Shipping insurance

How providing shipping insurance can be a game changer for your sales

Read how a custom shipping insurance can transform your post purchase process and open a new revenue channel.

Online shopping means your customers will receive their goods by courier. And if there is one thing we know about products coming through couriers is that they are prone to damage or theft. 

1 in 10 packages in the US arrives damaged, while one in three Americans have had a package stolen. When this happens, the burden of the damage falls on the seller. You have to negotiate with the shipping company and issue a refund or replacement to the customer. This results in a loss of time and money.

It is an unpleasant experience for the customer too. Calling customer support, proving that the box was indeed damaged/stolen during shipping, and shipping the damaged product back to the source will also drain their energy. 

The worst part of this experience is that the customer is unlikely to buy from you again, even if no one is at fault. 

If you avail of shipping insurance from the shipping company, it will increase the shipping costs. If there is no shipping insurance, you risk losing out on the sales revenue. 

What is the solution of shipping damages and theft?

While it is impossible for the seller to prevent damages and theft of packages they can find a way to indemnify (to promise to protect them, especially financially, if it happens) customers against the losses.

The best solution is to create a custom insurance plan that will let customers add shipping protection at marginal rates. 

In simple terms, you can sell shipping insurance along with the products. Most people will opt for the insurance at a marginal rate because it guarantees to get the money back. 

Shipping insurance

Advantages of selling shipping insurance

You may think that everyone is trying to give free shipping then why would I add an extra cost on shipping for insurance. While this idea may not be suitable for all the businesses it does make sense for many others who sell expensive/fragile products or deliver products in areas prone to theft.

  • Reduce losses due to shipping damages
    Let’s say you list an item worth 100 dollars and offer a shipping insurance for 5 dollars. Ten customers buy the item along with insurance, and one customer receives a broken product. The customer only paid 5 dollars extra to cover an item worth 100 dollars, but the other 9 also paid for insurance. Hence this gives you a financial cushion to cover this loss. 
  • Easy to claim insurance and process damage claims
    When shipping insurance is not in the picture, sellers only have two options- refund/replace. Tracking the replacement is another headache. With a custom shipping insurance, it becomes easy for the customer to file a claim and easy for the merchant to track such claims and settle them.
  • Additional revenue
    This is an advantage that is a given. Not all your packages will be stolen or damaged, and there is a good chance that none of them face any mishap. This means that all the amount paid for Shipping insurance is additional revenue.
  • Creates trust
    As a customer, if my shipment is insured, I can sit back and relax without worrying about damage or theft. Insurance also increases trust in the post-sales process that your store is equipped to handle shipping mishaps. The premise is that the seller is ready to take responsibility if anything happens to the package.
  • Reduce customer frustration
    Customers go through multiple calls and emails if their package is lost. Ironically it will be 10x tricky for them to follow up if the product is insured for shipping by the shipping company because then the customer has to contact the shipping company for reimbursement. But if the seller provides a shipping insurance on their own, it will save the customer a lot of time.

How is a shipping insurance a game changer for your sales?

One may think that if I have multiple insurance claims at a time I may face a loss or probably won’t have enough cushion to cover the losses. But here’s a catch, this issue will arise only when you refund them in full through online transfer or back to source. This is pure monetary loss.
From the customer’s point of view, refunding the entire amount back to the source makes sense. But we have to find a middle ground that satisfies your business needs and the customer’s needs. The middle ground is to refund the via points or credits. This makes sense for your business because it ensures the customer will return to your store to use those points.
Shipping insurance in itself is a great option to provide for customer satisfaction, your brand value and after sales process. But it can be a game-changer and get you more revenue if you refund them via alternate methods.

Use Flits store credits with Simply shipping insurance to settle claims

To help with custom insurance settlements Flits has integrated with Simply shipping protection. 

Simply shipping protection lets merchants create a custom insurance plan. 

Simply insurance plan type

Merchants can settle the claim by multiple ways. To fulfil claim via store credit merchants can select- Credit points.

Settle Shipping insurance claims
Settle Shipping insurance claims- Simply shipping insurance

Once you complete the process of integration with Simply Insurance , your customers can receive insurance settlement in the form of Store credits.

Flits store credit x simply shipping insurance
Flits x Simply shipping insurance

When claim is processed by the merchants, customers can check the credit status in My account > My credits.

This is a very clever integration as this makes sure that customers will use the credits which means they will return to the store. It also minimises the losses of the seller.

Merchants must take advantage of features that serve more than one purpose. The integration mentioned above is one such feature that has a lasting impact on various facets of your business.




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Rashmi Singh
Rashmi Singh
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