My experience, including 2015. Self insurance (cookie jar) statistics

[ricarmic]

As I'm going through the painful task of year end book keeping, I figured now is probably the best time each year to republish this for those who are interested:

Notes:

-I live in the stamp collectors world, so these results are all from postage stamp selling categories

-this includes items lost to "crime" as well.  "Crime" is defined as situations where I think people purposefully buy with bad echeques, or claiming lost in transit but that is only my best guess.

-I sell a lot of stuff internationally, 35% of my packages go outside North America

-the numbers below 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 package loss rate is not an ebay buyer issue.

It is also worth noting that for 2015 I have 3 types of insurance:

1. Self insurance for the small stuff

2. Canada Post for the first $60 or $100 only when items are sent expedited, expresspost, registered or trackable (I rarely use tracking unless something like a zero feedback high value shipment, or my spider senses are tingling!)

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

2015 results

% of shipments = .0097 = about 1% of packages are lost, so about 1 in 100 packages are lost

% of sales = .0090 = about 1 percent loss rate

   13 "lost" in 2015 Russia(5) Belarus, Canada, China, French Polynesia, Kuwait, Pakistan, South Africa, Sri Lanka

   3 believed to be lost to "crime" (Russia, ordered 3 separately close together)

   9 lost and unrecovered(so far)

   1 repaid (Buyer advised delivery later and repaid: Canada)

Things I did in 2015.

-I changed China and Brazil to custom shipping requiring trackable shipping, ie lowest shipping $17.50 regardless item size. Number of buyers dropped dramatically.

-am considering adding extra custom shipping costs to Russian buyers (not tracking), however had many sales, including one for $1500 which more than offsets the minor losses.

-I sell in US$ so the lower $C rate gives me more room to make packages trackable, which I’ve been doing more to new buyers and/or buyers in scary countries

2014 results

 % of shipments = .0051 = 1/2 a % of packages are lost, so about  1 in 200 packages are lost

 % of sales = .0040 = .4% of sales ie less than 1/2 of one percent loss rate

     10 "lost" in 2014 USA(2) Nepal(1) China(2) Brazil(3) Germany(1) Russia (1)

       2 believed to be lost to "crime" (China)

       5 lost and unrecovered(so far) USA(2) Brazil (2) Russia 

       3 repaid (Buyer advised delivery later and repaid: Nepal,Germany,Brazil)

2013 results one half of one percent of sales loss rate:

0.51% "insurance" loss rate (10 unrecovered losses USAx3,Argentina,Chinax3,France,Israel,North Korea)

   0.3% as a result of "crime" (6 shipments)

   0.21% as a result of items lost in the mail (4 shipments)

(Note in 2013 2 packages “lost” and later arrived and Buyers repaid(Brazil, Russia), 1 package loss partially covered by Canada post, no losses covered by 3rd party insurer)

2012 results - under 1% of sales loss rate:

0.83% "insurance": loss rate (unrecovered loss 9 shipments Argentina,Australia,Brazil,Canada,Chinax2,Indonesia,Russia,Turkey)

   0.78% as a result of "crime" (2 shipments)

   0.04% 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).

[sylviebee]

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@pierrelebel wrote:

" I'm pretty sure I'm ahead buying TPI selectively."

This would suggest that the insurance company underwriting your "selected" shipments would have lost money.

Maybe you should do the calculations after all.

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Once again:  Claiming to know my business better than I do.    Trust Me:  You don't!

[ricarmic]

My thinking is similar to Silvie's.

A word insurance companies really dislike is "antiselection" - this is a situation where the "wrong" people are attracted to an insurance policy. This is why generally to get health insurance one has to belong to a group, the theory is that across an insured group (like small company) there will be a balance of high claims people vs low claims people.

If the insurance company just accepted everyone that cared to apply individually, they run the risk a disproportionate number would be high claims people (who couldn't get insurance elsewhere) and the company would either lose money, or have to charge higher (too high) rates to cover the higher claim rates.

I suspect the same concept holds true for shipping insurance. The average person buying insurance is buying too much insurance. This offsets folks who are more selective about what insurance they buy, and who theoretically the insurance company makes less money from. 

