Stakes Are High For Shipping Luxury Goods

For delivery services looking to transport jewelry, handbags and other expensive items, shipping insurance remains a complicating factor.

Logistics-based companies like UPS and Uber are facing challenges while trying to take on the delivery of luxury goods, The Wall Street Journal reported Tuesday (June 16), but the growth of the market is alluring.

WSJ cited a May report from consultancy Bain & Co., which stated the sale of personal luxury goods rose to $271 billion in 2014. The sales of luxury items like watches and jewelry increased 2 percent from 2013, while sales of luxury accessories rose 4 percent.

In order to keep the deliveries of these items below the maximum insured value, many services end up splitting orders of these high-priced items into smaller shipments, resulting in even higher costs and less convenience.

While Uber continues efforts to solidify its position as a company that can do more than coordinate rides, the shipping insurance challenge for luxury items presents yet another roadblock.

“Uber Technologies Inc. has struggled to maintain business arrangements with some clients, including online retailer Gilt Groupe Inc., because it was unable to insure high-price items sold through Gilt’s online store,” WSJ said.

“Keeping eCommerce companies happy is key to Uber’s chances of transforming itself into an ‘urban logistics’ company that delivers not just people, but things,” they added.

According to an earlier report by WSJ, Uber has also lost out on delivery contracts with both Apple and Starbucks, who eventually struck a deal with startup courier service Postmates instead.

These reports may add even more speculation to the questions surrounding Uber’s capability to really deliver.

Earlier this week, the financial-services arm of UPS, UPS Capital, announced plans to acquire Parcel Pro, an independent logistics providers to the jewelry, wristwatch and collectibles industries.

In a move that may just put UPS ahead of the curve, the company now has a better chance of keeping up with the shipping demands that have come with an increase in the sale of luxury items, especially internationally.

“UPS Capital and Parcel Pro recognize customers need better solutions, and because of their technology and security, together they are able to insure shipping within the United States for up to $150,000 in value per package and internationally to selected countries for up to $100,000 per package. The increased maximums allow companies to ship more items in one package, which is logistically easier and more cost effective,” the company release stated.

“Parcel Pro’s mission is to provide the most affordable, reliable, secure and convenient services for our industry customers to ship and insure valuable goods. We believe that the acquisition by UPS Capital supports our mission and will only benefit our customers, as well as UPS Capital customers who ship high-value items,” Parcel Pro CEO Joseph Lam added.

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