Retailers risk trading pounds in parcel claims for pennies off delivery rates this peak

Analysis from the AI powered courier claims platform Claimit has found that the value of retaining courier claims rights significantly outweighs small savings on parcel delivery rates, particularly during the peak trading period.

A reduction of five pence per parcel would save £5000 across 100,000 deliveries. However, Claimit’s analysis during last year’s peak period found that 1.5% of parcels shipped generated a claim, while parcel volumes increased two and a half times compared with off-peak. With courier pay outs capped as low as £25 per parcel, those claims could represent up to £37,500 in potential compensation, more than seven times the savings made on the delivery rate.

Parcel volumes also increased two and a half times compared with off peak, further increasing the value at stake. Claimit says this underlines why retailers should scrutinise delivery agreements that offer a cheaper headline rate while restricting the ability to claim when something goes wrong. 

Courier liability caps mean retailers recover only a fraction of the retail value associated with a lost parcel delivery. In one example, the company recovered £2.5 million in courier credits over a year, despite the parcels involved representing £16 million in retail value. The credits recovered were equivalent to less than 16% of that value, demonstrating how much exposure can remain with the retailer even when eligible claims are successfully pursued.

Andy Watson, co-founder of Claimit, said: ‘Retailers are under enormous pressure to take cost out of every parcel, so shaving a few pence off the delivery rate can understandably look attractive. But the cost of delivery is only one part of the process of getting an order to a customer. Even when retailers retain their claims rights, liability caps mean the credit they receive can be only a fraction of the retail value that has disappeared from the business. That makes those claims rights valuable. If you then give up the ability to recover £20 or £25 when something goes wrong in exchange for saving two, three or five pence on every delivery, that saving can very quickly become a false economy.’

Claims allow retailers to recoup part of the cost when deliveries fail and provide a financial mechanism for holding carriers accountable for service failures. Claimit has found that automation can increase claim success from 13% to over 70% and cut manual processing time by as much as 80%.

Andy added, ‘Peak is when that trade off matters most. Volumes increase sharply, more parcels generate claims and suddenly the impact of a seemingly small contractual decision is being multiplied across hundreds of thousands or millions of deliveries. Retailers need to understand how much of the financial risk they are agreeing to carry when a parcel doesn’t arrive as expected.’

Claimit automates the process of claiming for lost and damaged items, connecting directly with retailers’ CRM and e-commerce systems. The platform gives retailers real time visibility over lost and damaged parcels and invoicing errors, helping them recover revenue without adding to the administrative burden on customer service, operations or logistics teams.

The courier claims platform is used by hundreds of retail brands to identify and recover money owed on lost, damaged and incorrectly invoiced parcels. As retailers look for ways to protect margins during peak, recovering revenue already owed to the business should be considered alongside efforts to reduce fulfilment costs.