How Do You Deal With Lost Packages When Dropshipping?

If you're dropshipping, you will probably have to deal with lost packages at one point or another.

And you must know how to handle it to avoid receiving negative reviews.

This article will explore everything you should know about lost packages as a dropshipping store owner, including:

• The most common causes of lost packages.
• Your responsibility over lost packages as a dropshipping store owner.
• Ways to minimize lost packages.

Let's start!

What are lost dropshipping packages?

Lost packages when dropshipping refers to the situation where a shipping company loses a dropshipping package.

The package contains products a customer ordered and paid for at a dropshipping store.

5 Main causes of lost packages when dropshipping

Here are five main causes for lost dropshipping packages:

1. Order fulfillment and packaging-related mistakes
2. Theft (in-transit and porch piracy)
3. Transit-related challenges and issues
4. Carrier-side errors
5. Imports and customs regulations

Let's explain these causes:

1. Order fulfillment and packaging-related mistakes

Order fulfillment and packaging-related mistakes are prime causes of lost packages in dropshipping.

Such errors include poor labeling, incorrect delivery addresses, improper packaging, printing label mistakes, inaccurate weight, incorrect freight classification, and so on.

While these mistakes can have many causes, we can attribute most of them to the fact that dropshipping stores don't control inventory management or order fulfillment.

Instead, they rely on dropshipping suppliers:

Most dropshipping suppliers work with various store owners.

Therefore, order fulfillment and packaging mistakes can happen, especially when working with a supplier who lacks a streamlined order fulfillment and processing system.

The good news is that knowing which questions to ask dropshipping suppliers can ensure you work with the best, most reliable ones.

These suppliers make few order fulfillment and packaging mistakes that might lead to lost packages.

2. Theft (in-transit and porch piracy)

According to the 2023 Package Theft Annual Report, 17% of Americans have lost at least one package to theft in the last three months, and over 40% have been victims of package theft at some point since May 2020:

These statistics highlight how rampant and costly package theft is to retailers (around $8 billion annually) and why it is one of the main causes of lost packages in dropshipping.

While some theft might happen in transit, as the statistics show, porch pirating is the most common theft type in the US.

That is why it is very important to ensure customers have a way to track their packages; that way, they will be home or available to receive a package when it arrives, thus denying porch pirates a chance to get to it first.

3. Transit-related challenges and issues

In a world where nearly half of all online shoppers expect the same or next-day delivery, transit delays are a big deal because consumers do not want to wait longer than necessary to receive their orders:

Most transit-related delays and challenges that might lead to lost packages, like customs clearance, carrier reliability, and last-mile delivery challenges, are beyond your control as a dropshipping business owner.

For example, you can't control a customs officer with the legal mandate to confiscate some packages, perhaps due to customs fees or the legalities of shipping some products across borders.

In such instances, confiscation can lead to lost packages.

Conversely, customs clearance can complicate and lengthen the last-mile delivery process and make your customer impatient enough to consider the package lost and request a refund.

While there isn't much you can do about transit-related challenges, you can limit such instances and their impact on your dropshipping business.

For example, every order from your store should have a tracking number so customers can track their orders throughout the delivery cycle:

Clear communication with your customers is a key thing you can do to limit the effects of lost packages on your business.

So stay on top of all transit-related challenges and promptly communicate them with customers.

4. Carrier-side errors

Carrier-side errors are another common cause of lost dropshipping packages.

These mistakes may include misdelivery, damage during transit, shipping errors, or such long delays that customers file for refunds.

Take misdelivery, for example, where, due to things like human error or an incorrect shipping label, a carrier delivers a package to the wrong address or person.

Such an instance can lead to incomplete deliveries and even in-transit theft.

Fortunately, you can avoid most carrier-side causes of lost packages by working with reputable dropshipping suppliers who work with the best carriers to ensure every package has complete and accurate address details.

5. Imports and customs regulations

Import and customs regulations are another cause of lost packages. Such issues can be especially common when shipping internationally.

For example, customs officers may confiscate some packages, perhaps due to existing laws prohibiting importing some goods or customs clearance fees.

On the other hand, a customer's package may be waylaid at certain entry and exit points for so long, perhaps due to clearance and regulatory issues, that it becomes undeliverable, leading to a lost package.

Who is responsible for lost dropshipping packages?

You, the dropshipping business owner, are responsible for lost dropshipping packages.

Yes, you read that right: in your customer's eyes, you are responsible for lost packages, not the customer, your dropshipping supplier, or your carrier.

Here are two reasons why:

• Generally, there's an unwritten 'ecommerce agreement' that all orders (and everything related to them) are your responsibility until customers receive their packages.
• It's good customer service; trying to shift blame to the customer for lost packages is likely to earn you many negative reviews. Taking responsibility for lost packages shows customers you value them.

How do you protect yourself from lost package claims when dropshipping?

