Fulfillment Mishaps Hit SMBs Hardest

May 20, 2021

As online shopping and e-commerce continue to grow, fulfillment mishaps also increase. For large retailers and marketplaces, it’s easy to absorb the cost of shipping the wrong product or replacing stolen items. But for small- to medium-sized businesses (SMBs), online order hiccups can be devastating.

There are solutions, though, which include adopting fulfillment strategies used by larger companies, noted UPS Capital, the shipping insurance division of UPS, in a report released today.

UPS Capital said with the “proliferation of e-commerce marketplaces and platforms, it is easier than ever for SMBs to set up shop and begin selling online. But with any ‘virtual storefront’ comes the challenge of getting goods into consumers’ hands when and where they want them.”

In its survey of nearly 900 SMBs this past March, UPS Capital found that 63 percent of retailers “noted an increase in incidents involving lost or damaged packages over the past year, with nearly half (48 percent) spotlighting an increase in theft after delivery, also known as ‘porch piracy.’”

In a survey of consumers, 38 percent reported experiencing lost packages while 36 percent said delivered goods were damaged. And 21 percent said they were shipped the wrong merchandise.

“In all instances, consumers are most likely to reach out to SMBs for resolution, despite the fact that many small business owners may not have dedicated employees to handle these inquires,” UPS Capital said in its report. “While 38 percent of consumers are likely to fault the company they purchased from for any shipping issues, 21 percent would also point to e-commerce marketplaces. Unsurprisingly, 81 percent of SMBs stated that they are adversely impacted when shipments are lost, stolen or damaged.”

Kiel Harkness, head of global marketing and business intelligence and analytics at UPS Capital, said there are several things SMBs should consider as online sales continue to grow and also shared strategies to mitigate mishaps.

“Shipments to the end customer have a long journey — most of which you don’t see,” Harkness told WWD. “Any kind of loss or damage can occur in transit from a supplier to the warehouse, during inbounding or storage, while being picked and packed, in transit to a customer, or on the customer’s front porch.”

Harkness said each touchpoint along that journey “opens SMBs up to potential revenue loss and reputational risk.” He also said many of the points of vulnerability “may not be visible but can be closely monitored and controlled.”

“And fulfillment technology is quickly evolving, giving full visibility into inventory levels and fulfillment and delivery statuses,” Harkness said.

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From a higher elevation, Harkness said omnichannel approaches that leverage larger retailers’ legacy brick and mortar locations “to supplement and complement their own in-house fulfillment operations reduces the miles between shipping site and consumer delivery.”

“This reduces the overall fulfillment time, providing consumers a tangible benefit,” Harkness told WWD. “Omnichannel also provides consumers additional options on where and when they can receive their order. Click and collect, the option where consumers buy online and pick up in a store location of their selection at their selected time, is also a tangible benefit to consumers.”

However, these benefits don’t have to be offered by larger retailers alone, Harkness said. “SMBs can select fulfillment partners that forward stock their inventory closer to their consumers, thereby reducing the fulfillment time from click to delivery,” he explained. “Similarly, SMBs can provide their consumers click and collect options by offering delivery options to ‘Access Points.’ These are real options that are leveling the playing field for SMBs.”

Harkness acknowledged that even with these options, shipments and orders can “go wrong from time to time.” He said loss, damage, and porch-pirated theft “are a part of e-commerce fulfillment.”

“And these incidents matter and are costing SMBs,” Harkness said, adding that 40 percent of SMBs in the report said they experienced “reputational damage and losing a customer” due to shipping mishaps. “So just as SMBs are looking to fulfillment solutions, they should also look to shipping insurance offerings that allow them to offer best-in-class post purchase experiences to their customers; automatically reshipping and making themselves and their customers whole when something goes wrong,” he added.

And with a nudge touting his own company’s services, Harkness said it is important for SMBs to find “a trusted logistics partner [that] can help protect the fulfillment journey starting with proper storage, inventory management, pick and pack and timely fulfillment. And leveraging partners that include insurance coverage should there be a mishap can help SMBs recover quickly.”

When asked about other approaches to creating a better fulfillment experience for consumers, Harkness told WWD that every “moment counts for small and medium businesses, especially when customer expectations and costs are high.” He said last year brought “no shortage of elevated expectations, unexpected expenses and disruptions to traditional business models.”

“These disruptions are a fact of life in the shipping industry, but what we can change is how to anticipate and overcome shipping setbacks,” he said. “For one, the industry can begin to pivot toward transactional insurance models, breaking away from the traditional methods of large, all-encompassing annual policies. For example at UPS Capital, our fully-digital, self-service offerings look to make coverage affordable and accessible wherever SMBs transact – via our website or popular shopping and shipping apps like Shopify.”

Harkness said with more “dynamic protections such as porch piracy and its ability to pay most claims in the matter of days,” smaller-sized merchants can deliver a better customer experience “through their shipping insurance protections.”

“Additionally, these methods can help level the playing field for SMBs, who are not afforded the same luxury as these larger players, who can replace lost, stolen or damaged goods instantly,” he added. “With these smaller margins of error SMBs work under, the need for timely assistance and fast claims payments is critical to their business success.”