UPS Capital Survey Reveals How Shipping Shapes the Customer Experience
The eCommerce landscape is evolving rapidly, with global sales set to surpass $6 trillion mark in 2024. This explosive growth stands as a testament to the resourcefulness and adaptability of merchants who have embraced the digital revolution. However, as the number of packages circling the globe increases, so do the risks.
Commissioned by UPS Capital, the 2024 Mid-Year Guide to Shipping Excellence report explores the primary shipping challenges merchants are facing as eCommerce booms, offering actionable advice to help businesses not only survive but thrive in this evolving landscape. Drawing from the perspectives of 500 eCommerce merchants and 1,000 consumers, the conclusion is clear: businesses that fail to adapt and fortify their supply chains risk being left behind in the wake of this eCommerce revolution.
Sorting Through Shipping's Current Obstacles
Most merchants surveyed (92%) report their company would be prepared if their shipping volume were to increase by 30% this year. However, growing pains, intensified by rising consumer expectations, remain inevitable, creating large barriers to success for businesses.
Over 2-in-5 (42%) merchants surveyed report it takes two or more days to have an online order ready to ship. Yet 46% of surveyed consumers expect to receive their online orders within three days (excluding purchases from big-box retailers like Amazon, Walmart, and Target). This discrepancy points to the need for full shipping visibility between merchants and consumers to manage expectations vs. reality.
Despite this discord, merchants consider faster delivery demands to be a lesser threat. Surveyed merchants instead cite rising shipping costs (52%) and shipping issues like damaged (40%) or lost (37%) items as the greatest challenges to their business.
For apparel merchants specifically, warehouse limitations are becoming a thorn in their sides. Surveyed apparel merchants state physical storage space (50%), quality control assurance capacity (47%), and inventory stock level gaps (43%) as the biggest constraints.
Global Challenges
Shipping issues aren't just domestic as eCommerce’s popularity is going global. Nearly half (45%) of merchants surveyed are currently shipping more than 20% of their orders internationally, with 73% of surveyed consumers making online purchases shipped from other countries.
However, borderless shopping comes with additional complexities. Nearly 3-in-4 (73%) merchants surveyed report their business has been impacted by international shipping mishaps (e.g., delays, damage, or theft) due to congested overseas ports in the last 12 months.
Delivery Dilemmas: Fraud & Counterfeit
Almost half (49%) of surveyed merchants suspect that more than 20% of returns are fraudulent. And consumers echo this notion, with 32% of those surveyed believing returns fraud is on the rise.
A primary factor contributing to this mounting threat is time-consuming manual verification processes, with over 2-in-5 (41%) merchants surveyed saying they’ve had difficulty mitigating fraud risks due to this. Moreover, other respondents say exploitation of lenient return policies and pressure to minimize customer dissatisfaction contribute to the challenge of identifying fraudulent vs. valid returns.
Nevertheless, consumers believe counterfeit goods are the real concern. A notable 41% of consumer respondents say counterfeit is trending upwards, with 23% reporting they’ve received a counterfeit item instead of the authentic product they purchased online. Gen Z appears to have the most issues with counterfeiting, given 43% of respondents in this demographic personally experienced counterfeit fraud.
Unpacking Success: Prioritizing Loss Prevention
Given the current state of eCommerce shipping, it’s no surprise merchants are looking for proactive ways to mitigate risks and shore up their reputations and bottom lines. Over the last year, the percentage of surveyed merchants who don’t take any insurance precautions has decreased from 13% to 1%. Notably, almost half (44%) of surveyed merchants are using third-party shipping insurance providers like InsureShield® shipping insurance to gain peace of mind they have comprehensive coverage when shipping and delivery issues occur.
Additionally, a new trend is emerging as merchants and consumers are embracing alternative delivery locations for their security, convenience, and speed benefits. Over 4-in-5 (82%) consumers surveyed are open to using alternate pick-up points, which includes grabbing deliveries from a UPS Access Point, delivery locker, or a retailer’s store location.
To take defense a step further, merchants should leverage innovative technology like UPS Capital's DeliveryDefense™ Address Confidence tool. Using artificial intelligence and machine learning, the model can predict the likelihood a package will arrive safely at its destination. This enhanced visibility enables merchants to identify potential problems like theft or fraud before shipment and take proactive measures to help reduce risk like adding shipping insurance or redirecting shipments to UPS Access Points®.
For more data on evolving shipping trends, get the full report.
For media inquiries, please contact upscapital@pancomm.com