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Oh no, the product arrived damaged…

December 29, 2011

During the week following Christmas and New Year, warehouses everywhere start getting returns. Returns happen!  Now is a good time to review your  returns policy and how it will impact your buyers thoughts of you, and you bottom line.

Every year we see damaged product returns.  It's expected that some products will get damaged.  Why does it happen? What happens behind the scenes?

One of my favorite movie scenes is the opening scene of Ace Venture Pet Detective. Ace, dressed like a parcel courier, is going to steal back a dog for its owner.  Ace puts a parcel through its paces in a hilarious scene.

Who would have thought that today we would be seeing Ace's patentent moves being usurped by parcel carriers all over.  Phone and security camera footage is popping up everywhere.  I've included a few below.


How do damaged product returns work?

We all know the experience, you open a package with high expectations, you reach in and find the object of your desire has been damaged.  Deflated, you return it for a new one.  Most retailers will promptly refund or reship the good.

  • Notification and buyer return – When a buyer notifies a Shipwire powered merchant about a damaged product, the merchant reports it by clicking a button on the order.  We dispatch a shipping label and issue a Return Merchandise Authorization (RMA) number so it can be tracked.
  • Return and reship – The damaged product is sent back to the warehouse where it is received back into inventory as damaged.  A reshipment is typically triggered once the original is returned.  Some retailers will reship before the return is in inventory but after the RMA tracking is activated (when the buyer ships it back).
  • Removed from inventory – Damaged product has a special classification in inventory.  This ensures that it won't be confused for "good" inventory and shipped to buyers.  It also allows for easier inspection.  Many of our merchants choose to liquidate this inventory, or bulk ship it back to their manufacture inspection facility for final disposal and recycle.
  • Automate Insurance claim – Shipwire Report a Problem selection initiates this process and begins tracking.  For do-it-yourself shippers, I know there are also 3rd party insurance services and consultants that can manage your shipping negotiations with carriers.

Who covers the damage?

This question comes down to when did it get damaged and which insurance was in place at that point.

Shipwire recommends and facilities a "chain of insurance" for our merchants.  Typically, goods come in to our warehouses from the manufacture (inbound), is stored at the warehouse (storage) and then shipped to fulfill buyer orders (outbound).  Insurance is available the entire lifecycle.  If a cargo container is washed overboard or product is damaged in freight then the freight insurance covers.  If a product is damaged by a forklift, then the warehouse insurance policy is looked to.  If the product is damaged between the warehouse and the buyer, the carrier insurance is looked to.

For stored goods with Shipwire, warehouse insurance can be added to your inventory globally with 1-click in Account Settings.  Carrier insurance, above our included amounts, is a setting in Shipping Preferences.

Excessive damage claims can be a sign of bad packaging design

Work with your manufacturers to design durable packaging for transport.

Well designed shipping packaging protects the products inside from falls, impacts and weight crushing.  At the same time it has to be logical and reduce your costs.  Design for "maximum shipability".

Here are some Shipwire resources if you want to keep reading.

If you built your own products and have your own shipping packaging.  You probably also know how much weight can be stacked on it before it crushes…right?

But, how did it get broken?

If a damaged product arrives on the doorstep, it is typically caused by 1 or 2 things.  Either the product was incorrectly packaged for it's method of transit.  Or, the product packaging couldn't live through the extent of the abuse that it was subjected to in transit.

Shipwire has evolved some pretty complex packing algorithms to aid pickers, minimize crush and ensure product fit.  Pack staff is trained and monitored to best packaging processes. We're confident it leaves the warehouse well packaged and documented.

Packaging and crush protection is designed to handle most of the bumps and scrapes of transport. But more often than not, parcels and packages take abuse during transit.  They get cut open or broken open in customs and handed off between carriers.

The last few feet are often the roughest.

Fedex delivery man tosses monitor over fence

With 7 million views and counting, FedEx got a lot of bad press this December when their delivery person tossed a monitor over a fence.  I'm sure the customer shipment will be covered by insurance or Fedex.  I very much doubt that the manufacturer designed the packaging to protect the product for this delivery.  Packaging is probably designed for a fall of a few feet only.

It's not just Fedex.  UPS drivers get caught on camera too throwing deliveries to the door or delivering 20 feet to the neighbors house.  Packages get put behind brush, buried in snow, kicked, dropped or run-over in the last few feet of their trip.

Truck packing and unpacking

Parcel carriers get caught on video often treating parcels roughly during truck packing and unpacking. Most of the products are probably fine….most.

Expect boxes to be kicked, dropped, stacked with heavier boxes of them.  Some drivers have been caught throwing packages out the door (captions) or doing their truck "sort" with their feet (soccer style).

Most packaging is designed to handle some abuse from the carriers.  Throwing packages into and from a truck seems to be a common thread.

During "sort" or "processing"

When packages are shipped via the major carriers they are picked up from the warehouse by the carrier and delivered to a sort facility.  Packages are sorted by destination and consolidated with other packages going to the next depot.

These sort facilities are massive operations with lots of automated systems to understand where a package came from and where it is ultimately going.  It's not uncommon for smaller parcels to get hung-up in conveyors and ripped open.

In the warehouse

Products can get damaged in a warehouse.  Insurance is offered to cover against things like forklift damage.

Products damaged in the warehouse are set aside and don't get shipped out. If a product arrived at a door damaged, the damage was most likely caused in transit.

Nate Gilmore

Nate is the Vice President of Marketing & Business Development at Shipwire. He oversees channel development and the developer network, as well as our marketing and public relations. Previously, Nate spent six years at Concentric (acquired by XO Communications), where he ran product management, sales, and marketing. Nate has also held various legal positions in intellectual property and business law. He holds a B.A. in History and a J.D. from Santa Clara University.