The fact of the matter is it doesn't matter if other people can tell what is in the packages or not. It doesn't matter if items fell out of or ripped the envelope.
What matters is how the customer feels.
If the customer feels put in an awkward position due to the way their package was shipped, they no longer feel confident and happy to be shopping with you. They no longer feel assured and as if things are safe and discreet for them.
If the customer prefers intact boxes, especially the beautiful gift boxes many things come with, and are instead receiving smashed, crushed and otherwise marred goods, they no longer feel the item is in the promised condition. They again lose confidence and reason to shop.
No one should have to have packages held at the post office or make an extra stop to a UPS store when ordering from an online seller that should be practicing quality, safe shipping. That's beyond insane.
If I bought something from Bed Bath and Beyond and they said it was going to be partially crushed and flopping around in the bag when i got it and, hey, I can prevent that by having it held at the post office... I'd tell them to bugger off and just go shop at the freaking brick and mortar store.
The point isn't how we can accept this. The point is this is not acceptable.