eBay

ricarmic · ‎07-31-2013

Hi!

A discussion about shipping in another thread reminded me that when 2013 began I was worried about what impact the Canada Post "no insurance" for small packets was going to have for me because:

-for trackable countries it is frighteningly expensive (I sell a lot of $15-$40 items which make no sense to ask people to spend $20-$40 extra for tracking, if it is even possible, so I have to self insure these now

-I send a lot of stuff to non-trackable countries like Russia, China, South America.

So I went and looked at my "insurance" loss rates. I put insurance in quotes because I include items lost to "crime" as well. Here "crime" is defined as people purposefully buying with bad echeques, or claiming lost in transit when I have identified them as repeat offenders (see other thread for my comments on experience around this).

Note that my loss rate is calculated as a % of sales $, it is not a % of shipments. I care more about what the % of sales lost is so I track it that way.

It is also worth noting that for 2013 I have 3 types of insurance:

1. Self insurance for the small stuff

2. Canada Post for for the first $60 or $100 only when items are sent expedited, expresspost, registered or trackable

3. 3rd party insurer (Hugh Wood) for stuff over $200

2012 results - under 1% of sales loss rate:

0.0083% "insurance": loss rate (unrecovered loss 9 shipments)

0.0078% as a result of "crime" (2 shipments)

0.0004% as a result of items lost in the mail (7 shipments)

A reminder that 2012 is the year that CP covered the small packets, I had a few recoveries this way.

I had a big crime loss within Canada (this was also spelled out in a different thread).

2013 results (to end of June) under 1% of sales loss rate:

0.0074% "insurance" loss rate (all 7 are unrecovered losses so far this year)

0.001% as a result of "crime" (1 shipment)

0.0064% as a result of items lost in the mail (6 shipments)

So while the loss rate for actually lost items is about 15 times as much (so far) as last year, it remains well below 1% of sales. Generally I "allow" 1.5% loss rate in my cost models so it is doing well against plan.

Note that the numbers above are specific to eBay sales. As I mentioned in other threads, I experience losses both real and "crime" related via the other online venues I use so it is not an ebay buyer issue.

I am also adjusting some of my behaviours for some countries, most notably China. I'm aware of at least one problem "zip code" and I will adjust what I ship to that code or based on what else I see for a given ID in China.

Not sure if this info is of use to anyone else but it was worthwhile as I'd never gotten around to figuring it out until today!

toff3 · ‎07-31-2013

Ric,

I find the number of shipments "lost in the mail" surprisingly high. What evidence do you have that they were indeed lost in transit? I would think most, if not all, of them would more likely belong in your loss-due-to-"crime" category (buyers falsely claiming INR).

Tom

ricarmic · ‎07-31-2013

Hi Tom!

The count on its own does seem high, but it isn't so bad when compared to the overall volume. I don't have certain statistics, but my reasonable estimation is that the count % is quite similar for both years, it is about 0.005% (half of 1%) in terms of volume too.

The 2012 postal loss countries (I recorded) were:

Argentina

Australia (probably a "crime" as you mention)

Brazil

Indonesia

Russia

Turkey

(Crimes were Canada and China)

The 2013 postal loss countries were:

Argentina

China

France (this was a many time repeat buyer)

Israel

Russia

USA (possibly a "crime" too)

(Crime was China - same "group" as 2012 and probably 2011 too)

The loss countries are "expected" countries - I don't have stats on how many items I sent to them, but if I had to guess I would say that it is maybe in the 5% loss range to these countries.

I have struggled with the benefits/costs of limiting the countries I ship to. I have built in extra cost recovery in my shipping charges to international locations which so far more than offsets the losses and I (so far) believe there is good value in saying I ship "worldwide".

toff3 · ‎08-01-2013

Ric,

I'm still wondering how you know that a shipment was lost in the mail. In my experience, actual losses are few and far between. Normally, undeliverable shipments are returned to the sender - which, admittedly, can take a long time, as they're usually sent back surface mail. Your estimated loss rate of 5% to the six countries you list is very high, indeed unacceptably high. It does look like your lost shipment to France does indeed qualify as a true loss, as your known, repeat buyer claimed non-receipt. One of my two allegedly lost (disappeared for good) shipments, in 13+ years of trading on eBay, failed to be delivered in France (the other didn't make it to a buyer in Italy). I say "allegedly" because all I have is the word of the buyers that they did not receive the shipments but I have a gut feeling that both were honest.

