Top 4 Shipping Issues Facing Merchants + Actionable Solutions to Them

Shipping issues are one of the biggest merchant headaches. Not only can issues like delayed shipments and transit damage cut deeply into your profit margins, they also annoy customers to the point that many consider bouncing to another seller.

To make matters worse, many shipping issues are out of your control. You can’t prevent carriers from raising their fuel surcharges, nor can you stop natural disasters from cutting off vital international shipping routes. 

But you can control the customer experience when these setbacks take place. Here are four of the most common shipping problems, and how you can turn them into opportunities for strengthening your relationship with customers.

#1: Supply chain disruptions

If you’re a North American merchant sourcing parts or products from overseas, you’re well aware of the havoc caused by supply-chain disruptions to your shipping process. 

First there was the pandemic, which idled ports. Then conflict in the Middle East began to limit the safe passage of ships through the Suez Canal. 

In a September 2024 press release, a Maersk representative said that the issues in the Red Sea “led to service reconfigurations and volume shifts, straining infrastructure and resulting in port congestion, delays, and shortages in capacity and equipment.” At the time, he said that “the timeline for easing these disruptions and returning to ‘normal’ remains uncertain.”

Fewer container ships means space on available ships costs more, if you can get your cargo on them at all. You may have to pass on these higher costs to customers, or refund orders held up at clogged ports. To mitigate these shipping issues, consider the following tactics.

Onshore or reshore as much inventory as possible.

Depending on your risk tolerance, you may need to source more or all inventory from domestic suppliers. 

Vetting new suppliers and re-aligning your distribution network can be costly and time-consuming in the short term. But in the long run, you'll see improved delivery times and less business blowback from geopolitical tensions.

Partner with several suppliers. 

Suppose you have an excellent relationship with an international supplier that occasionally experiences disruptions. Rather than cut ties with that supplier completely, consider partnering with a backup supplier offering the same or similar products. 

Many companies are already aligning with multiple suppliers. In a 2023 report, Accenture estimated that 78% of companies “will use multiple sites in three years’ time to produce their products, up from just 41% who are already doing this today.”

During peak seasons like the holidays, backup suppliers can keep your distribution centers full if the international supplier experiences shipping issues.

#2: Higher domestic transit and packaging costs

Even if you only use domestic suppliers, higher prices from shipping partners and rising ecommerce packaging costs can keep you from offering a perk customers want: free shipping.

How popular is this perk? In its 2023 State of Shipping Report, Shippo learned 47% of consumers will spend more to reach a minimum amount that qualifies them for free shipping. DHL discovered in a more recent study from 2024 that more than half of online shoppers (54%) experience frustration from “high delivery costs,” driving many away from online retailers altogether.

But even with spending thresholds, many small- to medium-sized merchants still can’t offer free shipping thanks to costs like these:

• In September 2024, both UPS and FedEx raised fuel surcharges by 2.5% to 3.75% and 0.75% to 1.25%, respectively.
• USPS increased its Ground Advantage, Priority Mail, and Priority Mail Express service prices by 5% to 6% each in January 2024.
• The Producer Price Index for wood pulp, the raw material of corrugated packaging, rose 20% between October 2023 and October 2024.

Outsource order fulfillment to a 3PL.

If you’re a small merchant dealing with a steady rise in orders and looking to save on shipping fees, outsourcing logistics to a third-party logistics (3PL) distribution center might make sense.

Many 3PLs process millions of packages per year. The major shipping carriers reward these high order volumes with better rates than a company that only processes hundreds of packages. And if you use packaging sourced by the 3PL, you’ll enjoy another benefit of scale: lower costs on boxes, filler, and labels.

Granted, it costs time and money to vet 3PLs and outsource shipping to your selected partner. But in the long run, the cost savings may be sufficient to offer free shipping to select segments of your customer base. 

Make free shipping conditional.

The classic technique to get customers to “pay” for free shipping is requiring a minimum spend on orders. This method still works, but there are other engaging ways to keep free shipping conditional while making it aspirational.

• Loosen your free shipping rules during select busy shopping seasons. For example, if you sell high-end chocolates online, lower the required minimum spend to get free shipping in the weeks before Valentine’s Day. The higher volume of orders will offset shipping costs, and customers will be delighted by the perk.
• Award free shipping on all orders to customers with a certain LTV. Because most ecommerce platforms let you tag customers — Shopify Flow does this automatically — it’s now possible to offer free shipping only to specific customer groups. Sure, customers will need to be logged into their accounts for the system to recognize them. But this bit of friction is worth the satisfaction they’ll experience from not having to pay for “high delivery costs.”

