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

Hi! Since you never received the customer’s item (UPS says it was damaged and the contents were discarded), you can’t actually perform the custom service as ordered—so the cleanest Etsy move is usually to cancel the order and issue a full refund, then have the buyer re-send the item and re-purchase (or you create a new custom listing) once they’re ready. That keeps you from missing your “ship by” date on an order you can’t complete and avoids the order turning into an Etsy “not received / not shipped” problem later.

If the buyer still wants to move forward (and you want to keep the order open), the “better” option is to update the order’s ship-by date while you wait for the replacement item—but only if the buyer agrees and you’re confident they’ll re-ship quickly.

Here’s the practical way to handle it:

1. Keep everything documented in Etsy Messages
   Send one clear message that includes: the UPS status (“damaged, contents discarded”), that you did not receive anything, and the two options (refund/cancel vs. extend ship-by date while they resend).

2. Decide between cancel/refund vs. extending the ship-by date

• Cancel + full refund (recommended in most cases): Best when the buyer’s item is essential (it is), and there’s no guarantee when/if a replacement will arrive. Then the buyer can re-order when they’ve shipped again.
• Extend the ship-by date (only if you’re continuing this same order): Etsy allows you to update the ship-by date once, before it passes, for up to 21 days. Do this only after the buyer confirms the new date works for them.

1. Set expectations about the UPS claim (and who usually has to file)
   Because the buyer purchased the UPS label and tendered the package, they’re typically the shipper of record, so they’re the one who usually has to open the claim with UPS. You can absolutely help by providing any info you have, but you generally can’t “fix” the inbound shipment on your end.

A message you can copy/paste (adjust as needed):
“Thanks for checking in! I haven’t received your item—UPS tracking shows the package was damaged in transit and the contents were discarded before delivery. Since I don’t have the item, I can’t complete the service as-is.
Option A: I can cancel and fully refund this Etsy order right now, and once you’re ready to resend the item you can place a new order.
Option B: If you prefer to keep this order open while you resend, tell me the date you expect to ship and I can update the ship-by date (Etsy only allows me to extend it once, up to 21 days).
In the meantime, since you shipped it via UPS, you may want to contact UPS to open a claim for the lost/discarded contents.”

Going forward (to prevent repeats), it’s also worth adding a short line in your Etsy listing description/FAQ for your “mail-in service” like: buyers should pack well, use insurance, and understand the inbound shipment is handled by their carrier until it arrives to you (and that if it’s lost/destroyed in transit, they’ll need to claim with the carrier and resend the item).