In ecommerce, the delivery experience often serves as the final and perhaps most critical touchpoint between a retailer and its customers. Under pressure to balance rising consumer expectations and while protecting the bottom line, it’s a moment teeming with potential to either cement customer loyalty or drive churn. Enter insurance. Damaged parcel? Claim it back. Package gets stolen or lost? Claim it back. It’s convenient to view insurance in ecommerce as a failsafe should things go wrong; a guarantee that the value of your goods will always be protected. That’s understandable when we consider the fact that most ecommerce retailers view insurance as something that only has value when things go wrong. But it is so much more than that.
Driving accountability through insurance
Recent statistics underscore the urgency for retailers to prioritise the delivery experience. A study by Citizens Advice in 2023 found that 34% of UK shoppers encountered a delivery issue with their most recent parcel. This figure is not just a statistic; it represents a significant portion of customers whose last impression of a retailer may be marred by frustration and disappointment. Further research from Ingrid on the Ecommerce Last-mile Delivery Landscape in the UK in 2023 highlights a stark reality: 85% of online shoppers would be deterred from ordering again from an online retailer after a poor delivery experience. If we apply these findings to a hypothetical scenario of 100 shipments, 34 will face delivery problems, potentially leading to nearly 29 customers deciding not to return. This insight isn’t merely alarming—it’s a clarion call for retailers to reevaluate how they manage and insure their shipments.
Insurance, when leveraged effectively, becomes more than a financial safety net. It embodies a commitment to accountability, ensuring that every party involved in the ecommerce ecosystem—from retailers to couriers, and ultimately, to the consumers—upholds their end of the bargain. This commitment is crucial, not only for addressing and rectifying issues when they arise but also for preventing them. Through the lens of accountability, insurance can stimulate improvements in logistics, packaging, and handling, contributing to a more seamless and reliable delivery experience.
Creating value beyond claims
The narrow view of insurance solely as a financial safeguard should be challenged. The shipping industry would not be what it is today if not for Lloyd’s Coffee House in London where shipping traders would agree to share the losses of cargo shipped due to perils of the sea. Insurance is a tool that enables businesses to compete. Far beyond mitigating losses from damaged or lost parcels, insurance now plays a crucial role in enhancing operational excellence and the customer experience. Much like other businesses, insurance is expanding into a data and digital tool. Embedding insurance seamlessly into business operations not only offers peace of mind but also serves as a proactive tool for operational improvements, risk management, and brand protection. This strategic shift transforms insurance from a grudge payment to an integral component of business strategy, providing valuable data and insights that enable retailers to identify and rectify delivery issues before they impact the customer. Such an approach underscores a retailer’s commitment to customer satisfaction, fostering trust and loyalty by demonstrating that every possible step has been taken to ensure a positive shopping experience. By redefining the role of insurance during last-mile delivery, businesses can unlock its potential as an accountability tool, driving continual enhancements in both service quality and operational efficiency.
The data gathered through the insurance process can offer a wealth of knowledge about the logistics chain, pinpointing areas prone to delays or damages. Armed with this information, retailers can make informed decisions, adjusting their shipping practices or even re-evaluating their partnerships with courier services. The goal is to create a delivery experience that not only meets but exceeds customer expectations, turning potential points of friction into opportunities for positive engagement.
So how much is insurance really worth to ecommerce? It turns out it’s a lot. Beyond its primary function of risk mitigation, it plays a pivotal role in driving accountability across the delivery process, enhancing operational transparency, and building customer trust. In a market where a significant number of UK shoppers report delivery problems, and a vast majority indicate that a poor delivery experience would deter future purchases, the stakes are high. Retailers that embrace a comprehensive approach to insurance, and use it as a tool for continuous improvement leveraging data to improve customer satisfaction, are poised to thrive. Through this lens, insurance is not just a cost of doing business; it’s an investment in a retailer’s most valuable asset—its customers.
