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When online orders go missing, who picks up the tab?

Missing deliveries can make or break the reputation of an online retailer – yet almost always when an order goes astray it is beyond the control of the vendor. 

Customers, nevertheless, usually have little or no contact with the shipper. When they fork out cash to buy an item online, they assume the responsibility for the delivery lies with the retailer or marketplace platform. 

So what happens when the product you’ve sent to a customer goes missing? 

“More often than not everyone is going to look at the retailer for remedy,” explains William Rich, co-founder, director and chief underwriting officer for e-commerce insurance provider Ship-Safely. “Whether it be your customer or the platform you sell on, someone will expect you to have the solution.”

Moreover, when a purchase goes astray, the ultimate responsibility falls on the retailer, regardless of their innocence. 

“Most – if not all – carriers deny liability under their terms and conditions and the majority of platforms will automatically deduct the loss from the vendor in the event of a reported loss,” explains Rich. “In other words, they offer all care, but no responsibility. 

“The merchant loses out each time: in reputational damage, in time spent handling the claims issues and in money lost to their bottom line to refund or replace the items damaged, lost or stolen.” 

Rich recalls one retailer approaching him after an incident in which their customer had a single order go astray not once, but twice. 

“The customer went online and started rubbishing the store’s service and questioned if they were real or fake and just taking people’s money.”

A world-first, independent insurance solution

Despite not being in complete control of the delivery process, retailers and vendors still have one option to provide reassurance to their customers. By offering independent insurance to customers at checkout, both vendor and customer have peace of mind. 

Ship-Safely, for example, offers third-party insurance that covers items damaged, lost or stolen throughout the shipping process, in a contract with the customer rather than the shipping company or vendor. A spin-off benefit is adding a new and free revenue stream to the merchant when the customer opts for the insurance – by means of a commission. 

The policy system – a new innovation in e-commerce, not just in Australia, but internationally – is based on the traditional model of marine transit cover that has been around for more than 100 years. Accordingly, the cover and policy have the same benefits in any area where the retailer may trade.

“Most businesses are not aware that such a product exists,” says Rich. “We are an insure-tech business that provides the ability for online shoppers to purchase our policy to cover their goods whilst in transit.”

Besides the revenue stream, the merchant receives an additional sale in the event of a claim – because Ship-Safely does not compensate the customer with a cash refund – it covers the cost of replacing and re-shipping the missing item. 

“When a package goes missing, consumers expect the merchant to simply replace items. So that’s when we step in.”   

Ship-Safely provides the consumer with an insurance certificate as soon as they pay for a purchase. Within the certificate are links to make a claim, to seek further information and download the policy. If a customer has to make a claim, all the interaction is with Ship-Safely, not the vendor. 

Rich says the solution is the only one that provides peace of mind for all parties – vendor, shipper and customer. 

“It’s a win-win-win for everyone. But most importantly, it protects the retailer’s reputation without adding to its overheads.”

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