eBay Fails: How our eBay Business Survived Losing $20,000 worth of packages

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A few weeks ago we told you how we overcame a nerve wracking eBay account suspension by implementing an eBay best match hack. After going through that ordeal it finally seemed like we were on the right track to grow our business. Christmas was just around the corner and with it came an expected boost to our sales. Just as things seemed to be going the right way, we had one of our most epic eBay fails.

The Christmas hype came indeed, we were selling like crazy, breaking our own records on a daily basis.
Just when everything seemed to be working in our favor another disaster struck – the Chinese postal system crashed due to the volume of parcels they were handling (we were 100% dependent on Chinese suppliers at that time).
With the crash, 200 of our parcels, worth $20,000, got lost. With no one to take responsibility – we were looking bankruptcy in the eyes.
This is how we managed to survive a disastrous eBay fail while many other businesses crashed and burned as a direct result of the Chinese postal system meltdown.

The Chinese post meltdown

At first we regarded customer complaints about late delivery as “Christmas nerves” – customers were anxiously awaiting the GPS devices they bought as presents for their friends and family, and we were accustomed to getting “Where the hell is my GPS?! It’s been 4 days since I paid for it!!!” messages. But then the little drip of messages became an ever growing stream of eBay and PayPal disputes and an enormous amount of angry customer messages.

The Grinch stole our eBay packages?

The Grinch stole our eBay packages?

This was when we first realized that something was wrong, terribly wrong.
Packages weren’t arriving to our customers, people were being left without Christmas presents.
We contacted our Chinese suppliers, who in turn contacted their local postal branches, and the answer we got was the worst possible one – “Nobody knows what is happening at the moment, they say we should wait a little while.”
There is nothing worse than giving a customer, who has just paid $100 for a Christmas present for his son, an answer along the lines of “Please wait a bit longer, we don’t know where your package is!”
This is one of the biggest challenges we have ever had as eBay sellers – having to give definitive answers and promises while having no concrete data on our side.

More trouble – PayPal and eBay disputes

On top of this epic eBay fail we got a phone call from PayPal, they were concerned with the spike in disputes, we had more than 50 open PayPal disputes against us within 2 weeks. We promised PayPal that everything was fully under control and that customer satisfaction was guaranteed, asking them to take a look at our previous stellar business conduct and reputation – PayPal gave us the needed air.
But eBay disputes and negative feedback were still pouring in, and we had no info whatsoever regarding the lost packages.
I can’t begin to explain the frustration we felt, after surviving so many fails, finally it seemed like the final blow would rain down because of something completely and miserably out of our hands – A Chinese postal system meltdown.
We were taking all the heat directly, the customer didn’t give a damn about the true reason, for all they cared – we should fly to China, grab the GPS and deliver it to them personally. And I can’t blame them.

The rescue plan (saving our eBay business!)

Days went by, we were swamped with furious customers, disputes, and negative feedback. All seemed lost. We decided that if we were going down, we would go down fighting, doing everything possible to keep our reputation as clean as possible. Our decision was to try to buy some time with our customers by issuing partial refunds to show them that we were doing everything possible on our side, if the parcels still didn’t arrive – we would have to issue full refunds and bear all the loss ourselves.

Just as we were issuing the first partial refunds an email came from one of our suppliers, he told us that the estimate from the Chinese postal service was that the packages would be returned to the dispatch center in China within 60 days.
Working with that information we devised a new plan –
We decided to contact all of our customers, telling them about the situation to the best of our knowledge; but neglecting to mention this latest (but not concrete) estimate about the parcels being returned to China.

We sent a very straightforward message stating the following –

“Hi XXX,
This is a quick note to let you know that we’ve been in constant contact with the postal service, their best guess is that your package got lost.

We will of course take all of the loss on ourselves, and would like to offer you 2 options:
1. Immediate full refund
2. Resend a new GPS to replace the lost one

Please let me know which option you prefer?”

We were hoping that being this honest with our customers would earn us some points and that at least a few would choose the 2nd option, and also hoping that the GPS devices were indeed on their way back to China, from where we would be able to re-ship them to our customers.

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The astonishing reactions from our customers

The results blew us away – nearly 70% of customers (who were completely furious with us) reacted well to our honesty, showed understanding and asked us to resend a new GPS. Many customers even thanked us for being responsible and said stuff like “we’re all human” and “shit happens” etc. This eBay fail was beginning to look like an opportunity to rebuild trust with our buyers.
Luck struck again and the parcels were indeed returning to the original shipping branches in China. We were reshipping them to the customers, keeping them closely in the loop with every new bit of info we had. Our suppliers reshipped the parcels and they finally started to arrive to our customers.
We were saved once again.
Ever since this incident, whenever I hear online merchants getting excited about the upcoming Christmas rush – I get shivers, I’m truly and utterly afraid of the Christmas rush! Knowing how fast and how badly things can go wrong, we now make endless preparations for the rush season – making sure the ship is tight and ready for the big wave of sales 🙂

What can you learn from this?

I believe that the obvious lesson here is to ALWAYS set your north to customer satisfaction, customers are the lifeline of your business. Keep them satisfied even at the cost of losing some immediate cash (I wrote about our focus on customer satisfaction as one of the best eBay hacks we sued to grow sales).

But there is another lesson here that is no less important – eCommerce has a lot of “moving parts” – manufacturers, QA, shipping companies, customer service, accounting and so on… The more parts that are out of your direct control, the more things that can go wrong.
As your business grows – try to control as many parts as possible directly. For us it meant opening a small office in London where we keep the top selling items. It’s our own stock and we have full control over its dispatch (we still drop-ship the more rare items).

Over to you

Have you got some interesting successes or fails of your own? We’ll be happy to discuss them in the comments area, just drop a comment below.

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