The Advantages of Shipping Insurance for Shopify Merchants | #129 Jared Haas

In this episode, I speak with Jared Haas of UPS Capital about porch piracy and other shipping issues. We will discuss what insurance options you have for your ecommerce stores.

On the Show Today You’ll Learn:

• An insight into how shipping companies operate.
• How to communicate with your customer about making their deliveries safer.
• How Shopify merchants can get one-click package protection for their business.
• How the InsureShield App for Shopify can significantly improve your conversion rate.
• And more

Jared Haas is the Digital Agile Solutions Supervisor at UPS Capital. He has been with UPS Capital for just over three years and has been an instrumental part in the creation of UPS Capital’s InsureShield App for Shopify, an app designed to help brands improve their conversion rate, brand affinity, and brand loyalty by protecting against shipping mishaps, including porch piracy. The InsureShield app gives consumers and merchants opt-in options for shipping insurance protection on orders.

Links & Resources

Website: https://upscapital.com/resources/consumer-elected-insurance/
Shopify App store: https://apps.shopify.com/insureshield

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Transcript

Claus Lauter: Hello, and welcome to another episode of the E-Commerce Coffee Break. A lot of merchants have a problem that their delivery arrives at the [00:01:00] client, at the customer, and got stolen. So porch piracy is a big issue there. Other issues along the way can happen, so the delivery just disappears, and then a situation appears where there's a lot of finger pointing.

The client, the customer's not happy, the merchant is not happy, and so on and so forth. There is some solutions for that and we wanna dive into one solution today to make the life of everyone a little bit better there. So therefore I have with me, Jared has, he's the digital Agile solution supervisor of UPS Capital.

He has been with UPS Capital for last over three years and has been an instrumental part of the creation of UP. Has Capitals Ensure Shield app for Shopify. It's an app designed to help brands improve their conversion rate, brand affinity and brand loyality by protecting against shipping mis HEPs, including Porch piracy.

Hello, Jared. How are you today? 

Jared Haas: Doing well. Thanks for having me. I really appreciate it. You're 

Claus Lauter: welcome. Jared, tell me a little bit more about the landscape or what's happening out there in the world right now with shipping and delivery. Where things to go downhill where it does not really work.

Jared Haas: Yeah, you already hit on it a little bit, right? There's a lot of [00:02:00] things that can go wrong, , and a lot of things we don't like to think about, especially in the e-commerce world where it's not the brick and mortar, just hand the, Package over to the customer right there at the counter.

You're relying on carriers and you're relying on carriers to get your goods to your end consumer, and that's part of your customer So certainly port piracy is something that we've seen, , a major increase within the United States especially. , I wanna say right now those numbers are somewhere around 210 million packages.

Are being stolen right off residence doorsteps. , I'm not gonna say it's new. It's not like it never happened before, but you're seeing an increase in it. And then of course, just with carriers and all of the packages that are in their networks, there's going to be some lost packages.

There's going to be some damage, , every now and then 

Claus Lauter: now, obviously, , merchants are interested or have often the notion that the shipping company will take care about everything, which is not true.

Giving a bit of insight on how it actually works. 

Jared Haas: Glad you asked that because what we deal with when we're talking to our merchants a [00:03:00] lot, especially on the front end, is we're talking about carrier liability So that's where a lot of people have a misconceived notion that they have actual insurance through the carrier that they use, whether that's FedEx, ups, U S P S D H L, , sometimes they even pay extra.

per $100 worth of coverage that they think is insurance. It's not really the case. , it's something that carriers have offer their merchants or their shippers, , when they're working through their network. But so many people call it insurance to me, which I can't say because I am a licensed insurer. , but what that does is it can cover, the replacement costs of the goods if they are lost and damaged, but only when the shipper, so the merchant that is selling the goods and putting them through the network.

Is able to prove that the carrier was legit in that loss or damage, which can be very cumbersome. those things can take quite a bit of time, weeks, sometimes even months, just to get resolved. And when they do get resolved, if the [00:04:00] carrier is paying, which happens around 50% of the time around all the major carriers, , like I said, they're only gonna pay for the replacement cost, so not what you sold the goods.

But what it would cost you to replace them and they're not gonna take care of your shipping costs. So it's nothing that ever makes you whole, , as the merchant. And that could be quite a bit of problem, not just in what you don't receive as far as, maybe whole again for what you sold, but also for the time that it takes to file these claims with carriers.

I like to take a step back and just remember that a carrier's customer service is not around paying out claims when they have a loss or. Their main customer service is to try to get your package there without any problems, and for the most part they do that pretty. But when these types of situations occur, if you're shipping enough and you're selling them up through e-commerce market, you're going see these problems with your s.

Claus Lauter: Yeah, so there's so many different fields where you hurt your business. You might have, claims, you might have, obviously a very [00:05:00] unhappy customer who will give you a bad testimonial who goes out in the world and puts your name all over the place. So you wanna avoid that as much as possible. I understand UPS came up with a solution, , to solve , this problem.