I am like Silvie, I am selective about what I track/insure. I feel that my spider senses are good at predicting what situations warrant tracking. I do have to admit with the low $C, I am tracking more stuff now than a year ago, however I am doing this for two reasons:

1.) I am starting to think of the situation from the customers perspective, if I pay $200 for something, I would have a much higher expectation of seeing tracking with it (companies outside ebay that ship much lower value stuff certainly have tracking) so I can see where it is. I don't care about the seller saving insurance/tracking money, I just want to know where my package is and when it might arrive. If it is "free shipping", just like outside ebay companies, I would expect the cost of tracking to be included in the price.

2). Sometimes I send stuff tracked to my better customers (generally this is to the US) because then I send it in a box and I can put lots of nice stamps on the box for them. Some of my customers I am certain continue to come to me because I put nice current stamps on the box, which almost nobody else does. This is much more affordable now with the low $C.

As you can see from my experience, I do lose a portion of packages every year. My record keeping happens to make it easy for me to track this. While so far I haven't lost any $1,000 plus items, the $40somthing it costs me a year to insure the jumbo sized stuff is more than offest by the problems I'd have if I lost a $2,000 or $3,000 box, if even just from a cash-flow perspective. (Before I get a zillion questions, the $40ish it costs me extra is because it is a portion of a much larger policy covering inventory, liability etc, you can't just get package coverage for $40ish)

I'm not saying other perspectives are wrong, they are simply different from mine. 

[maximus7001]

Who are these third party insurers? What is the procedure to get it? How does one make a claim? And most importantly do they pay when something goes "missing" or gets crushed?

About a year ago we started a topic on third party and nobody had any definite answers about anything to do with third party insurance. So we gave up on the topic and forgot about it again.

[sylviebee]

ricarmic, that's it exactly.

The reason I'm worried TPI might not honour my current claim is because they might decide I'm not a customer they want to keep because with insurers like me they don't make money.

If they don't honour my claim I won't use TPI again.

[momcqueen]

Of all the times I bought third-party insurance through Uline, I only once made a claim but ultimately cancelled it when the buyer wrote to say it had arrived after all. Ironically, it had been tracked packet (insured due to value above $100) that went off the rails when it entered the destination country. (They'd had flooding which disrupted government services.) So, I don't actually know what the outcome might have been. It was tracked, after all. They also asked the buyer to complete an online affidavit. 

[ricarmic]

Hi Maximus, as I mentioned wayyy back at the top, my 3rd party insurer is through Hugh Wood Canada (in Toronto, just google it) The policies I have with them are underwritten I believe by Dominion and Lloyds Insurance. The policies are designed for collectibles stores/online/show sellers/auctioneers.

The overall policies are not cheap, but as I mentioned it covers everything inventory, liability, loss through various means including lost in the mail which is an "option". They are intended for businesses so one has to have fairly significant sales to be able to support the cost.

I have had losses processed through them, although it has been a few years now since I lost one big enough to qualify (the package has to be worth at least $201 for me to get anything because there's the PO initial $100, a $100 deductible then everything after that is covered, as long as I've shipped the required way).

When I last claimed (lost package was going to Brazil) I had to have something signed by the recipient saying they did not receive it. The customer obliged and I received the settlement no problem. I had a discussion with the broker about what happens when the person on the other end doesn't speak english, or wouldn't sign. I suspect they would be supportive in that situation too as long as it wasn't happening too many times. Things may have changed since then in terms of what they require for proof given all the natural paperwork we get from ebay anyway.

[sylviebee]

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@mjwl2006 wrote:

They also asked the buyer to complete an online affidavit. 

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Yes, and when the buyer is on the up and up things go smoothly.

When the buyer doesn't want to complete the affidavit and/or doesn't (or pretends not to) speak the language things get a little dicey.

The clock is always running because if the buyer gets the refund before signing the affidavit there is really no incentive to sign.

In the past the company I use has waived that condition but this time they might not.

In the meantime my buyer is ignoring me while eBay is pestering me to refund quickly.

[recped]

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@mjwl2006 wrote:

Of all the times I bought third-party insurance through Uline, I only once made a claim but ultimately cancelled it when the buyer wrote to say it had arrived after all. Ironically, it had been tracked packet (insured due to value above $100) that went off the rails when it entered the destination country. (They'd had flooding which disrupted government services.) So, I don't actually know what the outcome might have been. It was tracked, after all. They also asked the buyer to complete an online affidavit. 

