In the last few years, online trade /e-commerce/ in Bulgaria
has seen significant growth from year to year. According to information published in Capital by the Bulgarian E-commerce Association (BEA), citing data from the “Passport of the e-commerce industry in Bulgaria 2022”, the expected growth in B2C (business to end user) for 2022 is 30% and a volume of 1.64 billion EUR compared to the previous year 2021. The trends are this percentage to grow. Together with this, the expectations and demands of the buyers towards the Internet merchants are increasing.
According to statistics, the most frequently purchased goods are: clothes, shoes and accessories. Sports goods. Furniture and home goods. Consumer electronics and equipment (laptops, phones).
The delivery methods chosen by users are: door delivery (63.83%). Courier office delivery (32.66%). Pick up from physical store or courier locker (3.50%).
In relation to these trends, below we will address the important aspects of ensuring the risks that exist for online stores and consumers when the goods are sold, shipped and delivered.
Most of the goods listed above
tend to be expensive, light, fragile, and susceptible to getting wet, damaged, or missing. Therefore, online traders should ensure shippers provide adequate compensation protection during transportation. And adequate and suitable packaging, of course. A small number of buyers of goods from online stores are aware that they must also purchase an insurance for their shipment before pressing the “complete order” button. That is in order to be able to receive full compensation in the event of the absence or damage of the ordered goods. The correct solution to this is for sellers to provide the necessary information to consumers about the risks that exist in advance. Along with this, merchants need to have the right integrated solution. Which enabling their customers to quickly and easily insure their shipments for the risks that exist during their movement from the point of loading to the point of destination.
Why is this crucially important?
The majority of all shipments ordered from online stores are transported by couriers. Their liability for damage, loss and theft is limited according to their own terms and conditions. Or according to national legislation.
In on one of our previous articles we have explained the difference between cargo insurance coverage and the carrier’s liability. And the applicable limits for international transport.
In the standard case where the ‘declared value’ option is not included, there is a limit to the compensation that can be obtained. I.e. customers may be unpleasantly surprised to lose money due to damage. For different companies, this limit varies, but the basic “standard” compensation is up to BGN 15 per damaged or lost shipment. In other cases it is up to the actual value of the damage, but no more than 5 to 10 times the value of the courier service.
Couriers offer the option of “declared value”. For an additional fee of 0.5% to 2% of the value of the shipment (the value you declared), buyers guarantee themselves full coverage for the goods which they order. By paying this significant additional amount, especially for more expensive goods, consumers have the option for full compensation up to the amount of damage/loss. However, there are couriers which limit the maximum amount of their compensation (for example up to 5000-10000 BGN per shipment). In order for customers to benefit from compensation, they must also comply with the specific conditions of individual courier companies. They include: putting a remark on the bill of lading and photographs. Notification period, validation period and the decision for compensation which the couriers make.
Lack of information on shipment protection reduces awareness of the importance of insurance coverage for retailers and consumers.
The claims process for an identified loss can also be unfamiliar. Only choosing the right solution and partner for this service can contribute to effectively managing the risks that exist. The satisfaction of end customers depends on how they experience the claims process.
How can e-commerce companies guarantee 100% coverage and satisfied customers?
Cargo insurance guarantees full coverage up to the value of the shipment during transit, so that the financial interest of traders and consumers comes first. Without the risk of losing money due to damaged and lost shipments. The insurance of the goods is completely under the control of the online stores and consumers. I.e. they decide how and whento conclude it. The other main advantage of this type of coverage solution is that its terms are internationally standardized. This applies to standard covered risks as well as excluded risks that are specifically listed. This is a major difference to the above-mentioned coverage conditions of courier companies. They determine themselves the conditions under which they should protect shipments. When using cargo insurance, each e-commerce company can and should negotiate their special coverage terms to suit their specific business processes.
That is why it is important to choose a competent insurance broker who is aware of all the small details. In that way he will be able to draft the terms of the policy so that they work in favor of the insured.
Of no less importance, cargo insurance rates are much lower than those of “declared value”.
When setting rates for a subscription cargo policy that online stores can take out, it is not always necessary to apply a “hard” fixed rate. The rate is optimized according to the type of goods that are covered and their risk class. This is because it makes a significant difference whether a laptop, garden equipment or glassware is insured. Such a solution works in favor of the user.
Online retailers must have excellent resolution for complaints and problems regarding damaged or lost shipments for better customer experience. When the end user receives his ordered item broken, he should be aware of the steps to submit a claim and who to contact. By using cargo insurance as a solution, the notification and claim process is also standardized. With pre-defined steps to resolve issues. This can be done through an integrated claim submission, management and resolution system. This is a significant advantage over working with different courier companies with different conditions. Where in order for a user to solve his case, he should go through a call through a service center, be redirected several times and make several unnecessary steps to solve his problem.
The cargo damage solution on the other hand allows consumers and merchants not to be involved in the process entirely.
They need only to be informed of the status of the development of each claim. As mentioned above, after completing pre-defined notification and providing basic info and documents, claims are quickly resolved. Afterwards compensation is paid to the insured and customers remain satisfied.
Every e-commerce platform has enough experience with customer satisfaction management
That’s why they should be aware that with an adequate solution of damage and loss cases, they strengthen their reputation towards the end user. In that way, they reaffirm that even in difficult situations, they have an easy-working solution. Thus, customers remain satisfied and would prefer to order from this online store again. And for the trader, it is precisely the good insurance decision that predetermines the positive financial result after such incidents.
In conclusion
An integrated online insurance solution is crucial for a successful business model due to automation in online processes. Insurtech companies have the products and the systems that allow e-commerce companies to provide their users with the necessary risk coverage. As well as a significantly better level of resolution of problems with the sold products. All of this influences which e-commerce platform customers pick for their next purchasing journey.