Shipping protection, explained.
When a package disappears between your warehouse and a customer's porch, somebody pays. By default it is the store. Shipping protection exists to change who, and it has quietly become a revenue line for the brands that run it well.
Shipping protection (also called package protection) is an optional add-on offered at ecommerce checkout, usually for 1-3% of the order value. It covers lost, stolen, and damaged packages with a fast replacement or refund, funded by the fees rather than the merchant's margin.
Why shipping protection exists
Carriers lose and damage a small but steady share of everything they move, and porch theft adds more on top. None of it is the merchant's fault, and all of it is the merchant's problem: customers expect the store to make it right, carrier claims take weeks and are routinely denied, and the cheapest path is usually to reship at your own cost and move on.
Shipping protection reframes the whole situation at the moment it can actually be solved: checkout. The customer pays a small fee to guarantee their delivery, the fee pool funds fast resolutions, and the store stops absorbing transit losses order by order.
How package protection works
- The offer. A protection option appears in the cart or checkout, priced as a small percentage of the order.
- The opt-in. The customer adds it with one click. On Brella stores, about 60% do.
- The incident. If the package is lost, stolen, or damaged, the customer files a claim on a self-serve page, in about a minute.
- The resolution. A replacement or refund goes out, paid from the protection program. The store's margin and support queue are untouched.
What shipping protection covers
Coverage is scoped to transit: packages that never arrive, packages marked delivered but stolen, and packages that arrive damaged. It does not cover returns, exchanges, or buyer's remorse; those are a separate flow with separate economics.
The three models of shipping protection
| Model | Who keeps the fees | Who pays claims | Who does the work |
|---|---|---|---|
| Provider-owned | The protection provider | The provider | The provider |
| Merchant-owned (self-funded) | The store, all of it | The store, out of the fee pool | The store's support team |
| Revenue-share (Brella) | Split, up to 80% to the store | The protection program | Automated, self-serve claims |
Provider-owned protection solves the problem but hands the entire new revenue stream to a third party. Merchant-owned, sometimes called in-house or self-funded shipping protection, keeps every dollar but also keeps the claim risk and the claims inbox. The revenue-share model sits in between: the store keeps most of the money, and the platform absorbs the claims work and the coverage.
Does shipping protection hurt conversion?
Done badly, it can. A pre-checked box that sneaks a fee into the cart erodes trust, and an offer that is priced too high gets ignored. Done well, protection is opt-in, clearly worded, priced at a couple of dollars, and tested rather than guessed at. Customers who choose it are, if anything, more confident completing the order. We take the uncomfortable version of this question seriously in is shipping protection worth it.
What protection earns the store
Under a revenue-share model, protection is one of the few post-purchase features that shows up as income. The formula is orders, times attachment rate, times fee, times your share. Work through your own volume in the shipping protection revenue calculator, or see the Shopify-specific walkthrough in Shopify shipping protection.
Frequently asked questions
Is shipping protection the same as package protection?
Yes. Shipping protection, package protection, and order protection all describe the same checkout add-on: the customer pays a small fee, and lost, stolen, or damaged packages are replaced or refunded quickly.
How much does shipping protection cost the customer?
Typically 1% to 3% of the order value, which is a couple of dollars on most orders. Some stores use a small flat fee instead, especially at low order values.
Do customers actually buy shipping protection?
Yes, at higher rates than almost any other checkout offer. Customers are protecting something they just chose to buy, and the fee is small relative to the order. Stores running Brella see an average opt-in rate of 60%.
What happens if a protected package is lost?
The customer files a claim on a self-serve page, usually in about a minute, and receives a replacement or refund. The cost is covered by the protection program rather than the store, and no carrier claim is involved.
Can a store run shipping protection itself?
Yes. That model is called merchant-owned or self-funded shipping protection: the store keeps the fees and pays claims out of them. It earns the most per order but puts claim risk and claims handling back on the store. Platforms like Brella automate the offer and claims while still paying the store most of the revenue.