Insurance is vital for helping people to prevent footing huge bills for things like healthcare, dental care, car repairs, and more themselves. Businesses also tend to have a wide variety of insurance policies in order to prevent experiencing heavy losses if particular negative events occur.
However, one area that some e-commerce companies fail to get insurance coverage for is shipping. Unfortunately, there are a wide variety of negative consequences that can occur if you sell products online and if you do not have shipping insurance. In fact, both ecommerce businesses and their customers can experience problems if a company does not have shipping insurance.
Here are three ways that companies and customers can be negatively affected if there is a lack of shipping insurance coverage.
Problems for Ecommerce Companies
1. An Abundance of Refund Requests
Unfortunately, package theft is still a major problem. In fact, in 2022, $19.5 billion worth of packages were stolen in just the United States alone. The argument could be made that we are currently living in the golden age of package theft. This is because online shopping has increased dramatically since the start of the pandemic, but there have not been many effective solutions created to prevent package theft. This means the package theft trend is only likely to continue and grow larger. The more packages that your customers have stolen, the more refund requests that your company will likely experience, and this can be a major burden for your company.
2. A Loss of Customer Confidence
The chances are that if your customers do not receive their products and do not get reimbursed, then they will lose confidence in your company. Nobody likes to spend money and then not receive any products. So, if customers think that there is a chance that this will happen, then many of them will look for other companies to buy from that offer shipping insurance. Even if your customers only have one package stolen after ordering from your company, this can be enough for many of them to lose trust in your company.
3. Lower Conversion Rates
Ecommerce companies that do not offer package insurance have lower conversion rates than those that do. In fact, ecommerce companies that offer package insurance through Shipinsure experience a 36 percent increase in conversion rates. So, not only can having parcel insurance help you to prevent having to pay a large amount of refunds, but it also makes customers feel more comfortable buying from you, which increases conversion rates. As more and more customers have packages stolen around the world, it is becoming increasingly important for businesses to offer package insurance. Having package insurance is a competitive advantage that many companies cannot afford to miss out on.
Problems for Customers
1. Not Getting Their Money Back
Many ecommerce companies do not offer package insurance. Thus, if a package is stolen after an order is made, then in many cases, the customer will not be able to get a refund. This could cause a very high level of frustration for the customer, and it could result in them never shopping at that particular store again. In fact, research has shown that even just a single mistake that harms a customer’s experience with a store can make 69% of customers less likely to return to that company for more purchases.
Because package theft is so prevalent now, customers who do not have package protection have to deal with increased anxiety every time they buy a package. They have to wonder whether the package will still be sitting on their doorstep when they get home or whether it was stolen by a porch pirate. If the company that the customer bought the product from did not offer parcel insurance, then the customer knows that there is a decent chance that he or she might have just wasted a significant amount of money buying a product that they will never receive. Considering that 63% of Americans are currently living paycheck to paycheck, wasting money on stolen packages is not something that the average American can afford to deal with.
For many people, even if they have their product stolen, they will still need to go out and buy the product again. This means having to conduct research to find a new company with a similar product, comparing prices, analyzing their shipping policies, etc. Some people will just not buy another product from companies that don’t offer parcel protection if they have their package stolen. But, many people who shop online are buying things that they need, and will thus be forced to spend more money to buy another similar product. This is a major hassle, and it is definitely something that most customers would prefer to avoid if possible.
Conclusion
Essentially, when an ecommerce company does not offer package delivery insurance, it causes problems for both the company itself and for its customers. Many of the problems that a lack of package insurance causes are costly, frustrating, and incredibly tedious to deal with.
In order to prevent having these problems occur, ecommerce companies should strongly consider adding shipping insurance for their products. One of the best ways to get shipping insurance is through Shipinsure. Shipinsure has a 97% claims approval rate for lost or stolen packages. It also has protected over 429,000 packages worth a total of over $25 million.
The package theft problem is not going away. Between 2020 to 2021, there was a 40 percent increase in package theft. Over 49 million Americans are now experiencing at least one package theft per year. This is a serious problem and it is not something that ecommerce companies can afford to overlook anymore.
Shipinsure offers guided installation and ongoing support. This means that it is hassle-free for merchants to set up, and if they have any issues at any time while they are using the service, then they can easily get support for them. Is it time for your company to start offering shipping insurance?
