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While E-commerce Growth Soars, Retailers Face Challenges

UPS Capital's latest e-commerce report surveyed merchants and consumers, and found some disconnects.

The e-commerce market is soaring, with global sales expected to reach $6 trillion this year. The growth is a win for innovative brands and retailers who’ve mastered online selling, but there’s a dark cloud hanging over the industry: shipping and fulfillment challenges.

In UPS Capital’s latest survey of retailers and consumers, titled “2024 Mid-Year Guide to Shipping Excellence,” researchers found weaknesses in several areas. While most retailers are confident in handling a 30 percent order volume surge, there is a gap between their capabilities and consumer expectations. An eye-opening 42 percent of retailers and brands polled said they take two or more days to process orders, while nearly half of consumers polled said they expect their purchases within three days (excluding e-commerce giants like Amazon).

Authors of the report said this disconnect highlights the need for better communication and transparency throughout the fulfillment process.

Other findings include retailers citing rising shipping costs (52 percent), damaged items (40 percent) and lost items (37 percent) as bigger threats than faster delivery demands. The report also found that apparel retailers and brands tend to face more unique challenges such as limited warehouse space, concerns over quality control and inventory gaps.

The survey also revealed a shrinking world. Nearly half of the merchants polled said they’re shipping more than 20 percent of their orders internationally, while 73 percent of consumer respondents said they’re making purchases from abroad. However, this global reach comes with complexities. Almost three-quarters of retailers polled said they have been impacted by international shipping issues such as delays, damage or theft in the past year, which is likely due to congested overseas ports.

There are other threats too. The report found that nearly half of retailers surveyed suspect more than 20 percent of returns are fraudulent. Consumers also share this concern, with 32 percent believing return fraud is increasing. Manual verification processes are a major roadblock, with more than 40 percent of retailers struggling to mitigate fraud risks due to time constraints. Lenient return policies and pressure to appease customers further complicate the issue.

On the flip side, consumers worry more about counterfeit goods. Forty-one percent of surveyed consumers believe counterfeiting is increasing while 23 percent have received a fake product instead of a real item. This issue seems to impact Gen Z the hardest, with 43 percent of respondents in this demographic experiencing counterfeit fraud.

The report identified trends such as the use of alternative delivery locations. More than 80 percent of consumers polled said they are open to using pick-up points such as UPS Access Points or lockers for added security, convenience and speed.


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