What should I do on Etsy if a buyer’s inbound package is damaged and discarded?

Hi! Since you never received the buyer’s item (and the carrier says it was damaged and discarded), you can’t complete the Etsy order as-is—and in Etsy’s rules for “buyer sends an item to a seller for modification,” the buyer assumes the risk for their item while it’s being shipped to you.

What I’d do in practice is give the buyer two clear options and keep everything in Etsy Messages:

1. They want to remake/replace their item and resend:

• Ask them to resend a new item (ideally insured and well-packed).
• Best Etsy workflow: cancel/refund the current order (or refund the portion you haven’t earned yet), then have them place a new order once they’re ready to ship the replacement item. This avoids “overdue/not shipped” issues and reduces the chance of an Etsy case or a bad experience caused by waiting on shipping that’s outside your control.

1. They want to pursue the shipping damage with the carrier:

• Tell them to file the carrier claim themselves (because they’re the shipper/sender), and you’ll help by confirming in writing that you did not receive the package.
• You can either hold the Etsy order briefly (only if you’re still comfortably within your processing/ship-by window), or again, cancel/refund now and let them reorder later. In most situations, cancel/refund is the cleanest.

A simple message you can send:

• “I’m sorry this happened. I have not received your package—tracking shows it was damaged in transit and the contents were discarded. Since the shipment to me was sent by you, you’ll need to open the claim with the carrier as the shipper. To keep your Etsy order clean and avoid delays, I can (A) cancel and refund now, and you can reorder when you’re ready to send a replacement item, or (B) if you prefer, you can resend another item right away and we’ll start once it arrives.”

For the future, it also helps to add one sentence in your listing description/messages like: “Customer-supplied items are the buyer’s responsibility until they arrive; please pack well and consider insurance,” so expectations are set before anyone ships.