Sellers, How Do You Manage Breakage?

Loremonger

Since I opened my shop here, I have seen a huge influx of orders. Fewer stores + advertising affiliate (Rebrickable) + Wishlist easy button = lots of orders coming in to Brickmonger.

What I'm finding is that the more I sell online, the more incidents of lost packages, mistakes, and eventually I know I'm just going to get ripped off (unfortunately it just happens sometimes). Basically, at some point, every seller has to eat some cost or another.

So the question is, as a seller, how do you manage breakage?

minithingsforlife

You have to look at turnover figures after a reasonable period of trading. For example 6 months of trading will show you a nice average per month turnover. If you then work out how much you have spent on refunding, resending and appeasing your customers for loss/damage, then you can get a percentage figure of your breakage against turnover. However this is only data. What you decide to do with it is the difference between businesses. You may decide that to reduce the percentage you will increase your prices so that if you sold the same amount of product each month, your breakage % will be less. However it may turn out that even a slight increase in prices will cause your sales to go down because of how customers feel about your new prices.

One other way of handling it, is a small increase in shipping charge.

Personally I would just make sure you have excellent customer service skills and do not argue with customers over pennies and whose fault it is if the parcel goes missing. In the EU, it is always the sellers fault. You can blame the postal service, but the buyer is still entitled to a refund.

Loremonger

Personally I would just make sure you have excellent customer service skills and do not argue with customers over pennies and whose fault it is if the parcel goes missing.

This is how I operate. I am kind of puzzled by discussions I see sometimes about who's responsible for lost packages. As a customer, if I pay for something, I've held up my end. If a seller fails to get it to me, I am going to want my money back or a replacement. That's pretty much how e-commerce works, so that's a responsibility I assume as a seller.

That said, one of the ways that I manage breakage is to insure packages that cost more than I'm willing to part with if it gets lost in the mail.

Enoch

Thor

No worries. If you are unwilling to accept the very small risk of loss or damage during shipment in return for often significantly lower postage, sellers should make sure all your orders - no matter how small - are fully insured and trackable. Of course, the extra costs of insuring and tracking your order will be at your expense. Very easy, and no finger-pointing. But it will cost you more.

Thor

DadsAfol

As a reference point, we've had maybe 10 lost-in-the-mail orders over about 15,000 total orders between BL and BO. The average order value lost is about $20. So I've spent maybe $200 refunding buyers for lost orders, which is far less than paying to insure each one. I recognize that our volume helps spread this risk out, but if you are a small or medium size seller, you will be better off in the long run by self-insuring up to your pain point. For us, we only buy insurance if the order is international and over $500 (and we don't charge the buyer for that).

Eccohawk

Since I use Paypal commercial shipping for all domestic orders, it automatically adds $50 worth of insurance to each shipment and a tracking number. That protects me from any major loss, and generally applies to most orders I receive. I also explicitly recommend insurance for orders over $50, and state in my terms that we are not responsible for lost packages that are not insured. That being said, you're still risking the loss of any customer who has the unfortunate experience of not receiving an order, so depending on your comfort level, this may or may not be for you. I'm also toying with the idea of forcing insurance to be added to the shipping costs over a certain pricepoint, say $100.

BWA

Mhhh, as we only sell parts, which makes it hard to get to "huge" order amounts. (So losing a battlestar/moon) is not an issue.

In general we only work with quotes..., so we can "judge" all potential orders... based on weight, amount, shipping adres etc we make an assumption on how it could/should be sent...., If we feel there is a risk we will include Track/Trace, Insurance etc in the quote...,

Still some orders get lost..., are incomplete, wrong color, quality of items or whatever...., (and we for sure also make mistakes) when reading the complaints the thought "yeah sure" always lurks, but then again the customer is always right...., so if an issue arises, we always try to find the middle ground..., (and do refund).

We found it is indeed a small % (<5) that has issues..., with a refund rate of <2,5 which we find very acceptable..., Playing it hard would cost more (photo's of shipment/losing clientele etc.).