Insurance policies may often feel overwhelming. But the benefits can make all the difference for your small business.
In a day and age where buying products online has become such a huge part of consumer shopping habits, the competition amongst businesses is higher than ever before. Small businesses are dominating the US business population, now making up a whopping 99.9% of all US-based businesses. Talk about growth!
But while it’s clear to see that small businesses are quickly gaining in popularity, many are still struggling to build credit and protect themselves from the high costs of lost, damaged, or stolen goods. Consumers rely on the secure delivery of their online-ordered products. Small businesses that cannot provide that service are at serious risk of losing customers.
This is where shipping insurance becomes important. By acting as a cushion for lost, damaged, or stolen packages, you can guarantee either safe delivery or full reimbursements to your customers. All without bleeding out your resources.
Let’s find out more.
What Is Shipping Insurance?
Shipping insurance is a form of insurance that provides financial protection for unexpected thefts, losses, or damages done to a seller’s products during their shipping process. Many carriers such as UPS, FedEx, and USPS cover products valued under $100.
But shipping insurance covers the entirety of any costs – including full shipment value, and freight costs, irrespective of how or why the issues occurred. While it is possible for any business to obtain shipping insurance, it is mostly used by those that handle high-volume or high-value products.
For this reason, not many small businesses opt for getting shipping insurance. However, the increasing strain on e-commerce platforms is prompting small businesses to take stronger measures to protect themselves. Especially from the many potential risks that exist over the course of the shipping and delivery process.
Buyer Versus Seller Shipping Insurance
There are two main different types of shipping insurance: buyer shipping insurance, and seller shipping insurance. Seller shipping insurance is insurance obtained by a business to indemnify losses or damages. Buyer insurance is insurance obtained by a customer to protect their package.
These two forms of shipping insurance are similar. They both entail paying an insurance company to protect a product’s delivery process and reimburse any costs paid out for theft, loss, or damage. If something happens during the delivery process to compromise a shipment, either the buyer or seller will be indemnified from paying for it.
The difference between these two lies in the reimbursement process. With buyer shipping insurance, the reimbursement is activated via a refund option. With seller shipping insurance, reimbursement happens via a third-party insurance agency or shipment carrier.
Five Reasons Your Small Business Needs Shipping Insurance
It can be difficult to know when it’s time to get shipping insurance for your small business. There’s no denying it can be pricey, but the benefits are priceless if you want to stay consistently popular with the public. Shipping insurance is not a mandatory practice. But once you hit a certain level, it can become an indispensable source of support for your business.
Before making any hasty decisions, take a look at these five indicators. You may find that it’s time for your small business to invest in shipping insurance.
You sell internationally
International deliveries are significantly more at risk for damages, losses, and thefts than domestic ones. The distance is longer and more complicated, resulting in more opportunities for liabilities to occur. If your small business deals with global eCommerce, shipping insurance is essential.
You sell fragile or easily broken products
Things like pottery, fine art, electronics, or glassware are all at high risk for accidental breakage. No customer wants to receive a damaged product. But providing them with the option to get a refund can help to restore their relationship with your small business.
You sell luxury, exclusive, or high-cost products
As the value of a product goes up, so does its likelihood of being stolen. There is always a risk that products may be susceptible to theft, but the increased demand for e-commerce delivery has meant a dramatic increase in stolen items – particularly high-value ones.
If your small business sells exclusive, limited edition, or high-value products, investing in shipping insurance can save you thousands.
You sell during peak seasons
Peak shopping seasons such as Christmas, Black Friday, or Cyber Monday mean an influx of both national and international shipping movements. As the demand for shipped products becomes inflated, so do the chances of them being intercepted by theft or loss.
You are spending a lot of money on replacement costs
If your small business has run into recurrent issues with successful deliveries, it may be a sign that something needs to change. Without a solid delivery, reimbursement, and refund plan for customers, your small business cannot survive in the competitive eCommerce market of 2021.
What Are The Key Benefits Of Shipping Insurance?
There are so many benefits that come alongside obtaining shipping insurance for your small business. In addition to the logistical benefits that come with the decision, here are some more key benefits your small business can experience by deciding to invest in quality shipping insurance:
Better customer service
Bad delivery service is the reason why 84% of online customers never return to an e-commerce platform. In order to avoid disappointing your customers, you need to be able to promise either secure and efficient delivery or the option for a full refund should the delivery fail in some way.
By obtaining shipping insurance, your small business can introduce a sense of loyalty with customers and gain a solid reputation that will keep them returning again and again for more purchases.
Peace of mind
Running a small business is no vacation. The stresses that come with maintaining control over every little detail can feel overwhelming. But with shipping insurance, at least one weight can be lifted off your business’s shoulders. They say you can’t put a price on peace of mind, but one could certainly argue otherwise when it comes to paying for high-quality shipping insurance.
Less paperwork for you
Reams of paperwork go into the running of any business, yet you can significantly reduce the load by investing in shipping insurance. If you have shipping insurance, all shipments received are covered. Therefore you don’t have to sign individual insurance paperwork for each shipment —it’s all covered under the policy. This streamlines the paperwork process and relieves your business from the task of signing off each individual one.
Increased security and assurance
This one goes for both your small business and your customers. The security of knowing that no matter how a shipment unfolds, both your own and those investing in your company have their interests covered can make a huge difference to everyone’s sense of assurance.
Simple Techniques To Avoid Damage, Loss, And Theft
Shipping insurance can be expensive, and not all small businesses have the capital to invest in it (just yet). If your small business is looking for ways to implement a cheap but effective shipping protocol, here are some practical ways you can avoid unexpected damages, losses, or thefts along the way.
Disguise your packages
It might sound strange, but this tactic can help to prevent thefts from occurring. It can be very tempting to package your products in bright, beautiful designs or textiles. While that can provide a special unboxing experience for customers, it also advertises value to thieves.
Instead of opting for expensive-looking packaging, aim to disguise your products in plain boxes that do not encourage any plunderers to take a chance.
Keep meticulous records
If your small business does not have shipping insurance, keeping meticulous records is non-negotiable. Your return and refund policies need to be clearly stated on your website, and customers need to be fully aware of the risks involving shipment.
You can avoid a lot of frustration on everyone’s behalf by putting an airtight procedure in place for any damages, losses, or thefts that do inevitably occur over time.
Invest in secure, high-quality packaging
This is particularly important if your small business sells fragile or easily damaged goods. By investing in strong, durable boxes and packaging products, you can be spared the drama of letting broken goods be delivered to loyal customers.
While every business can benefit from investing in shipping insurance, the key points of interest apply to those with international e-commerce, high-value products, or easily damaged products. Insurance protects both your company and your customers from dealing with unwanted costs, paperwork, and the disappointment that comes with unsuccessfully delivered goods.
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As a small business, your main priority should be happy, satisfied customers. Shipping insurance is one of the many things that will give you just that. Positive feedback is the lifeblood of small businesses in 2021. Investing in shipping insurance is one step any company can take towards surviving and thriving on the high-stakes landscape of eCommerce in an (almost) post-pandemic world.