#3: “One size fits all” customer service

Shipment delays due to bad weather, theft, or loss disappoint the customer. But even more disappointing is when your customer service team doesn’t address the situation adequately. 

In the Shippo study mentioned earlier, “42% [of respondents] said their willingness to shop with a retailer again if a package is lost depends on how the merchant responds to or resolves the issue.”

A big part of resolving such issues is personalizing the support encounter. Providing shipment-tracking information and delivery updates via email is important, but these are now table stakes and can fall on deaf ears in certain situations.

Consider this scenario: a loyalty program member with a high LTV is faced with a delay on a repeat order — after navigating a delay on a previous one. 

For customers like this, a botched response to an unexpected delay will hit harder given their unique history with your company. They expect more from you, and they’ll likely take their business elsewhere unless you “go the extra mile” to make things right. Many customer support and email marketing software solutions available today let you identify these customers and personalize responses quickly and efficiently.

Route certain customers to specific agents.

Suppose a customer calls, texts, emails, or opens a chat with your company about a delay. Support software like Gladly will use identifying information about that customer (name, phone number, and/or email address) to route them to agents best equipped to help them.

Gladly syncs with Shopify. This integration means a customer tagged as a VIP in Shopify will be connected with an agent who specializes in making VIPs happy. The agent will also be able to view the customer’s LTV, giving them even more context.

Send electronic gift cards to affected customers.

An unexpected gift card can turn the disappointment of a delay into an incentive to shop with you again. Agents can issue these cards manually after interacting with certain customers. But if you use Shopify and integrate it with email marketing platform Klaviyo, you can send cards automatically.

Say a customer tagged as a VIP in Shopify experiences a shipping delay. Klaviyo can send an email containing a discount code or gift card right after the email announcing the delay.

#4: Damaged or lost packages

Despite the best efforts of major shipping carriers, a percentage of the packages they handle will arrive damaged. Some will get lost in transit due to an incorrect address, human error, theft, or something else. Damage and loss are major contributors to retail shrink, which reduces your bottom line.

Of course, customers will want a replacement yesterday. And unless you have a process in place to respond to these shipping issues quickly and efficiently, you risk damaging brand trust.

In a 2023 survey of British consumers, DS Smith learned that “nearly half…(47%) reported receiving damaged goods from online purchases in the past 12 months.” Add stolen packages to the mix, and the risk of lost revenue and lost customers intensifies. You can start tackling these shipping issues with the following tactics.

Invest in sturdier packaging.

Given the rising cost of corrugated packaging, many merchants opt for the cheapest possible option. But this decision can backfire if your products are heavy or fragile.

According to sustainable packaging provider EcoEnclose, the raw materials of their sturdiest shipping boxes (the 44 ECT (Edge Crush Test rating)), “can cost 40-50% more than that of 32 ECT.

”If you receive a high number of claims for package damage, experiment with thicker packaging. The money you save from shipping out replacement products may offset the higher packaging costs.

Offer shipping protection or package insurance.

An even more effective solution is offering some type of shipping protection or insurance to your customers. For a fraction of the product’s price, customers can purchase the assurance that you’ll compensate them for a stolen or damaged product.

Even better, shipping protection providers like Extend take on shipping issues without hassle. Customers file a claim with a few straightforward questions, and in most cases, they receive a claim resolution in a matter of seconds. 

As a merchant, you enjoy the assurance that customers will feel satisfied with how their issue was handled. You’ve safeguarded — and even improved — your brand’s reputation and the customer relationship.

With so much to gain, it’s surprising that 50% of merchants “do not currently offer shipping insurance and have no plans to start,” according to Shippo. 

These merchants are leaving a flexible solution to a huge shipping issue on the table, since Shippo reports that 26% of consumers would “always” add “shipping insurance” at checkout.

Turn shipping issues into opportunities to boost your brand.

Handling all shipping issues internally can drain resources you could devote to marketing, events, and new product development. Outsourcing issues can be tricky because you want the third party to value customer satisfaction as much as you do.O

ne of the easiest issues to outsource, both logistically and psychologically, is damaged- or missing-product claims. Extend handles the customer experience from beginning to end, giving you peace of mind and freeing up time and money for other pursuits.

To learn more about how Extend can mitigate high shipping and operational costs, read these articles:

• “What Explains High Shipping Costs? Root Causes and the Impact on Ecommerce”
• “How to Reduce Operational Costs in 6 Steps: A Guide for Today’s Merchants”

If you’re ready to get started with Extend Shipping Protection, click here to get in touch with a specialist.