Did you know that as much as 15% of all e-commerce orders shipped to urban areas don’t actually reach their destination? The cause? Anything from logistical issues and carrier errors to package thefts.
But does the customer don their coat and reach for their magnifying glass to catch the real culprit? Not quite. Instead, they chalk it off to your e-commerce platform’s inefficiency and with a ‘sayonara’ ride into the sunset, never to be seen or heard of again.
Yep, that is the cold, hard truth. And so, it’s no overstatement to say that your lost shipments can create a serious dent in your customer experience, revenue, and overall brand reputation. And so, to help you tackle this very real issue with modern-day online shopping, here we give you a complete rundown on lost shipments, from why shipments get lost and their impact on businesses to how to prevent them in the future. Let’s begin!
Why do Shipments Get Lost?
Even though it sometimes might feel like it, shipments don’t just disappear into thin air or get swooped up by aliens. Instead, most of the time, the reasons are circumstances and human error. So, in the mysterious case of the lost shipment, here are some suspects that you should look into:
Package Didn’t Actually Get Shipped
Well, the investigation begins at home. Your lost package could simply still be sitting patiently at your warehouse, having failed to get picked up by the carrier. How did it slip through the cracks? Well, the culprit could be an inefficient package loading process, human error, or even access to the volume of packages that simply overwhelms your team, leading to missed packages.
Read more: How to handle lost packages
Package Wasn’t Scanned Properly
If the package doesn’t get scanned properly (the scanner doesn’t pick up the barcode) or misses the scanning stage altogether, it could be moving through the delivery process without you or the carrier being aware. Unfortunately, at such times, only when someone notices an imposter in their packages will they realize the mistake and return it to the scanning stage. Until then, the package is going on an unsolicited road trip.
Package Didn’t Get Sorted Correctly
The sorting stage involves packages getting assigned to different delivery trucks or batches based on their final destination. This can often take place at a central carrier-managed warehouse where the carrier collects all packages from e-commerce businesses and then divides them based on their destination or even at the customer’s local distribution hub before the delivery agent gets them loaded onto the delivery truck for their last-mile journey.
Package Label Get Damaged
The next possible reason why your shipment got lost is that its label was damaged beyond recognition—making scanning, sorting, and, frankly, identification difficult. And if it cannot be recognized and tracked, losing it is pretty easy. Because of this, e-commerce businesses must prioritize legible and clear shipping labels that are appropriately placed and safeguarded from easy damage.
Package Got Stolen Post Delivery
Lastly, your lost shipment could have been the work of a “porch pirate”- a colloquial term used to refer to package thieves. In 2024, porch pirates stole approximately 58 million packages, amounting to roughly $12 billion. So, if you’ve tracked your package all the way from shipping to delivery, chances are high that your customer will have to check their cameras and inform the authorities to recover the package.
Impact of Lost Shipments on Businesses
Lost shipments rarely only lead to the loss of the package. They, in fact, have far-reaching consequences that can truly hurt your e-commerce platform. Here’s a look at how lost shipments affect a business:
Hampers Customer Experience and Affects Brand Trust
Customers will be reluctant to engage with your platform again if they don’t receive their order the first time because you have lost their trust. Trust is foundational to every relationship, especially customer relationships.
Further, HubSpot reports that acquiring a new customer is 5 to 25 times more costly than retaining an existing one. A lost package can cause not just a loss of revenue from that one order and all the future orders that the customers could have placed but also push you towards spending more to acquire another customer.
Affects Your Bottom Line
Lost packages also hit your bottom line—quite badly. When your package doesn’t make it to your customer, you have to refund their money or replace the product. Either way, you’re spending money again. In the first case, you’re losing your revenue. In the second one, you’re retaining your revenue, perhaps even salvaging the customer experience, but you’re paying to ship the order again.
Damages Brand Reputation
Word of mouth and reputation are everything when it comes to driving your e-commerce business’s growth. You see, humans are social animals that value social proof. And so, when your package doesn’t make it to your customer, getting lost in transit, you’re not simply losing that one customer but also saying bye to all the other prospects that will likely be influenced by this customer’s bumpy customer experience.
Preventive Measures for Lost Shipments
Okay, so we’ve discussed what causes lost shipments and how they can affect your e-commerce business. So, the next obvious question is—can they be prevented? Well, yes, they can! Here are some strategies to integrate:
1. Ensure Shipping Details are Accurate
What might seem like a small detail to you could become the difference between a package that is properly tracked and delivered on time and one that never reaches the customer. A missed postal code or apartment number can cause the loss of a package.
So, make sure you add accurate, legible, and detailed information on your package’s label. Further, invest in a high-quality printer that is able to print your labels clearly, in addition to adopting a label design that is easy to identify.