You can protect yourself from lost package claims by doing the following:

• Keep accurate order and shipping records. Keeping accurate records will make it easier to track an order, know its state, and take action at the right point when instances of lost packages occur.
• Insurance is your best friend. At the very least, have liability insurance coverage for your dropshipping business and shipping insurance coverage (you can ask your dropshipping suppliers if they have one).
• Work with a reliable dropshipper and carrier. Working with the best dropshipping suppliers with a proven track record and clear policies is an important way to reduce instances of lost packages.
• Have a good customer support system (communication). This is another key thing. Ensure your customer support system provides clear, up-to-date information and keeps an accurate account of the records.

What should you do after a customer informs you of a lost package?

You must do a few things when a customer reaches out to you about a lost package.

First, empathize with the customer and reassure them that you have received their message about their lost order and are working to resolve it.

To instill brand trust, you can even take this first message further by mentioning some steps you have already taken or intend to take to solve the issue.

However, avoid spelling out solution timelines because a lot can happen in this process.

After empathizing and reassuring the customer that you’re handling the issue and will get back to them shortly, the second thing is to check for the lost package:

How do you check a lost dropshipping package?

To check lost dropshipping packages, do the following:

1. Check the tracking information. Use the tracking information provided by your supplier to track the package's delivery history and current status.
2. Review and verify the shipping information. Check to ensure the shipping address and information used by all parties is the same across the board.
3. Contact your dropshipping supplier/carrier. Based on what the tracking information reveals about the package's status, you can contact your supplier for more information.
4. Check imports and customs regulations. In instances of international shipping, check if the package adheres to all regulations and is not stuck in a customs warehouse.

After checking all this information and confirming the lost package, the next step is to explain the situation to the customer and offer relevant solutions, like a replacement or refund.

Since, as Benjamin Franklin once said, 'An ounce of prevention is worth a pound of cure,' let us look at how to prevent cases of lost packages:

5 Tips to avoid lost dropshipping packages

You can lower instances of lost dropshipping packages by doing the following:

1. It starts with proper packaging

Since packaging is a common cause of lost packages, it's impossible to overemphasize the importance of working closely with your supplier to choose the right packaging.

Ensure your supplier uses high-quality, fitting packages and good labeling that can withstand the rigorous handling and delivery process.

2. Use address verification

According to Clutch, shipping label mistakes are the main cause of 'lost in the mail' deliveries.

Because of that, and because customers can mistype their shipping addresses and apartment numbers or use incorrect city and street abbreviations, adding address verification to your checkout process can be a game changer.

Using a shipping address validator that can ask customers to fix shipping address issues can help minimize shipping label mistakes and prevent undeliverable addresses.

For Shopify dropshipping, a Shopify app like Address Validator Plus is a great place to start:

3. Use good labeling

Besides verifying addresses to minimize shipping label mistakes, you should also work with your supplier to ensure all packages have good labeling.

For example, when shipping fragile items, the package should have a clear 'fragile' or 'handle with care' label, and the shipping label on all packages should be as secure and safe as can be, even from wear and tear and water damage.

4. Consider shipping insurance

Given that, according to Clutch, more than half of all online shoppers have not received a package in the last six months, shipping insurance is your best friend.

Shipping insurance can cover you against damaged, lost, and stolen packages.

In some instances, some shipping insurance covers also have contingencies for things like reshipment costs and shipping delays.

You can choose between insurance options like flat-rate shipping, third-party, carrier liability, all-risk, international, or return shipping insurance.

5. Communicate, communicate, and communicate

This is such an important point.

Remember that lost packages can damage your reputation because, in the customer's eye, you are responsible for all packages until delivery. That is why open communication is so important.

Invest in good customer service, keep accurate tracking records, and support your customers throughout the process until you arrive at an agreeable solution and way forward.

You do not need to update customers every second, but communicating as things unfold can build trust and win you customer support points.

Summary

Before we get to the conclusion, here is a summary of this article so you can easily remember the main points:

• Lost packages are packages that fail to reach the customer.
• The five main causes of lost packages in dropshipping are packaging and order-related mistakes, in-transit theft and porch piracy, transit-related challenges, carrier-side errors, and import and customs regulations.
• You, the dropshipping store owner, are fully responsible for lost packages.
• You can legally protect yourself from lost package claims by keeping accurate records, working with a reliable supplier, and taking a shipping insurance cover.
• You can avoid or lower instances of lost packages by adopting good packaging practices, using address verification, using appropriate labels, and communicating well with your customers.

Conclusion

There you have it: everything worth knowing about lost packages in dropshipping.

Although lost packages are not common when dropshipping, especially when you work with reliable suppliers, it's important to know how to handle them well.

The most important thing to know is that, in the end, you will have to decide whether to send the customer another package or offer a refund.

Ultimately, choose the quickest, most effective way to make the customer happy.

Sometimes, it's just easier (and better for your business) to have your supplier ship the customer a replacement.

Until next time, if you have any comments, thoughts, or questions, leave them in the comments section.

Otherwise, have a rocking day, and remember: keep learning, experimenting, and growing.

Want to learn more about dropshipping?

Ready to move your dropshipping store to the next level? Check out the articles below:

• How to Cancel a Dropshipping Order: What to Know in 2024
• Can You Combine Dropshipping and Private Labeling in 2024
• 15 Best Books That Will Help You Run a Dropshipping Business

Plus, don’t forget to check out our in-depth guide on how to start dropshipping here!