Small Dog Electronics speaks out on theft-in-transit, credit card fraud and more

The other day we told you about the guy who had his (then) newly purchased iPod swapped out for a bar or soap while in transit from Small Dog, a Vermont Apple Reseller. I was amazed at how many people mentioned that similar - and worse - things had happened to them so I decided to ask the reseller at the heart of this particular story just how much of a scourge this really is. Don Mayer, CEO of Small Dog Electronics, had a lot to say on the matter.

Q. Has Small Dog had this happen before or since?
A. There is a growing trend of theft through delivery services. We receive hundreds of packages each day and send out hundreds, too. It used to be that we could trust shrink wrapped pallets of goods from the manufacturer, however, lately, we have had reams of paper substituted for computers, batteries and old socks seem to be the choice for iPods. We've had bricks sent to us and old books and magazines, too. In just about every case the thefts appear to be happening at one of the shipping facilities. Sometimes the pallets are broken down and re-stacked with the tampered boxes on the bottom of the pallet.

[More after the jump...]
Q. Is the shipper generally cooperative when it happens?
A. In just about all of these cases we are successful in working with the shipping company and/or the vendor to resolve the situation. The most frustrating part of the process is the time that it takes to resolve the issues.

Q. Is the vendor reimbursed when a product goes MIA in transit?
A. Since we primarily ship with UPS, they tend to take good care of us and act quickly for our customers, too.

Q. Are there any new precautions being taken to insure iPods and other high-value items arrive at their destination safely and un-tampered with, such as double-boxing or using security tape to indicate whether the package has been opened in transit?
A. We do try to double box products that have obvious value but the more that Small Dog Electronics becomes known for selling Apple products the harder it will be to hide the contents. One of the things we do to help eliminate the opportunity for theft is to ship all of our packages UPS 3-day service (or faster) on the theory that the shorter the time the product is out of our hands (or the customers) the less chance of tampering.

We at TUAW don't want single out UPS, of course, as the lone culprit when it comes to the old switcheroo. FedEx, DHL, Airborne, USPS and other carriers all face the same problems and with the volume of packages sent and received every single day it's really astonishing that the whole shipping and delivery system works as well as it does most of the time. Especially considering how many hands touch each package between Point A and Point B - many of those hands belonging to outside contractors and temporary workers. For every package you hear about that doesn't make it to its destination trouble-free, however, think of the countless packages that do make it without fail. As with most things, what you primarily hear about and read about are the problems and failures, not the successes.

An even more alarming trend, Mayer says, is increased sophistication in credit card fraud. "The thieves are now stealing identities by calling the credit card issuers who have weak security and asking for an address change. Thus when we verify address it comes back clean but is not the real card holder. And of course, it is the merchant that holds the bag. We are involved in a few disputes with credit card issuers where they have charged back legitimate sales where their security was lax and identity theft was made easy by their processes."

Mayer continued, "Our company is built upon the notion of making customers for life. Hapy [N.B. Hapy Mayer is Don's son and CFO and co-owner of Small Dog] and I train and empower our employees to treat our customers as if they were their mothers. The profit from the sale of a single product is insignificant when compared to the life-value of a satisfied customer."

And it looks like that attitude has paid off since Don and Hapy were named one of America's Best Bosses by Fortune Small Business magazine in 2004, as well as honored as one of Vermont's fastest growing businesses by Vermont Business magazine's 5x5x5 Award.

In fact, you can witness their growth in person if you're in the Burlington, VT area this weekend when they open their new retail store at 100 Dorset Street in South Burlington. Grand Opening week kicks off at 10:00 am today and continues with uniquely-themed days throughout the week. Check out the event schedule for details. If you happen to buy something while you're there, though, do yourself a favor and open the box before you leave the store, just in case...
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