Shipping and Delivery Disputes

Table of Contents

1. What Does the Global Shipping Crisis Mean for Merchants?
2. What Holiday Shipping and Delivery Disputes Should Merchants Watch Out For?
3. What Types of Holiday Fraud Should Merchants Expect to Encounter?
4. How Can Merchants Protect Themselves from Post-Holiday Chargebacks?

Most merchants have some way in which they prepare for the holiday season. Sometimes that means rolling out new or seasonal products, other times it means stocking up on existing ones in preparation for a flood of orders. For e-commerce merchants, however, preparing for shipping delays is often one of their largest concerns.

Post offices and shipping services get slammed with a rush of packages every holiday season, which means just about everything will take longer to get where it's going. That problem will be even more significant this year due to the ongoing global shipping crisis.

Unfortunately, when delays in shipping cause holiday gifts to arrive too late, many customers resort to filing chargebacks. What do merchants need to know about holiday shipping problems, the chargebacks that can result, and how to best serve their customers and protect their business?

As e-commerce accounts for an ever-larger share of total purchasing activity, more and more customers are buying goods not from a local store, but from warehouses hundreds of miles away or factories on the other side of the world. That's great for e-commerce merchants, but not so great for the global supply chain.

Most parts of the supply chain have been operating on the slimmest of margins for decades in order to maximize profits. Just enough container ships to handle their current load, just enough port capacity to handle those ships, and just enough freight trains and truck drivers to move those goods inland. Then the pandemic hit.

Lockdowns began in China, shutting down factories for months, then hit the rest of the world, causing a decrease in spending on local entertainment and an increase in spending on products, especially those that made working from home a little easier.

Local inventory was depleted, and the factories opened back up to a huge backlog of orders to be shipped overseas.

The dominoes began to fall, and the backlog in manufacturing overloaded the supply of container ships, causing a backlog there as well. The flood of container ships overloaded port capacity, leaving many ships waiting in line on the American west coast rather than heading back for another trip. That caused even more delays. While the situation has improved somewhat, this problem won't be going away anytime soon.

In order to account for these delays, e-commerce merchants want to consider starting their holiday sales efforts a bit early this year. When it comes to online holiday shopping, much of the focus has traditionally been on Black Friday and Cyber Monday sales.

This year, however, gifts ordered on Cyber Monday might not reach their destination in time for the festivities. This is especially true for smaller merchants who can't throw their weight around to get their shipments prioritized or charter entire container ships themselves.

Every year, millions of shoppers wait until the very last minute to purchase their holiday gifts. This year, far fewer of them will be rushing to the mall—instead, they’ll be ordering online and counting on their purchases being delivered on time.

Delays in shipping can aggravate shoppers any time of year, but the holiday season comes with built-in deadlines. In the minds of many holiday shoppers, if a purchase doesn’t arrive in time for the holiday, it might as well not arrive at all.

A higher volume of orders also means that many of the common everyday shipping-related disputes will increase accordingly. Overworked carriers may damage items in transit, and customers in a rush to get their shopping done may find that the product they receive isn’t quite what they imagined. Either scenario can lead to “product not as described” chargebacks.

Account takeover is a “the fraud is coming from inside the house” scenario where the fraudster gains access to a legitimate customer account and exploits it for their own gain, often by using stored payment credentials to make purchases.

One common ploy is to request a change of shipping address after an order has already been placed and screened for fraud indicators. As “buy online, pick up in store” (BOPUS) purchasing options have become more popular, especially in the wake of coronavirus, many fraudsters are rolling up to brick-and-mortar stores and walking away with other people’s purchases.

Many merchants struggle to keep pace with the holiday rush even in normal times, and it’s easy to bypass security protocols just to keep things moving and get orders out the door—and that’s exactly what fraudsters are capitalizing on.

The holiday season is no time to let your guard down. With fees and overhead factored in, the typical chargeback costs more than twice the amount of the original disputed transaction, so it’s not hard for a wave of chargebacks to take a huge bite out of a retailer’s holiday profits. Some shipping and delivery issues are unavoidable, but there are steps you can take to mitigate these problems.

It’s always a good idea to provide tracking information that allows customers to follow their order’s journey from warehouse to doorstep—that way, they won’t be caught off guard if there are any delays. Free shipping, if you can offer it, can also go a long way towards making customers more forgiving of unexpected hiccups.

When problems do arise, excellent and attentive customer service—and an easy, no-hassle refund policy—can save you from many disputes and chargebacks. Remember that it’s always cheaper to offer a refund than endure a chargeback, and this helps preserve good customer relationships as well.

When things go wrong, it’s not uncommon for customers to engage in friendly fraud by claiming their order was never delivered. Signature confirmation and meticulous record-keeping can help you fight and win against these chargebacks.

As for account takeover fraud, don’t make the fraudster’s work easy for them. Strong password requirements and two-factor authentication can make it very difficult to break into your customers’ accounts. You should always look very closely at requests to change shipping addresses after an order is placed and confirm with the customer via verified email or phone.

If you offer BOPUS shopping options, be sure to check the customer’s ID when they come to claim their order. in friendly fraud by claiming their order was never delivered—signature confirmation and meticulous delivery confirmation records can help you fight and win against these chargebacks.

With transparent delivery information, generous customer service policies, and the best defenses you can muster against fraud, you can protect both your revenue and your customer relationships—and when chargebacks do occur, signed proof of delivery and other relevant evidence can help you fight back and win.

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