I still believe that any loss rate greater than 1% is unacceptable and requires resolution.

Tom

pierrelebel · ‎08-01-2013

"how you know that a shipment was lost in the mail"

It does not matter does it? Whether the parcel is lost within the postal system or misdelivered or stolen at time of delivery or the buyer claims non-receipt, the results are the same: seller is out the money.

What Ric is doing is illustrating how self-insurance works for him. I appreciate the effort.

inuk_the_polar_bear · ‎08-01-2013

My experience, although I have never tracked it, is similar to the OPs.

I calculated that I have NOT spent $11,500 on insurance. I have never bothered to make a claim. INR or damaged in transit (two in 10 years) I cover myself. It was never worth the hassle.

ricarmic · ‎08-01-2013

Hi!

I actually don't think in some cases they are really "lost", I think in a lot of cases they are "seized" at customs ... I got ahold of a USPS link that explains the shipping rules for all countries and to be honest I was shocked at how restrictive the countries are for a lot of things! Certainly it explains some of the troubles/losses I'm seeing.

Here is the link, I'm assuming it is ok to include it:

http://pe.usps.com/text/Imm/immctry.htm

I sell stamps.

Here are some examples of scary rules that probably account for some of my troubles:

-if you look at the rules China has for stamps, a buyer is only allowed to import 100 stamps for personal use per year. Almost every package I send is several hundred stamps!

-if you look a the rules India has, they aren't able to import anything worth more than 100 rupees (which is really nothing) for personal use, otherwise they have to get some sort of license

Anyway, I certainly agree that 5% is high, but unfortunately it is my experience, so I've priced my shipping to be able to recover this level of loss. As I mentioned earlier, I think the "I sell worldwide" brings me more than enough extra income to be worthwhile, so far.

Certainly the list of countries I've had losses from are likely not a big surprise to anyone, and they are less a surprise to me after reading the "rules", I'm surprise as much gets through as does!

marnotom! · ‎08-01-2013

Canada Post has a list of "the rules" as well.

http://www.canadapost.ca/tools/pg/manual/PGintdest-e.asp

The reason I mention this is because I've noticed quite a few instances where the USPS International Mail Manual listing for a particular country differs quite significantly from Canada Post's International Destination Listing for that same country.

In other words, take what you read on those lists with a grain of salt. Italy's list has been derided a fair bit as being completely out of step with European Union restrictions, for example, and you'll see that the Canada Post listing for Italy is quite different than that of USPS.

ricarmic · ‎08-01-2013

THX for adding this, I didn't know our PO had one! Have bookmarked it!

inuk_the_polar_bear · ‎08-02-2013

I consider refunding simply as a cost of business. COGS, postage, office overhead, supplies, packaging, internet, car expenses, time, etc are all cost of business. Why seek to increase costs that reduce profit?

The insurance industry is set up to make money. They are in business to pay out LESS than what they take in. They are designed so they will make money and we will lose it. Why would we seek them out?

ricarmic · ‎08-02-2013

In my own experience, 3rd party insurance has a place in terms of managing risk.

I can "afford" to self insure items up to $200.

I can't "afford" to self insure the items that are thousands of dollars - the relative cost of insuring "big" items is low compared to the risk that someday something will be lost (last year had a $3,500 sale to South Africa - was glad to have 3rd party insurance to cover that). The relative cost for me to 3rd party insure items over $200 is low (<$100 year) given my volume so I am happy with not having to worry about it.

Other folks will have other levels of risk management capability/capacity.

rose-dee · ‎08-02-2013

@ricarmic wrote:
In my own experience, 3rd party insurance has a place in terms of managing risk.

I can "afford" to self insure items up to $200.

I can't "afford" to self insure the items that are thousands of dollars - the relative cost of insuring "big" items is low compared to the risk that someday something will be lost (last year had a $3,500 sale to South Africa - was glad to have 3rd party insurance to cover that). The relative cost for me to 3rd party insure items over $200 is low (<$100 year) given my volume so I am happy with not having to worry about it.

Other folks will have other levels of risk management capability/capacity.

