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What Every Company Needs to Know About Shipping Refunds

Mar 8, 2019 6:40:00 PM

How much of the $2 billion annually are you leaving on the table?

What you’re not aware of – and what others hope you’re too busy to find out – can cost you money. Small and medium businesses depend on reliable partners, who become an extension of their brand. You’re the one who gets a black eye when they fail to live up to their end of the bargain.

This is especially true if you depend on a major parcel carrier to meet their promises of on-time deliveries. Sure, they offer a money-back guarantee if they miss that delivery time, but how do you know these parcel carriers have met their commitment? If you’re taking a “no news is good news” approach, where you’re assuming that shipping deliveries are actually made on time unless you get a customer complaint, you could be missing out on significant sums of refund money. Here’s what you need to know.


It’s true that the major carriers track package delivery in real time. Hand-held scanners can even detect location with a GPS function. Wonolo is a staffing company that specializes in the shipping and warehousing industry. The organization writes that shipping companies like FedEx have delivery staffers who drive up to 200 miles daily to deliver between 80 to 100 packages directly to customers’ doors.

Prior to the start of last year’s holiday season, eCommerce giant Adobe forecasted that online sales would be in the range of $124 billion. There was a lot of potential revenue at stake if the purchases were made with the expectation of an on-time delivery guarantee.

Drunch times like the holiday season, the three most well-known carriers – FedEx, UPS, and USPS – managed to handle 72 million packages daily, with impressive on-time delivery performance:

FedEx: 95.1 percent
UPS: 97.6 percent
USPS: 97.8 percent

If we run the numbers, we see that 9.5 percent of the packages these carriers guaranteed to be on time, were not. It comes to 6,840,000 packages each day.

How much does “too busy” cost you?

Fact: Every FedEx and UPS parcel shipment your company ships to a customer is protected by a money-back guarantee. It’s got teeth. If your overnight shipment is even 1 minute late, or your ground shipment is delayed by a day or more, you are entitled to a full refund.

There’s a timing obligation on both sides. You have only 15 days to file a claim for a service delivery failure refund. And there’s no hard feelings when you do file these claims. After all, major carriers like FedEx and UPS offer on-time delivery guarantees as a way to earn your business. They realize that they’re representing your brand during the post-purchase customer experience. Their inability to deliver a package when they say so becomes a broken promise you make to a customer.

Even so, FedEx and UPS aren’t going to own up to missed delivery times. Will you? You’re likely too busy fulfilling orders for today’s customers to have the time or resources to audit completed deliveries. Your shipping carriers are counting on this.

You’re entitled to a refund that could go right to your company’s bottom line, but you probably won’t pursue it because it means auditing every shipment you make. If you are entitled to a refund, you’ll have to handle the claim and paperwork.

When does it start to be worth your while?

It’s going to depend on the amount of shipments you make and the revenue it represents. Entrepreneur magazine recommends that if your business generates more than $100,000 in annual revenues, you may be doing enough shipping to see the benefit of partnering with an organization that can help you identify and recover this source of revenue.

It shouldn’t come as a surprise that there is a growing number of companies that specialize in this recovery service. Entrepreneur magazine suggests that you closely evaluate each one and think of them as an extension of your own company – much the same way your shippers are, because you provide them with customer information too.

Some of these recovery companies also move beyond just assistance with late delivery refunds. Look for an organization that can help you with additional services such as refunds for lost and damaged shipments. Some can even help with proactive services such as requesting and collecting bids on shipping insurance and shipping discounts.

You make a promise to customers when you ship their order. Shippers help you keep that promise. Here at 71lbs, we help to make sure that you’re compensated when they don’t. Find out how.

Topics: Shipping Refunds, UPS, FedEx

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