Who's at Fault for Damaged Items—and What to Do Next

Accidents happen, and anyone who’s ever received a broken product that was damaged in transit knows this all too well. In 2023, UPS alone delivered 5.7 billion packages, FedEx delivered 2.84 billion, and in 2022, USPS delivered 7.2 billion packages. With an average rate of 10% of packages damaged across companies, avoiding product damage is imperative.

Not only do damaged goods hurt you as the seller, who must replace or refund the order and deal with potential damage to their brand's reputation, it also becomes a hassle for the buyer, who must then take steps to ensure they are properly taken care of. As a business owner, taking the time to protect your goods for shipping is always worth the cost.

"When it comes to delivering your products, the difference between a satisfied customer and a costly return can often be as simple as the packaging. Plus, the ripple effect of a negative customer experience can lead to a loss of thousands of dollars per customer in future orders,” said Rick Nelson, CEO, The Fulfillment Lab.

In this blog post, we’ll briefly cover how damaged product impacts your profitability, explain who covers an item that’s damaged in shipping, what a buyer should do about if they get a damaged product, and what a seller should do about goods that have been damaged in transit.

How Damaged Product Affects Profitability 

When a product arrives damaged, the impact on your profitability extends beyond the initial cost of freight.   

• Cost of freight: If a customer receives a damaged item, the company faces a double freight cost: one for the return of the damaged item and another for shipping a replacement.

• Customer service: Even a short interaction can add up, especially when considering the fully loaded labor cost, which includes benefits and other overheads.

• Packaging supplies: Poor initial packaging that leads to damage also risks further damage on return shipments, potentially increasing costs even more.

• Customer lifetime value: With 73% of customers indicating they are unlikely to purchase again after receiving a damaged item, the potential loss in future sales far outweighs the immediate financial costs. 

If an Item is Damaged in Shipping, Who is Responsible?

Thankfully, the question of who’s at fault for damaged merchandise is an easy one to answer. Unless a prior arrangement between the buyer and seller has been agreed upon or some fine print excuses them of damages, the seller is responsible—at least initially—for the damaged product.

What a Buyer Should Do a Package Damaged During Shipping

First and foremost, you should always be sure to read return policies before ordering anything. This can be especially important for large items, such as furniture, which can be a pain to deal with and a logistical nightmare to send back. 

Now, let’s say you’ve received damaged merchandise. After you’ve gotten over the initial disappointment, you’ll want to take a few steps to ensure you’re properly refunded or taken care of.

1. Accept the Package

If an item is presented to you instead of being left on your porch and you can see right away that it has been damaged in transit, your first inclination may be to refuse the package. After all, it was broken before it got to you, right? 

However, this could ultimately cost you more, putting you on the line for return shipping charges (some carriers' insurance policies nullify their responsibility to pay if you refuse the package) or storage fees acquired while holding the product while claims are processed. In addition, if you don’t accept the package, you won’t be able to properly document the damage for your claim. 

2. Document the Package Damage 

Upon accepting the damaged package, you want to immediately take detailed notes and snap photos of both the compromised packaging and the broken products; this may help to determine whether the package was improperly packed by the seller, or improperly handled and damaged in transit. 

By documenting your damaged goods, you can present proof to the seller or retailer that the item was damaged (most are going to want proof; even if they don’t want the item returned to them, they can use these photos as evidence if they decide to file a claim against the carrier).

3. Contact the Seller

Most retailers have their return policies on their websites, which includes a section on damaged or defective items. Even small ecommerce businesses will typically include this information on their website or product listing. So, as previously stated, you should always check this before placing an order. 

Things you should look for prior to ordering, and what you should understand when contracting the seller, include:

• How soon you need to contact the seller after receiving a damaged item for them to accept responsibility. For example, If you don’t notice the damage for weeks, instead of shipping the item back to the retailer for a replacement, will you need to ship it to the manufacturer for repair?
• Can you return the item by mail, in-person, or both?
• Who is responsible for covering return shipping fees?

Always remember to report damaged goods to the seller as soon as possible so that they don’t think you’re responsible for the damage.

Buyer Tips for Dealing with Damaged Merchandise

Here are a few things to remember when you've received damaged merchandise.

• Receiving a product that’s been damaged in transit is frustrating, but try not to take it out on the agent or seller when you contact them. There is a good chance this is not their fault either, and remember what they say, calm heads prevail.
• Keep copies of everything: the packing slip, invoice, freight bill, correspondence with the seller, and photos of the damaged package and product. Simply snap a picture of them all with your phone.
• Is the seller not cooperating with you on a legitimate issue? Wondering what to do if a retailer won't replace a damaged item? If you made the purchase on a specific selling platform, you can file a complaint against the seller; this could get you your money back or get them to work with you for fear of being removed from the platform.
  
  Otherwise, assuming you paid with a credit or debit card, you may be able to file a dispute with your credit card company or bank to have the charges reversed.

What a Seller Should Do about a Damaged Item

When you’re notified by the buyer that the product arrived damaged, can do one of the following:

• Initiate a full refund without requiring the product to be returned
• Offer a partial refund (depending on the severity of the damage) without requiring the product to be returned
• Send a replacement item with or without requiring the return of the original
• Request the buyer return the product, and then offer a full refund plus return shipping costs
• Nothing—risking negative feedback, potential removal from a sales platform, and potential lawsuits depending on the cost of the merchandise

Although you must make the situation right, it’s not necessarily your fault the product arrived damaged. Sure, you may have improperly packaged the product, but there’s also a good chance the blame resides with the carrier. 

For example, a driver may have improperly stacked boxes, the item may have fallen off a conveyor belt in transit, or poor warehousing or weather conditions may have compromised it. All are valid reasons for returning goods.

To recoup losses from the refund, you should then make a claim against the carrier service, generally through their website or by calling them directly.

Tips for Reducing the Likelihood of Damage in Transit

To ensure your products reach their destination safely, keep the following in mind:

• Select the right box size: Choose a box that snugly fits the item, allowing just enough space for protective materials to prevent movement.
• Fill the box's empty spaces: Use packing materials to occupy any voids within the box, securing items in place, particularly vital for sensitive electronics.
• Analyze shipping damage data: Maintain records of any shipping damages, noting the specifics and causes, to identify trends and implement preventive measures for future shipments.
• Mark the package as fragile: If the contents are delicate, make sure the box is clearly labeled as fragile to prompt handlers to use caution.
  
  

Seller Tips for Dealing with a Damaged Package

It’s in your best interests to make good on damaged merchandise if the claim is legitimate and falls within fair and posted return policies. 

This will help ensure that customers continue to come back. (89% of respondents in a consumer survey say that businesses can regain their trust if they take the steps necessary to resolve a problem.) This will also help keep them from posting negative feedback that can dissuade others from making a purchase.

Reduce Product Damage in Transit. Work With The Fulfillment Lab!

Another way to avoid dealing with returns in retail is to work with a reputable fulfillment center like The Fulfillment Lab. 

At TFL, we pride ourselves on our ongoing record of safe package arrivals. The professionals in our fulfillment centers take the utmost care when packing your goods, and we have many different styles and sizes of boxes, along with a variety of custom packing materials to ensure their safekeeping. 

And, if something should happen in transit, we’ll take care of the return and replacement process, and deal with the shipping provider as necessary. This allows you to focus on what’s really important—growing your business!

Want to learn more about The Fulfillment Lab? Contact one of our packaging pros today!