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

Hi! Since you never received the customer’s item (and the tracking literally says it was damaged and discarded), you can’t complete the custom service as sold—so the cleanest Etsy process is usually to pause the work, message the buyer immediately, and either (a) have them send a replacement item, or (b) cancel the Etsy order and refund if they can’t replace it. Etsy doesn’t really have a special “inbound shipment” workflow, and you don’t want to mark anything as shipped or completed when the input item never arrived.

Here’s the approach that tends to go the smoothest on Etsy:

1) Message the buyer right away (keep it all in Etsy Messages).
Tell them you did not receive the package, you’re seeing the same “damaged/discarded” scan, and you’re unable to start/finish without the item. Ask them what they’d prefer: replacement item or cancellation/refund.

2) Put the carrier claim on the right person (usually the shipper/buyer).
Because the buyer purchased/created the inbound label, they’re typically the one who has to open the damage/loss claim with that carrier. You can help by confirming in writing that nothing was received (and that you can’t return the discarded contents).

3) Choose one of these paths (pick based on what the buyer can do):

• If they can send another item: have them ship a replacement (ideally insured/tracked), and adjust your Etsy timeline so you’re not late. Practically, most sellers either:
  • ask the buyer to agree in Messages to a new schedule and then update the ship-by date/processing expectations as best as your listing setup allows, or
  • cancel/refund the original order and have them repurchase once the replacement item is actually on the way (this is often cleaner for deadlines and avoids “late shipment” headaches).
• If they can’t send a replacement item: cancel the Etsy order and refund. That keeps things simple and prevents a “not received”/“item not as described” case from brewing over something you never got.

4) Don’t “ship” anything on Etsy until you can actually ship the finished item back.
Marking an order as shipped/completed just to stop the clock can backfire if the buyer opens a case later.

5) For the future (worth updating your Etsy listing description / FAQs):
Add a short, plain policy section that says inbound shipping is the customer’s responsibility, they should pack well + insure, and if the inbound package is lost/damaged/discarded you’ll either (a) proceed only after a replacement arrives, or (b) cancel/refund the service portion you haven’t performed (you can’t “replace” their original item).

If you want, paste what your listing currently says about inbound shipping/“send-in” items and your processing time, and I’ll suggest exact wording + the least-messy way to handle the ship-by date for your specific setup.