Previously the discussion was about how to handle shipping while protecting both you and the buyer to your customers when it came to online pruchases with paypal, 2checkout.com and/or any other merchant account that accepts credit cards on the internet.
Now since one of the most popular payment methods online is through paypal.com (now with over 100,000 websites using the service without counting the all eBay buyers who use the payment merchant to process their payments), it’s of priority that you add insurance to packages that to YOU are considered of high financial value, have a limitation/scarcity print when it comes to quantity units available or that are plainly irreplaceable.
When it comes to the most popular shipping method on the USA, (USPS), insurance isn’t covered in any average shipping option with the exception of “Express Mail” packages.
What does that mean with paypal.com, 2checkout.com or the most popular merchant accounts accepting credit cards on the internet when a product is NOT covered with insurance and got lost once in the hand of the postal office, in transit or buyer request insurance as product arrived damaged? YOU ARE RESPONSIBLE for your buyers insurance claim. We ship the product, therefore, we as sellers make the claim for insurance reimbursement on behalf of the buyer.
The buyer doesn’t know how much the product cost you (or at least isn’t supposed to know), therefore, since we have receipts of the product(s) purchased either from the manufacturer,supplier, distributor or wholesaler, if you’ve covered the item in question with insurance you submit the claim with receipt of the actual cost of the merchandise in question to the post office agent. If the item cost you $35.50, you should purchase coverage for $35.50 ONLY and not exceed insurance coverage as USPS will only provide you insurance reimbursement for the cost of the product once proper proof of purchase/receipt to USPS agent has been provided.
What does paypal.com do on both Paypal Business account and Premier account? In a nutshell, if you can’t provide at least tracking information you as the seller will be with a lost when it comes to tangible merchandise shipped offline (digital downloads like music, software, eBooks are not covered when it comes to outside of eBay) so insurance is mostly to protect you the seller as Paypal is most likely to provide a reimbursement to the buyer and either leave you with low funds or your account or with a negative amount in your paypal.com account.
What can you do to prevent this? I’ve done two things since my first case back in 2004. Just like you should have an emergency fund for at least 6 month for expenses in your home, have a seperate emergency fund in your paypal.com account or any other merchant account that process your payment. It could easily be done by cutting out a small percentage of payments arriving to your account. Two, consider having insurance on all products that are shipped both domestically in the US or internationally.
When it comes to insurance, I will add insruace to items over $100.00 or more or if they are the last one in stock. Reason why, it doesn’t cost me anything as you and I can add it in the shipping expense to the customer(while still charging a low/reasonable shipping fee) AND because when it comes to shipping with USPS.com I’ve only have only one package lost with “Parcel Post” and only one with “Priority Mail” out of 1,000’s of items shipped in the last 4 years. Delivery success rate is around 99% with USPS so the chances of lost packages or damage in transit when it comes to responsible packaging is very minimum. If the item are CDs, games or products of low monetary value, I will personally disregard insurance. It’s of course up to you when it comes to your income protection with shipped items.
As always your comments and thoughts are welcome.
Happy savings in your Black Friday,
John R.