Oh no, the product arrived damaged…

By Nate Gilmore on 12.29.2011

Ace Ventura Movie - "Special delivery" scene

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 (link behind image).

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.

Fedex roughs up a delivery

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.

Packaging design considerations
Packaging Requirements for inbound products
Supplier instructions for packaging and labeling

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.

Unpacking what is hopefully apparel

Most of that isn’t video’ed; but, with cameras everywhere now, we know that …

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

Driver throwing deliveries from truck

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.

USPS shipment damaged during sort

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.

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Shipping to Canada can be a headache, eh?

By Nate Gilmore on 12.23.2011

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You”d think shipping to a country right next door to us would be as easy as crossing the border, but many US merchants shipping to Canada for the first time end up with a less than pleasant experience. Even big merchants like Zappos have decided to discontinue their offerings to Canada after numerous unhappy Canadian customers. Ah, if only they had decided to outsource this to the pros, like Shipwire!

Top complaints from merchants about shipping to the “Great White North”:

1. Brokerage fees – sometimes comparable to the miscellaneous fees from your monthly cell phone bill, they are hard to predict.

2. Lost shipments, lack of tracking abilities – once packages reach customs, it is very difficult to get a shipment update.

3. Shipments blocked by buyer when they get VAT charge – buyers refuse to pay additional “hidden” fees to receive their package that are actually handling fees that Canada Post or Canadian Customs charges.

4. Returns are a nightmare – it’s not unlikely that the merchant would rather abandon the product to save money, time and headache.

5. Unpredictable delivery times – with limited tracking abilities, it is difficult to give buyers a time frame for when to expect their package because of the delays at customs.

The most disliked thing about shipping to Canada is that the brokerage fees and VATs are difficult to estimate. Many times the receiver may have to pay additional taxes and handling fees before the package is released from customs. You can see how shipping to individuals could pose a problem: a buyer pays for shipping as stated on the website only to find there’s an additional fee upon delivery and disputes ensue. Of course, one workaround is to have your courier bill the fees to your account so your buyer doesn’t have to pay them – if this is an available option. But then you’re still spending more money than you have to and cutting into your margins by taking on all the customs costs.

There have been many reviews by merchants who recommend FedEx and USPS as their service of choice to handle such transactions. As a great alternative to all the hassle, Shipwire offers helpful tips and a shipping calculator so your business can be well-informed when deciding to offer shipping to your Canadian customers. Shipwire currently has two Canadian warehouse locations: Vancouver and Toronto. To help smooth out the US-to-Canada shipping process, we also have a wide variety of Canadian shipping options in addition to our platform.

How can shipping to Canada be less complicated?

Outsourcing your Canadian shipping needs to Shipwire would be the easiest bet, but for those who want to try the DIY approach, here are important things to keep in mind when using USPS:

1. Use the right Customs forms and fill them out appropriately

Use the green slip for First Class Mail, and the white one with the clear sleeve for Priority Mail. Customs does not/cannot provide tracking for packages, only packages with USPS tracking can be tracked. When filling out the customs forms, they require information on the contents, value (the price paid or winning bid); and for Priority Mail, both parties” names, addresses, phone number and/or email are needed.

2. Calculate Customs fees into your shipping costs, if any

Taxes (the most common fee), are only assessed by Canadian Customs on goods valued at $20CAD or more. A handling fee is also added when an item is taxed. The recipient then pays for both when the item is retrieved.

Duty is assessed on goods that are made or “originating” outside the US, Canada, or Mexico.

Bonus: When using USPS/Canada Post, the buyer will never get a “surprise” brokerage fee. However, using services like FedEx or UPS, which requires the use of brokers, will most likely incur those unpopular brokerage fees which may sometimes cost as much as the entire item plus shipping fees!

3. How to properly reuse boxes

Reusing old boxes is perfectly acceptable by USPS and Canada Post, Just make sure any old labels are properly removed/covered. There’s also no need to wrap your packages in brown paper, as it sometimes gets stuck in the machinery.

Still feeling adventurous? Good luck!

But remember, Shipwire’s world-class fulfillment service is just a click away so start a Free Trial.

*UPDATE* Read Part Two »

Shipwire Holiday Celebration Wine

By Nate Gilmore on 12.05.2011

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Dolcetto @ 2011 Shipwire Holiday Dinner

One of the benefits of living in California is we”re really close to wine country. The reality is we are in the middle of wine “counties”. We”re surrounded!

To the West we have Santa Cruz, Bonny Doon put it on the map. To our South, we get Paso Robles and the surrounding wine area. To the East, go past Sacramento and you will find all the tasting rooms on Hwy 49 and Placer County. A couple hours drive North are the amazing tasting rooms of Napa County that overshadows, for no really good reason (imho), Sonoma and Mendocino County wine.

If the end of the last paragraph didn’t give me away, I”m from Mendocino County! I spent much of my high school on tractors and navigating vine rows in Ukiah and Potter Valley (Never heard of it? Most people living next door haven’t either. I worked many a “crush” and was employed for a couple small wine labels and wineries throughout the year.

For the past 10 years my family has produced an excellent limited production Sangiovese that sells out every year (limited production) under the label Pettrone Family Cellars. Nothing big time, more of a family bonding experience for my mom and her two brothers. It’s available in California, New York and Virginia.

Pettrone Sangiovese wine has been served at Shipwire Holiday parties since there were 12 of us raising a ruckus in the back room of our friend Fabio’s place, Nob Hill Grille, and then the back room of our buddy Trip’s restaurant, Sauce. Family wine at family restaurants for the Shipwire family. It just makes sense.

Shipwire CEO Damon Schechter raising a toast at our holiday party. Thanks to all our family, friends and partners.

As Shipwire keeps on growing, our cast of characters is getting ever larger. Our employee holiday celebrations outgrew our network of restaurants. As we look to celebrate an amazing 2011 and look forward to an even more audacious 2012, it’s clear that thanks need to go out to more than our employees and customers. Shipwire is supported by a huge network of partners and developers, that introduce us to amazing customers, and hold us up as an example of great system integration to help merchants. We have spent years evangelizing our technology and the overall outsourced shipping market. We couldn’t do this without friends in the blog and press community willing to challenge the status quo, ask questions and shout about the success of our customers.

We”ve always said we are a part of a larger story. We’re a platform for entrepreneurs to get their dreams to market.

This year we made some wine to virtually toast our family, friends and partners. We”re shipping some bottles of Docetto 2009 to some of the press and partners that helped us get the word out this year. It’s bottled with appreciation in the family winery this fall. This wine isn’t for sale. You can’t find it in stores or on a menu. It’s as limited as limited gets. Insider only.

It’s a toast of thanks for helping us get to where we are now. And an early toast for some amazing new things we”re about to release in 2012.

Thank you for helping us make 2011 special. Together we’ve helped a lot of entrepreneurs to get their dreams to market. We look forward to 2012 with you.

Happy Holidays from our table to yours!

The Shipwire Crew

P.S. Here are a few “making of” pictures from my phone.

High tech bottling line consists of a barrel and truck. We went up market with CO2 compression to pump the wine (rather than our normal gravity line).