Filed under: Retail, Security, TUAW Interview
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...
![TUAW [Cafepress]](http://www.blogsmithmedia.com/www.tuaw.com/media/tuaw-cafepress-promo.png)
Reader Comments (Page 1 of 2)
Robert Mohns said 11:00AM on 10-28-2006
This isn't entirely new. Back when the 20th Anniversary Mac was still a hot thing, a lot of members of the TAM community had their TAM's stolen in transit to or from AppleCare. (At the time, the shipper was Airborne Express.) Apple made good every time, replacing the stolen Mac with a new one. Still, it was certainly frustrating for the owners!
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WhitIV said 11:02AM on 10-28-2006
I hate thieves.
Sure, the retailer and the delivery services seem, so far, so be good for it, but I hope the delivery services work hard to improve their own in-house security even further to stop the thefts from occurring in the first place. The stresses on the purchaser, the time wasted by all, the financial losses - curses on thieves!
I hate thieves.
Our legal system is way too easy on them.
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This is Me said 11:16AM on 10-28-2006
In New Orleans, years and years before Katrina, USPS workers at the downtown post office would leave work with garbage bags full of stuff. They'd also put re-direct stickers on packages. (Not second hand info; I can remember a 20/20 report on it back in the 80s.) A batch was fired, and a new batch hired. It's a never-ending cycle.
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jason mark said 12:39PM on 10-28-2006
I have a client who ships custom decals through UPS, and there is one hub where almost 50% of their products "go missing". They even had a customer walk into that hub to complain, and find their own custom sticker up on the wall of the UPS shipping facility!
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Nick Hawkins said 12:44PM on 10-28-2006
A few months ago, UPS lost a package of mine. It was shown as "delivered" to my building and signed by the guy in the receiving room. Alas, no package and no record of signing it in. After a month of getting nowhere with the shipper (really - it's not their fault) and UPS (useless), I had the credit card company intervene.
FedEx now gets all my shipping needs done.
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John C. Randolph said 2:37PM on 10-28-2006
UPS is crap, and that goes back to the days when they were started as a cover for the chicago mob's bootleg liquor deliveries. Never EVER ship anything fragile with UPS, they'll drop it off the back of a truck just for the hell of it.
-jcr
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Charles Eicher said 7:15AM on 10-29-2006
Yeah, this has been a problem for Apple way back since the days of the Apple III. I remember that some of our early shipments of development machines were mysteriously lost by the truck line, Apple later said that somewhere around 25% of their shipments through that shipper were lost or stolen. This was also a problem with the first Mac shipments, I remember getting an empty box at our store, it was supposed to be our display unit. Macs were so scarce it took us weeks to get a replacement.
Part of the problem is Apple's distinctive packaging, it usually has a picture of the product and large Apple logos, and the products are well known and highly desirable. But notice that recently, Apple has been "overboxing" high value small products like laptops, the distinctive packaging is covered by a nondescript cardboard sheath for shipping, so it doesn't shout "steal me."
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Mojo said 6:09PM on 10-28-2006
naw, you crazy. UPS is the best. Been shipping and receiving electronics/valuables with them for 10 years, never lost a thing. Nothing broken. This sounds isolated from smalldog's UPS distribution point where someone is a crook.
the worst, by far, is USPS. Airborne is next worst. FedEx seems good, but had a damaged PC shipping with them, so no longer use them.
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digitalintrigue said 5:48PM on 10-28-2006
It happens with Fedex, too. We shipped two PowerBooks to Canada about 4 years ago and both were pilfered, with empty boxes being delivered.
Some shipments recently received from Apple now don't say Apple on them. It's a generic brown box with a Fedex label, shipper listed as "ACI."
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Johnna said 6:37PM on 10-28-2006
I like Small Dog Electronics, that is a shame about their shipping issues. I guess we (the customers) will all pay for this at the end of the day. The future may have an 'insurance' cost applied to shipping to defray losses.
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Blaine said 6:11PM on 10-28-2006
"Some shipments recently received from Apple now don't say Apple on them. It's a generic brown box with a Fedex label, shipper listed as ACI."
My 5.5G iPod came this way... I was happy to see no Apple marking on the front...