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It's U-Pic not Uline!

[sylviebee]

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@ricarmic wrote:

When I last claimed (lost package was going to Brazil) I had to have something signed by the recipient saying they did not receive it. 

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This form takes a few seconds to complete but guilty buyers hedge and squirm when asked to sign it.  They only have to type their name in the blank.

eBay and paypal really let sellers down when they don't require that buyers fill out similar forms.  Of course, INADed cases might increase in turn.

I'll bet that claims that items didn't arrive would be cut in half with that small, simple gesture.

[momcqueen]

U-pic! Yes. My apologies. I get my BOXES via Uline.

[zee-chan-jpn-books]

My stats:

217 sales over past 12 months (I know, low number compared to most of you)

2 refunds (1 INR, 1 lost item without case open, and another INR that showed up a day after buyer opened case so she closed it before I got around to refund her)

0.92% loss items, sale loss was 0.81%.

I had zero cases opened against me and zero losses before 2015.

I use cookie jar insurance. The only time I use Tracked Packet is when it's to USA over 500g (usually TP is only about $2-3 more than small packet so I might as well use it). I don't use Tracked Packet International because it's too pricey... the most expensive sale I've shipped small packet air internationally was about $150 CAD to Europe and had no issues. My two refunds were both for items <$20. 

PS. My seller dashboard format changed. Now it shows I have 0% defects (used to be 0.92% because of the 2 INRs), 3 out of 30 late shipments. And it looks like if I want to stay "Top Rated" I can only have 5 or less late shipments... 

What bugs me is that one of the feedbacks for these three late shipments was "Fast shipping, great quality"... and no, this buyer doesn't leave the same feedback for everybody. 

[hlmacdon]

Tracking is the only way ebay and paypal can verifiy anything regarding the shipment. You have to keep in mind that when a buyer protection claim is initiated you are dealing with a chargeback situation where card issuers are potentially involved as well, and ebay/paypal as an intermediary have to have verifiable information that can be passed along as part of the dispute mechanism. We can debate the merits of marketing chargebacks as a buyer feature but there is no debate about the merits of tracking as it relates to settling any buyer/seller issues.

For our businesses, we typically saw a loss rate of 3-5 shipments per every 2000-2500 shipments with Canada Post light/small packet, with zero reported damaged items. All of those were to western European countries.

For another business we only ship via USPS. In just under 6000 shipments all with first class tracking/delivery confirmation, there were 0 lost shipments, 2 that buyers had not picked up from postal services that had not left pickup notices, and 1 damaged shipment that a USPS conveyor mangled. Of those shipments, just under 1500 were to international countries that fell into e-delcon groupings. Insurance was bought for a percentage of packages, paid for by a fractional handling add on across packages.

What throws a wrench into the insurance discussion is that many buyer claims are initiated not due to loss, but due to impatient or jittery buyers. This will get further complicated with ebay making ETA's a visible marketing tool to influence buyer decisions, as well as a metric they prompt buyers to measure sellers with. Those sellers that opt to use non-tracked services and rely on self insurance may potentially find they experience a growing number of claims with this new change. It may be wise to look at how you present your international listings and how your choice of displayed shipping method effects customer expectations.

[sylviebee]

I wanted to add a comment about Third Party Insurance (TPI)  to this thread.

I use InsurePost/Shipsurance.  They just came through for me on my most recent  case.

I've had 3 claims with them.  I also had a situation where a seller used Insurepost and there was an issue with the item.   They reimbursed her as well and the amount was substantial.

Getting the correct paperwork to them does take a little persistence. 

Also, if the buyer refuses to sign the affidavit they will waive that requirement if you can show that you sent it to the buyer.

Since I use them selectively I've come out ahead.

TPI also allows me to ship via small, light (if you do that and use online shipping don't forget a stamp at the PO) or tracked packet with an added degree of comfort and save on shipping costs as well.

When tha tis added into the mix I'm way ahead using TPI vs. cookie jar insurance.

(Just to add:  This has nothing whatsoever to do with risk tolerance.  I'm pretty sure I fall at the extreme upper end of the "risk tolerance" scale.)