The True Cost of In-Transit Damages
Does your retail organization capture the full impact of shipping damages?
It may cost your company more than you think.
As one of the world’s largest retail operations suppliers, we often find that retailers underestimate the full cost of in-transit damages. Many do not even have a process to capture the full impact of their damaged goods.
But product damages can add up to a larger loss than many would estimate, so in this article we will discuss the true cost of in-transit damages for a retailer and some of the aspects that aren’t often considered.
How to Prevent Shipping Damages
Many of these damages could be prevented through smarter packaging choices. In a previous blog, we covered some of the biggest mistakes we see in retail shipping and box packaging, which provides some great tips to prevent damage:
- Avoid oversized boxes and inadequate filler
- Use strong, quality boxes
- Look beyond standard-size boxes
- Don’t focus solely on packaging cost
Damaged Customer Relationships
It’s hard to assign a dollar amount to the harm that receiving a damaged product can do to your brand reputation. But survey after survey shows that when a customer receives a damaged package it can have a negative impact on your brand perception and influence customer loyalty.
In the unfortunate circumstance that it was a customer’s first time ordering with your company and they receive damaged goods, they may choose not to purchase again in the future. Receiving a damaged product from a new brand could give them an incorrect perception about your standards and product quality.
The hassle of then coordinating a return or a refund, shipping the item back and waiting for a new product are all challenges your customers will have to deal with and decide if they want to risk again. Retailers risk losing their business to a competitor if customer loyalty hasn’t already been strongly established.
The cost of a damaged relationship with your customers is something that cannot be stressed enough or overlooked.
Lost Productivity and Customer Service Strain
The time spent dealing with customers and sorting out the issue is not time that simply affects a customer service department, although that is one major component. Almost every department is affected by sorting out a damaged item and sending a replacement.
Multiple employees spend time filling out claims, tracking returns, shipping replacements and communicating with customers. There are calls to insurance, filling claims, and hours of administrative work associated with coordinating damages and refunding or replacing items.
Often times retail teams are not solely dedicated to the task of replacing damaged shipments, which means they are taken away from their primary responsibilities as well.
Repackaging and Reshipping Hurt the Environment and Profits
A damaged product will not only negatively affect your profits but the environment as well. According to Pregis.com, five billion pounds of damaged products end up in U.S. landfills each year. Further, they share that to re-ship one parcel, it takes approximately 1.7 gallons of fuel, 1.8 kWh of electricity, 40.4 lbs. of carbon dioxide emissions, and .13 ft² of habitat loss.
Multiple shipments due to damaged goods can add up and can incur substantial costs for a business. After the initial shipment, it could require up to two more shipments as the customer ships the item back, and then a replacement it shipped out again.
When comparing the cost of these three packages, it makes the case to opt for a higher quality package or box to prevent the damage from the start.
Testing, Assessment and Disposal
After a damaged product has been returned the task is not over. There is time spent assessing and testing the product to determine whether it can be resold. In the case that an item can be repaired, it may then still require additional testing and compliance after the repair, which takes more time and money.
If an item cannot be resold in its entirety or repaired, it may be analyzed if it can be resold for parts.
If the item cannot be resold or scrapped, the retailer goes the least profitable route and has it disposed. In this case, retailers also pay for the space to house the item until it can be properly disposed of and also incur costs for disposal.
Avoid Damaged Shipments
Prevent damaged shipments by working with packaging experts who can create custom packages and make expert recommendations as to what will work best for your needs.
We can work within your budget to find strong, quality packaging options. We’ll consider the box contents, weight, how it could be stacked and warehoused, how long it may be in storage, sustainability standards and more.
With deep supplier relationships and decades of experience in the industry, we can help prevent retail shipment damages and lower your costs.
Written August 4, 2022 by Bunzl Retail Services staff writers..