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Mike Hendrickson said 11:05AM on 10-29-2006
Apple has been sending out packages with the ACI identification for years. I've thought that this identification may be related to the growing availability of supply chain management/order fulfillment/distribution centers by major companies; for example, UPS' supply chain solutions, http://ups-scs.com/logistics/distribution.html. Apple holds little inventory, but rather tells the distribution center to ship such-and-such product to such-and-such address. The benefit to Apple is lower inventory, lower shipping-related labor costs, and possibly quicker ship times (especially when the distribution center warehouse is near a major shipper distribution hub); the benefit to the supply chain manager is lock-in or highly preferential treatment with that company, especially if the s/c manager is also a shipper like UPS. I would imagine that the removal of inventory control from one company to another, and then consolidating that inventory control with a number of other companies also using the same s/c management, presents a great deal of opportunity to those who would want to defraud.
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Paul said 10:23PM on 10-28-2006
This is an excellent piece of journalism by TUAW. Kudos for having the intelligence to think up this idea. It helps keeps things fair.
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dan said 12:16AM on 10-29-2006
Many years ago, I had ordered a laptop and was waiting for it to arrive. The Fedex tracking folks said it had been delivered - but to the wrong address. When I drove over there, there was no such address. I called Fedex back, they launched an investigation, and told me that their Burbank, CA hub was notorious for this. Their advice? Don't order a computer via Fedex if you live near Burbank.
Bright side of the story? Compaq refused to help in any way. I got so fed up that I ended up buying a Mac.
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Ronald Heft said 12:36AM on 10-29-2006
I have noticed that Apple has been trying to cover up their shipments. Like Blaine, my last few batches of packages from Apple have all been shipped under the name ACI.
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waroftheworlds said 9:06AM on 10-29-2006
It's not just Apple who are starting to disguise their products now. I just brought a lot of hardware from a certain internet-based company in the UK, and every article was doubleboxed (so double boxed in fact, that an Intel Pentium D processor came in a shipping carton 5x bigger than the actual packaged unit!) with the initials of the shipper instead of the full name (they're well known in the UK). It's unfortunate that such untrustworthy people get into a business where, ultimately, trust is everything.
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PaperQueen said 10:40AM on 10-29-2006
A couple of items:
#10--We already do pay insurance on UPS shipments. Any box with a value over $100 automatically has it factored into the shipping cost.
One other heads up: When purchasing software from any company, call to clarify whether or not "standard ground" means UPS from door to door, or if the package is being sent through UPS's "Mail Innovations" system. In that case, the box starts on UPS then is handed off to the postal service mid-stream.
This is a pronounced trend in shipping, especially if a purchase comes from an online retailer. Having a tracking number in hand doesn't guarantee the box stays in the UPS system--that number vaporizes the moment they hand the pallet off to USPS, making it completely untrackable.
I learned this the hard way with several DVDs ordered from PBS when not one, but two, orders were "lost" in transit. I opted not to select their "USPS" shipping option, paying instead for "Standard Ground" which kicked back a UPS (1Z...) tracking number. Imagine my surprise upon learning that number is only good for the first part of the trip.
More often than not, there is no indication of this on websites that utilize UPS Mail Innovations--it requires a pointed phone call to the shipper, and even then the customer service person on the phone may not know about handoff.
To learn more, see:
http://www.upsmailinnovations.com
Software packages ship under their Media Mail category.
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Squid said 5:10PM on 10-29-2006
I wonder if the shipping services they were delivering to were UPS-Stores.
UPS-Stores and delivery receiving services are not regulated by anyone. They are individually owned.
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Matt Blalock said 9:32PM on 10-29-2006
Am I the only one to notice how this story just happen to surface only days before Small Dog has a store grand opening? I mean, Small Dog is a great company, and I suppose if it was planned, its great marketing. No such thing as bad publicity, especially when TUAW clears things up with a nice little interview with the CEO. Right?
No offense to anybody, including but not limited to: Small Dog, TUAW, or the readers of TUAW.
-Matt
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peter said 4:01PM on 10-30-2006
I've dealt several times with SmallDog ( and visited once - it's a really great area) and have never had any problems. Certainly a high-class operation.
With regard to the substitutions - what I expect we'll see before long is RFID tagging of each high-value item. You can scan a pallet and check the whole thing. This would be especially effective if breaking the package destroyed the RDID tag - I don't know if the technology is there yet for that. Then thieves couldn't even strip iPods etc out of the package.
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