I'm obviously a much smaller seller than you in terms of volume, but I agree that you have to find your own "comfort zone" where insurance and risk of loss or non-delivery are concerned.

I've reduced the risk (I hope) by restricting the countries I sell to, or by using insured tracking for items of high value (roughly $150 or more). However I recognize that selling worldwide may be an easier choice for sellers with a different type, size and weight of items, or those with a higher volume who can better absorb losses. I really rue the loss of insurance on Small Packet, it was great peace of mind at a very reasonable cost. Now I basically have to self-insure those items -- fingers crossed, no problems yet, but then I don't ship to China or South America.

I appreciated reading your post on self-insurance, very thoughtful to have put it here, and insightful. I also am grateful for the poster who put up the CP link on foreign imports - this may answer a lot of questions!

marnotom! · ‎08-02-2013

@rose-dee wrote:

I really rue the loss of insurance on Small Packet, it was great peace of mind at a very reasonable cost. Now I basically have to self-insure those items -- fingers crossed, no problems yet, but then I don't ship to China or South America.

@ricarmic wrote:

last year had a $3,500 sale to South Africa - was glad to have 3rd party insurance to cover that

How often did you collect on your small packet indemnity, rose-dee?

And did you have to collect on your sale to South Africa, Ric?

ricarmic · ‎08-02-2013

Hi marno... no the sale to S.Africa was AOK, I guess I didn't word it very well, what I meant was that I was glad that I had 3rd party insurance to cover it if it were lost.....

pjcdn2005 · ‎08-02-2013

Now I basically have to self-insure those items -- fingers crossed, no problems yet, but then I don't ship to China or South America.

If the amount is higher than your self insurance 'limit' you can insure that package with a 3rd party insurance company.

pocomocomputing · ‎08-02-2013

Be careful with third party insurance. They do not insure to all countries. They also will not insure certain types of items. Read the terms and conditions for a third party insurer before insuring. Some insurers require proof of mailing.

ricarmic · ‎08-02-2013

This is a very good point - this year I spent hours with my insurance rep adjusting all the wordings to incorporate all the adjustments required with the Canada Post changes....my insurer requires proof of mailing (which I always have anyway because the big stuff is either small packet, registered, expedited, tracked or expresspost) but they do cover my stuff (postage stamps) to anywhere in the world.

rose-dee · ‎08-02-2013

@marnotom! wrote:
@rose-dee wrote:
I really rue the loss of insurance on Small Packet, it was great peace of mind at a very reasonable cost. Now I basically have to self-insure those items -- fingers crossed, no problems yet, but then I don't ship to China or South America.

@ricarmic wrote:
last year had a $3,500 sale to South Africa - was glad to have 3rd party insurance to cover that
How often did you collect on your small packet indemnity, rose-dee?

And did you have to collect on your sale to South Africa, Ric?

In answer to your question, I've never actually had to make a claim through CP when Small Packet was insured, but I had a couple of close calls (one to France actually as I remember) that could have meant some nasty DSRs had I not had the comfort of knowing insurance was available.

Being able to quickly refund a $100 item to a worried buyer - assuming the buyer was being honest about non-receipt - and knowing I could make a claim through CP later was peace of mind for me. Since I would have used Small Packet anyway and the price was reasonable, I was happy it was available. Tracked Packet just doesn't compare.

I don't use independent 3rd party insurers for the reasons mentioned by a couple of other posters, although my auction management company (Auctiva) offers easy-to-access and cheap insurance if I need it. They have very few restrictions, and are good to deal with (OMG, they actually have English-speaking customer service reps that you can talk to!), so if I feel it's necessary, I'll use them.

ricarmic · ‎08-02-2013

Hi! Rose-dee - I did not have to collect, see my earlier response to momotom, they asked the same question....the largest loss I can remember so far was around $400 it was to Brazil (to a many times buyer) and was a few years ago so I can't recall for certain - everything but $100 was covered via CP and 3rd party insurance (3rd party has a $100 deductible).

marnotom! · ‎08-03-2013

@rose-dee wrote:

In answer to your question, I've never actually had to make a claim through CP when Small Packet was insured, but I had a couple of close calls (one to France actually as I remember) that could have meant some nasty DSRs had I not had the comfort of knowing insurance was available.

I'm confused on this point. How would not having insurance have made a difference to your DSRs?