Why Asking About Shipping Insurance Gets You Blocked: A Veteran Online Store Owner's True Story

Why Asking About Shipping Insurance Gets You Blocked: A Veteran Online Store Owner's True StoryA recent online post complaining about being blocked by a store's customer service for asking about shipping insurance sparked widespread discussion. What's really going on? A store owner with over a decade of experience shares the truth behind this phenomenon and the immense pressure shipping insurance puts on businesses

Why Asking About Shipping Insurance Gets You Blocked: A Veteran Online Store Owner's True Story

A recent online post complaining about being blocked by a store's customer service for asking about shipping insurance sparked widespread discussion. What's really going on? A store owner with over a decade of experience shares the truth behind this phenomenon and the immense pressure shipping insurance puts on businesses.

Shipping insurance has become a common feature on e-commerce platforms, but it's a double-edged sword. While it reduces risks and enhances the shopping experience for consumers, it can be crippling for merchants, especially those selling clothing.

One store owner shared their April and May sales data, revealing the devastating impact of shipping insurance on profit margins.

April Data:

• Transactions: 20,342

• Refunds: 8,992

• Successful Transactions: 11,350

• Refund Rate: 44.20%

• Cost of Goods Sold: 255,429

• Average Cost per Item: 22.50

• Gross Profit: 315,055.77

• Shipping Costs: 40,682

• Marketing Expenses: 232,039.98

• Technical Service Fees: 10,242.59

• Shipping Insurance Costs: 65,082.07

• Net Profit: -32,990.87 (Loss)

May Data:

• Transactions: 11,665

• Refunds: 5,613

• Successful Transactions: 6,052

• Refund Rate: 48.11%

• Cost of Goods Sold: 134,658

• Average Cost per Item: 22.01

• Gross Profit: 158,014.77

• Shipping Costs: 23,330

• Marketing Expenses: 125,557.36

• Technical Service Fees: 7,317.26

• Shipping Insurance Costs: 43,429.35

• Fines & Deductions: 1,444.37

• Net Profit: -43,063.57 (Loss)

This data clearly shows that despite substantial sales and gross profit, the high costs of shipping insurance, marketing, and other expenses led to significant losses exceeding 70,000 over two months. The owner was forced to disable shipping insurance, stop marketing, and essentially shut down operations.

This isn't an isolated case. Many merchants, particularly clothing sellers, face similar struggles. Without shipping insurance, order volume suffers; but with it, the high costs and unpredictable refund rates erode profits and can cause significant losses.

So why does simply asking about shipping insurance lead to frustration and even blocks?

Experience has taught merchants that customers frequently asking about shipping insurance often have a higher return rate. The "I can always return it" mentality reduces purchase caution for consumers, but for merchants, each return means multiple costs: shipping, insurance, packaging labor, materials, customer service, marketing, technical fees, and repackaging for returns. These costs are borne entirely by the merchant.

When merchants perceive a customer isn't seriously interested in buying but is simply trying the product on or using it before returning it, they may refuse the order as a self-preservation tactic. Each such order avoided saves the merchant at least 10. Continuing to do this "useless work" is simply not profitable.

Therefore, blocking customers who inquire about shipping insurance isn't simply "thin-skinned," but a necessary measure to manage risk and control costs.

Let's address a common misconception: "Stores without shipping insurance must have poor-quality products." A veteran store owner refutes this. He's prioritized product quality for over a decade, maintaining a return rate of only 2-3 items per 100, covering return shipping for quality issues, while customers bear the cost for returns due to their own reasons. He believes adults should be responsible for their actions and merchants shouldn't pay for arbitrary returns. This model allows him to maintain profitability without shipping insurance, reinvesting the savings back into his products and customers.

Not all stores without shipping insurance lack confidence; some prioritize quality and customer experience, building trust through excellent products and service instead of relying on insurance. Shipping insurance is often favored by stores less confident in their product quality, anticipating returns.

Next time you shop online, consider the merchant's business model and product quality instead of focusing solely on shipping insurance. Good products and a positive shopping experience are key to successful online shopping. Ultimately, do you prefer stores with or without shipping insurance?

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