We, as an advocate of preventing shipping damage, have always emphasized the importance of prevention of damaged products, but what impact does product damage have on our business? And what are the real numbers that happen every day? Why does a useful tool to reduce damage matter to our business? Let’s explore this subject.
Both Crownhill’s and Returnalyze’s research points out that products that are damaged can cause a seller to face severe repercussions in addition to being a source of disappointment for customers. And if the harm is done on a larger scale, some of these repercussions may be very severe, impacting everything from a company's supply chain to its reputation.
In a perfect world, a product is manufactured, packaged, and shipped quickly so that satisfied customers can receive it. Unfortunately, customers may still receive faulty or damaged goods even in cases where every detail is closely examined. This may result in a bad customer experience that harms a brand's reputation, reduces customer lifetime value, and erodes customer loyalty. Ultimately, the expenses may greatly surpass the cost of the original defective product.
The cost can be high even if a customer returns an undamaged item. According to The Atlantic, "the seller has already lost money when you factor in the labor costs associated with picking, packing, and shipping the item; the freight involved in both directions; the labor required to receive and sort the now-returned item; the cardboard and plastic needed for packaging; and the overhead of the sorting facility." The costs may even be higher for items that are defective or damaged.
A product can be harmed in a variety of ways, from the initial stages of development to delivery. A defect may occasionally arise from a design flaw, textile quality may be impacted by storage humidity, or packaging may not provide sufficient protection while being shipped. Damages can and do occur in any situation. And some situations are very expensive.
Many businesses overlook the bigger picture when evaluating their protective packaging options because they are only concerned with the packaging's cost. When attempting to minimize product damage and its consequent impact on profitability, each product manufacturer or fulfillment operation needs to be aware of the crucial areas in addition to price, such as freight, product replacement, customer service labor, warehouse labor, packaging supplies, and customer lifetime value impact.
Another problem is increased price on goods because products that sustain damage cannot be sold to customers for the full price, and then the inventory cost increases
Wholesalers are most likely to experience this incident. They might decide to try to repair the products so they are in working order even though they have cosmetic damage, or they might decide to reduce the price of some products through sales.
Customers who might find it difficult to accept, particularly if a rival is selling a comparable good for less money. Similarly, a wholesaler can decide to go with a different supplier, breaking their agreements with the business that supplied defective or damaged merchandise.
Beyond the extra materials and cargo required for shipping, which raise the total carbon footprint, the damaged goods themselves pose a sustainability problem. In fact, according to Fast Company, "US businesses spend an estimated $50 billion on product returns annually." Concurrently, those returned items generate enormous amounts of waste for landfills and emit 27 million tons of carbon dioxide per year.
Although certain products that are broken or flawed can be repaired, donated, or used for other purposes, many products aren't meant to be disassembled. That makes putting them to other uses practically impossible. Furthermore, a lot of charities won't take donations of broken items, and certain industries don't have proper recycling policies in place. In the end, damaged goods are frequently thrown away or destroyed.
To save money on storing unsaleable inventory, some companies destroy products for the most basic of reasons. Warehouse expenses are rarely recovered for damaged goods that cannot be recycled, resold, or used for another purpose. But there's also the issue of brand reputation. Removing products that are damaged, recalled, outdated, or simply nearing their end of life is crucial to protecting brand reputation.
The detrimental effect on customer lifetime value is ultimately the most costly part of defective products.
The detrimental effect on customer lifetime value is ultimately the most costly part of defective products. After receiving a damaged item, a whopping 73% of participants said they would be unlikely to make another purchase from the company, according to Packaging World. Furthermore, compared to sustainability and ease of product removal, 80% of respondents ranked product protection as the "most important" packaging characteristic.
A customer receives damaged goods after making a purchase, they might become suspicious of the seller, choose to do business with a rival, and tell other prospective buyers about their bad experience.
It's possible that a single unfavorable review is entirely isolated and can be saved with a gift card or refund. However, what if a large number of other customers haven't told sellers outright that their item was defective when it arrived? Instead of making the effort to file a complaint, some customers might decide to respond by choosing to do business with a rival, blinding the original seller to the harm being done.
Gaining the loyalty and trust of customers is challenging, and it becomes even more so after a negative purchase experience. This is particularly harmful if a business lacks a backup plan, such as a responsive customer service team and an adaptable supply chain, to effectively handle defective products and disgruntled consumers.
In certain more severe situations, defective goods may give rise to expensive and complicated legal problems.
For instance, a customer may be able to sue a business if they suffer harm as a result of a defective or damaged product they bought from them. This occurs most frequently when electrical products sustain damage during production or transportation, leading to injuries like burns, shocks, or fires.
Any business, especially small or newly established ones, may find it costly and time-consuming to defend against product liability lawsuits. A company's reputation may be tarnished by the legal process, even if it is eventually determined that it was not at fault.
Lastly, a drop in sales may result from damaged goods. If customers have had bad experiences in the past with defective products, they might be less likely to make a purchase from that company. This can negatively impact a business's earnings and hinder its ability to expand and prosper.
It is critical for businesses to concentrate on developing a solid reputation and continuously delivering high-quality products that consumers can rely on in order to sustain and grow sales.
So how can companies prevent damaged products? There are some options to reduce product damage:
As we previously discussed, this doesn't solve the long-term issue that lowers customer lifetime value.
Might momentarily improve things, but occasionally this isn't possible because of the shipping environment, handlers' attitudes, and claims issues.
This is a pricey choice. If the package is handled correctly, it should be sufficient. The damage issue may only be slightly alleviated by a more costly package. The package may still be affected in ways that go well beyond wishes or expectations.
It will be the most costly option and the modification process will take a long time unless there is a significant shipping defect with the product itself.
Where Impact Indicator 2 makes shipment the same destination but a different journey
Impact Indicator 2 are single-use, go/no-go devices that determine if fragile products have been dropped during transit or in storage. The indicators are tamper-proof, field-armable devices that turn bright red when an impact exceeds a predetermined threshold.
The Impact Indicator 2 has been shown to reduce damage by 40-60%.
This device is not only used as a reminder for the handlers but also as a monitor. Certainly, shock indicators are extremely conspicuous on shipments that handlers could always notice and be more prudent in dealing with items with shock indicators, hence lowering the damage rate.
Whether they are consumer electronics, medical equipment, computer network or telecommunications equipment, or even potentially heavy-duty defense and aerospace components, hidden damage can lead to delays, warranty repairs, or, at the very least, visible damage (such as a stress crack) that keeps an item from being approved by the customer or manufactured. In the worst case scenario, it erodes internal parts, such as computer circuits or delicate welds, which leads to their failure.
Sometimes the harm doesn't show symptoms for months, leading to a series of unrelated issues. The need for warranty repairs—which aren't actually the manufacturer's fault—is brought on by that damage. That harms the company's reputation. If the product is a laptop, it's already problematic. However, it takes more time and sometimes significant money to identify and fix a problem involving heavy machinery and remote locations.
Prevention is better than Cure.
The entire situation could have been avoided if the manufacturer or customer had known, prior to installation, that the item may have been damaged early.
In our customer cases, clients are no longer worried about the unknown damage that could cause disasters to their customers, which is priceless. With Impact Indicator 2, both of us will know there could be potential damage, and could easily determine whether to request a replacement.
Simply stick this single-use impact indicator on the package or the component before it’s shipped. Contact our sales and technical team to turn your business around.