Tell me a little bit about. Yeah, so 

Jared Haas: UPS Capital, which is the division of UPS that I work for, and that's where we're talking about our inure ship products. Now, we are the shipping experience and insurance division of ups. So for over 20 years we've had insurance solutions. , for customers for specifically in transit insurance, not necessarily like a business owner's policy where we're covering your warehouse, , but where we are specifically covering your supply chain.

Obviously UPS has over a hundred years of experience within logistics. , so you know, that's where we. Found , our niche. So what we do is we cover the full loss and damage. So what we're talking about is invoice coverage for that loss, not just the replacement cost. , as well as. Force piracy, which we mentioned earlier here, will never be covered, under [00:06:00] carrier liability because how could the carrier be at fault for something that they successfully delivered to your house but then was stolen before you got it?

We do cover that. We started covering that in 2020. We saw that uptick was happening and obviously more people, , during the pandemic , were purchasing their orders online, so their course's going to ramp up. , but we've offered these solutions in different ways to customize them for your business.

But what we're really getting to right now, , is trying to meet our customer. Where they are and where they need insurance, where they can plug and play easily. Trying to get more into that InsureTech And that's where Insure Shield and specifically the , insure Shield app through Shopify started with us.

Claus Lauter: Okay. Now Shopify, as you said, Shopify merchants have a million different things on their plate, and obviously , their focus should not be on solving endurance problems there. Tell me the best way on how to communicate with your [00:07:00] customer or with your tobe customer on what use offer on that side and how it makes their life better and obviously more safe at the end of the day.

Jared Haas: Absolutely. What we really try to focus on is the education and, one of the things that we always educate any merchant on is, that carrier liability or what you're doing with your carrier right now is not going to cover you in the eventuality of a loss, damage or prior test. I think that's important to know because it's just a misconceived notion, especially if you work with a salesperson, , within your carriers network, they may have told you to put extra coverage on it, and it's not really them trying to mislead you.

I think a lot of times don't really know the difference between the insurance and what they offer. but also understanding that these situations are going to occur and that, you're gonna have to find a way to cover yourself. So with that, , we really like to explain to our Shopify merchants, which it's great with Shopify because it's already a platform that's set up for customization, right?

It's easy [00:08:00] customization. That's why a lot of people are drawn to it. You don't have to be a coder. Like you said, these Shopify merchants have a lot of different things on their plate. They wear a lot of different hats. Working the sales. They may be creating their product, they're taking care of the shipping, they're a shipping manager and, , wanna be able to take some things off your plate.

What we offer you is a customizable insurance solution. The thing we're, jams up to talk about now is our consumer model where we allow you to put our insurance within your checkout. And allow your end consumer to purchase insurance within their buying journey. But we also allow you to customize your own rules on the back end.

With the consumer model, that consumer also has the option or the. To choose not to insure a package, and then what happens, right?

So, uh, if I as a consumer decide I don't wanna pay any extra, you know, we know Amazon has already conditioned us that we don't wanna pay for shipping, let [00:09:00] alone insurance sometimes. So if I don't pay as the consumer, what happens to that shipment? As the merchant do, I have to then self. And that's what happens a lot of times or rely on that carrier liability.

We allow you to set up your own background business rules with the app to ensure based on your own preferences when your consumer decides not to. So everybody gets an opportunity to be covered and be the hero in your consumer's journey of that buying 

Claus Lauter: Okay. Now obviously you just mentioned Amazon and Amazon has set the standard on a lot of things there, and for a small medium enterprise family, , business, it's very difficult to get there.

So obviously a solution like yours will help there to cover parts of what Amazon can do and then being, , having a benefit in the market. Now, I understand this interest yield has a, , different features , there, so there. Consumer elect endurance feature and there's a brand feature.

Tell me a little bit more how that 

Jared Haas: works. Getting back into the differentiator, kinda what [00:10:00] we're doing, what we thought our businesses needed after speaking to a lot of these merchants is obviously people wanna create some awareness. That they offer something different than maybe the other 25 30 Shopify store, maybe more than that, that sell very similar to the same products that they do.

So what are your differentiators? , that's where the apps, the Shopify is great. You pick from, there's over apps in the store that allow you to differentiate your store. And, give you something other than just maybe a little slightly different theme that makes you stand out. People offer free shipping.

We give you the opportunity to offer your customers shipping insurance. So if you choose to ensure all of your shipments, With UPS Capital and the Insured Shield app, we also give you a consumer display where you can show your consumers within checkout cart that you have protected the package on their behalf.

If anything goes wrong with that, they're gonna be covered for the full invoice value plus the shipping cost, which allows you to [00:11:00] refund or replace that item for him, but it gives them that worry free buying solution right there. , with that being said, we also offer you as the. To allow your consumer to purchase insurance at that shopping cart level.

