo found that 10.6% of all packages shipped in 2020 had a delivery issue, such as being lost or damaged. Depending on how many shipping claims a brand might deal with in a given year, this can quickly become a costly issue. Because in addition to costs associated with shipping claims, this kind of negative customer experience can quickly earn you a bad reputation overall, potentially leading to lost sales.
eCommerce brands can protect themselves from these risks and ensure that their customers receive their purchases in good condition by offering insured shipping options.
Providing a great delivery experience is becoming increasingly important to online shoppers. Even with customer expectations on the rise, a recent study shows that nearly half (44%) of consumer respondents feel that brands are missing the mark when it comes to providing an exceptional delivery experience. By offering shipping protection, eCommerce brands can differentiate themselves from competitors and offer an additional layer of service to their customers.
Overall, offering shipping protection can provide a range of benefits to eCommerce brands. Here are a few of the key advantages:
1. Builds customer trust
By offering shipping protection, eCommerce brands can demonstrate to their customers that they care about their purchases and want to protect them during the shipping process. But even more than that, it shows that brands care about the overall experience customers have throughout the shopping experience, not just the transaction itself. This can help to build trust and loyalty among customers, leading to repeat purchases and positive word-of-mouth.
2. Reduces customer service issues
Lost, damaged, or stolen packages can be a significant source of frustration for customers. By offering shipping protection, eCommerce brands can reduce the likelihood of these issues occurring, which in turn can reduce customer service inquiries and complaints. As a result, eCommerce brands can save time and money on customer service operations. And, some shipping protection providers will provide their own experienced reps who will handle the entire shipping claims process from start to finish, providing even more savings for retailers.
3. Boosts sales
Knowing that their purchases are protected during the shipping process can encourage customers to make purchases they may have been hesitant to make otherwise. This can result in increased sales for eCommerce brands.
Who needs shipping protection?
While all eCommerce brands that ship products can benefit from shipping protection, certain types of brands may be at a higher risk for shipping-related issues. For example, brands that sell high-value items, fragile or perishable products, or items that are targeted by thieves may have a higher risk of loss or damage during shipping. Additionally, brands that offer free shipping or fast delivery options may be more susceptible to shipping-related issues due to the increased volume of shipments.
How much does shipping protection cost?
The cost of shipping protection varies depending on the eCommerce brand or shipping company offering the service, as well as the value of the item being shipped. Generally, the cost of shipping protection ranges from 1-5% of the total order value.
For example, if a customer purchases an item for $100 and wants to add shipping protection, they may pay an additional $1–5 for the service. It's important for eCommerce brands to consider the cost of offering shipping protection against the potential benefits it can provide.
Is shipping protection worth offering?
Of course, our opinion here is a resounding yes. But ultimately, brands should consider a few different factors when deciding whether or not providing a shipping protection service will prove worthwhile for their business and customers. Here are a few key considerations:
eCommerce brands that ship a high volume of packages may be more likely to experience issues with lost, damaged, or stolen packages. In this case, offering shipping protection can help to reduce the costs associated with these issues and provide customers with peace of mind.
Value of items shipped
The value of the items being shipped is also an important consideration. Like we mentioned earlier, if eCommerce brands ship high-value items, offering shipping protection can help to mitigate the risks associated with shipping these items.
Customers have come to expect a certain level of protection when shopping online. Offering shipping protection can help eCommerce brands meet these expectations and build trust with their customers.
Tips for optimizing your shipping protection practices
Offering shipping protection is just one part of the equation for eCommerce brands. To ensure a positive customer experience and minimize financial losses, it's important to optimize your shipping protection practices. Here are some tips to consider:
Clearly communicate your shipping protection policy to customers: Make sure your customers are aware of the shipping protection options available to them and the process for filing a claim if necessary. This can help build trust and transparency with your customers.
Choose the right shipping protection option: Evaluate the different shipping protection options available to you and choose the one that best fits your needs. Consider factors such as the value and volume of your shipments, the types of items you're shipping, and the likelihood of damage or theft.
Use sturdy and secure packaging: To minimize the risk of damage during shipping, use high-quality packaging materials that can withstand the rigors of shipping. Additionally, use tamper-evident seals or other security measures to deter theft.
Keep accurate records: Maintain accurate records of your shipments, including tracking information and delivery confirmation. This can help you quickly identify and resolve any issues that arise.
Continuously monitor and improve your shipping protection practices: Regularly evaluate your shipping protection practices and make adjustments as necessary. Consider collecting feedback from customers to identify areas for improvement.
Choosing a shipping protection provider
When selecting a shipping protection provider, it's important to consider several factors to ensure that you choose a provider that meets your needs:
Price: Compare the prices of different providers to ensure that you're getting a good value for your money.
Claim process: Evaluate the claim process for each provider to ensure that it's straightforward and easy to use.
Customer service: Look for a provider that offers excellent customer service and support, including dedicated, experienced customer service reps; 24/7 customer support; and quick response times.
Reputation: Choose a provider with a good reputation in the industry, as well as positive customer reviews.
Shipping protection is a valuable tool that can help eCommerce brands protect their shipments and provide a positive customer experience. By understanding the different types of shipping protection available, the benefits of shipping protection, and the factors to consider when choosing a provider, you can make an informed decision that best meets your needs.
Here are the key takeaways from this post:
Shipping protection can help protect your eCommerce brand from lost, stolen, or damaged shipments, and provide peace of mind for both you and your customers.
When choosing a shipping protection provider, consider the coverage options, price, claim process, customer service, and reputation of the provider.
Protecting your eCommerce brand with shipping protection is a smart investment that can save you time, money, and headaches in the long run.
Remember, accidents can happen during shipping (shiphaps!), but with shipping protection, you can minimize the impact and provide a seamless and stress-free experience for your customers.