2. Secure Your Package Carefully
We get it. You want your customer to receive a pretty package that perfectly encapsulates your brand. And brown cardboard hardly cuts it. But unfortunately, it does the important job of protecting your package, so we’d say it’s a necessary evil.
When securing and packaging your shipment, prioritize sturdiness and protection over aesthetics. Make sure it is well covered with robust material so that your shipping label can stay stuck and visible until your customer’s eager hands get to them.
3. Facilitate Real-Time Tracking
Knowing where your shipment is at all times is not losing your package 101. This is possible with real-time tracking and punctual status updates. Facilitating this doesn’t just confirm your package is well on its way but also helps you understand where the last point it was registered before it got lost, giving you a starting point on your hunt.
Consider integrating tools such as LateShipment.com’s Delivery Experience Management software to help gain timely updates on where your package is during its journey to your customer’s doorstep.
4. Offer Flexible Delivery Options
Next, offer your customer flexibility in delivery to ensure they’re at home when their packages arrive. This reduces the chances of porch pirates getting to the package while also driving your customer experience. After all, customers do appreciate personalization and flexibility.
Give them the option to schedule deliveries for specific times or even provide alternate delivery locations to ensure your packages make it to your customers.
What to Do When a Shipment is Lost?
Let’s say you did all that was in your power to prevent the catastrophe that is lost shipments. But, despite your best efforts, you’re having to deal with an MIA package. What do you do in such a situation? File a case report for the missing package. Not quite.
Instead, you take a structured approach to ascertaining what really happened. Here’s the protocol:
Ascertain whether your shipment is lost
This might seem confusing, but your first step is to ascertain whether your package is lost. Don’t presume this before you’ve done your groundwork. You see, as we discussed previously, the package could have been swiped by porch pirates or might even have been delivered a few doors down by mistake.
At such times, going ahead and badgering your carriers can not only lead to a waste of time but also sour your professional relationship. Do your research, and once you’re convinced it’s actually missing, you can move to the next step.
After confirming the shipment is lost, file an insurance or refund claim
Typically speaking, carriers can be hesitant to reimburse damaged or lost shipments, but they’re usually willing to compensate for lost packages. And so, your next step after confirming your package is indeed lost is to raise a claim with your carrier. In addition to the cost of the product, you can also request reimbursement for the shipping costs you incurred.
Further, while filing claims can be tedious and laborious, they do have a high success rate. Why? Because your carrier has a reputation to lose in case word gets out, they can’t manage their packages securely.
Replace the lost package to preserve customer experience and retain revenue
Okay, so you’ve recovered your losses. Is it all finally over? Not in the least. You have your most important task yet to address—your injured customer experience. Your customer was eagerly looking forward to their order, which didn’t get delayed, but worse—never turned up!
Now, considering 32% of customers are reluctant to order from an e-commerce business after a failed delivery, you need to act fast to ensure they don’t turn away for good. So, your next step is to quickly replace the item your customer ordered—on priority.
The Role of Shipping Insurance
At the end of the day, lost shipments are just part of the e-commerce world—impossible to get rid of. And so, what e-commerce businesses need to do is safeguard themselves against this inevitable villain—with shipping insurance.
Shipping Insurance refers to safeguarding your shipments financially so that you can recover your losses in case the shipment goes MIA. Now, doing this manually is definitely a nerve-wracking job. Fortunately, you can automate this increasingly important e-commerce business need with LatShipment.com’s Shipping Protection and Insurance software.
With up to $2000 coverage per shipment and a 99% claims success rate, our tool offers comprehensive, flexible, and global coverage, cross-carrier support, customizable insurance rules, centralized claims management, carrier performance insight, and much more—right at the tips of your fingers.
Over this, it integrates seamlessly with over 1200+ carriers and business tools, ensuring all your systems work with the most updated data. Automate shipment insurance with LateShipment.com today!
Conclusion
Being an e-commerce store, you’ll never be able to truly eradicate lost shipments. But what you can do is take active steps to reduce the chances of having to deal with them. Luckily, you have the ultimate guide right above to get you started on barricading your customer experience against these pests.
If you do come across a lost shipment, simply delegate the task of raising refund claims to LateShipment.com’s Parcel and Shipping Invoice Audit software.
Our sophisticated tool automates the entire process of recovering refunds—from combing shipping invoices for discrepancies to raising claims and recovering your refunds. Not only that but if your claims get rejected, our team of experts will escalate the dispute to ensure you get your money back.
And through all this, our solution meticulously tracks carrier performance so that next time you’re renewing your contracts or entering into a new one, you have bulletproof data by your side guiding you through negotiations.
Ready to streamline your claims process? Book a demo for our Parcel and Shipping Invoice Audit software today!