So we have a toggle button that they can toggle on or toggle off to purchase that insurance. But what's really neat is those backend business rules that we allow merchants to have. So when that consumer doesn't purchase insurance, let's say if you have it in the checkout part, you can ensure all of your shipments that your consumer doesn't purchase insurance.

Or you can do it by order value. So you would set a certain order value that when it meets or goes over that order value, let's just say it's 75, then you'll ensure that package. Anything else, then you may decide to self-insure. , so we do it by skew level.

So you can pick certain skews or products on your store that you wanna make sure are always insured, regardless of whether your consumer purchases. Or you can do it by recipient geography, whether it's a domestic or [00:12:00] international shipment. a lot of times merchants get a little more fearful when it's an international shipment just because it's crossing more hands, by going to more hubs.

they wanna make sure that those are coverage and they can use these rules in conjunction with one. So it truly is a customizable experience where they can set it and forget it rather than having to manually insert the order value when they're creating a label. But once again, we go back to time management with these Shopify stores, especially when it's one persons.

It's critical, so we want to do the best for our merchant to make it as easy as possible, to give them the ability at the end of the day, to not have to sit there when a consumer did collect to purchase insurance coverage. And have to make a decision whether or not they're going to take care of that end consumer because that means they're either gonna a have to say, well, I'm sorry you didn't purchase the insurance, therefore we're not gonna refund you or replace item.

We all know that that's gonna lead to a one star [00:13:00] review. Cause that's gonna be on your customer service, unfortunately not the carrier. Or you're going to make that customer whole again because you can't afford that one star review. And that means that you had to come out of the pocket and take the loss.

It shouldn't have to happen. That's why we exist. 

Claus Lauter: Yeah, that sounds like a very flexible solution where everyone wins. Now you said different carriers, which brings me to the question, obviously UPS is a huge carrier, but there's others in the market. So if you're working, let's say with DHL or so, or FedEx, , how would that work with your solution?

Jared Haas: absolutely, and I'm glad you asked that because sometimes we get pigeonholed as a UPS company. That we only ensure UPS packages and that could not be further from the truth. We're a multi carrier solution, so we know that a lot of, especially with smaller customers that are using Shopify ship mostly are using UPS and P to ship through Shopify ship.

But we also have FedEx and DHL that are huge players within Shopify merchants, carrier solutions, and we cover [00:14:00] those as we wanna make sure that we are not pigeonholing our customers into who they have to ship with, and we want you to have the best experience possible from the front end of making the sale until it gets into your consumer's hands.

Okay. 

Claus Lauter: I personally have been in a situation that things were stolen. I know what kind of pain it is. if somebody wants to try out your app, what kind of homework or what kind of timeframe do they have to set before they can get started? 

Jared Haas: That's really important to us as well. And that's another reason why this app has been, such a big part of what we're doing here.

We know that if some of our store owners, it's a second job, you know, they have a nine to five, so it makes it extremely difficult to talk to a salesperson, work with an underwriting team for that policy to be created. And then finally, sign with our app. If you go on the , Shopify app store and download our insure shield.

You can download it within a matter of seconds. You can [00:15:00] register for it within a matter of minutes, and you can start ensuring the next order that's purchased on your site as soon as that registration process is done. That means the policy has been 

Claus Lauter: So why can people find out more about the.

Yeah, so 

Jared Haas: obviously on the Shopify app store it's , under the, , ensure Shield shipping insurance. if you look up insured, you're gonna find it right there real quick on that and we have demo store on there. We have all of our FQs, or you can visit ups capital.com and look under our Shopify solution where we have FAQ's, PDF video.

On how to install, , as well as our customer service line, emails, whatever is the easiest way for you to get in contact with us. If you need a little bit more guidance, we're gonna take that journey with you. 

Claus Lauter: Okay. One final question before we come to the end of the coffee break is , obviously it's not for free, how much does the app cost for emergent?

Jared Haas: the app is free , there's no cost in actually downloading the app, but as far as the premium cost, so what we [00:16:00] do at is a price for $100 worth of premium. So when a merchant is using an express carrier, so that's up. FedEx dhl, it's 80 cents per $100 worth of coverage. if you are using ps, which just based off of our underwriting team and our experience within, , the networks, that's our loss ratio.

That's going to be 95 cents per 100 to. , and our consumer checkout part. So the price that will be presented to your customers within the checkout part will be 95 cents per 100. Okay. 

Claus Lauter: That's very affordable and I think it's definitely worse to go that route because it saves you a lot of headache at the end of a day and, , makes it just a better business jar.

Thanks so much for giving us a bit of an insight there. I will put the links in the show notes, then you're just one click away. , thanks again and have a 

Jared Haas: great. Thank you. I really appreciate the time.