Retail Shipping Experience and the Impact on Customer Loyalty

The past year has been an exercise in adaptability and agility for retailers across the globe, as e-commerce spending has hit record highs. This year alone is projected to reach over $6 trillion in online sales, doubling that of 2019’s pre-pandemic shopping days. These unexpected spikes caused immense strain to global supply chains, forcing many companies to rethink operational strategies.

Many retailers pivoted, investing in technology to forecast demand and identify new suppliers to support production. However, some shipping issues remained outside of their control.

Ultimately, consumers felt the result of these shifts, voicing complaints about delayed deliveries and missing or damaged shipments. Moving forward, it’s critical to understand consumer concerns and find ways to create shipping experiences that exceed customer expectations, even in the event of a shipping mishap.

Pandemic Accelerates Consumer Delivery Challenges

The retail industry has seen a pivot to online storefronts for some time now, but the pandemic forced nearly all businesses to shift operations online overnight. This surge presented an opportunity for companies that didn’t normally have a robust online presence to take a slice of the multitrillion-dollar e-commerce industry.

This uptick in online shopping overwhelmed businesses, and consumers began noticing more shipping issues. According to a recent survey commissioned by UPS Capital, nearly three-quarters of all consumer survey respondents (74 percent) reported lost or damaged packages, and 12 percent reported theft after delivery.

While shipping challenges have accelerated, consumers still expect a consistent level of service from the retailers they purchase from. Therefore, retailers must have the ability to adapt when these issues occur and provide the best possible outcome for consumers.

Shipping Mishaps Damage Bottom Lines and Customer Loyalty

Perhaps the most crucial implication for retail businesses is the role that reputation plays in customer experience strategies. Large retailers have set the bar for best-in-class shipping experiences, but it can be difficult for small and midsize businesses (SMBs), with tighter margins and fewer resources, to keep up. The previously cited UPS Capital report found over a third (37 percent) of consumers are unlikely to buy from a SMB if they’ve had a bad experience in the shipping process. Considering that more than half of consumers spend between $100 and $1,000 with SMBs per year, this is the equivalent of up to $56 billion in lost sales.

Among the top frustrations, consumers expressed include persistent cases of porch piracy (55 percent), wrong merchandise deliveries (54 percent), lost packages (52 percent), damaged packages (49 percent), and delayed packages (45 percent). These issues threaten to derail customer loyalty, which can have devastating impacts on revenue streams.

Customer Experience Will Remain Key for E-Commerce Success

Retailers need to prioritize superior shipping experiences or risk losing customers to competitors. Though social distancing restrictions have been lifted in some regions, the shift to e-commerce is here to stay. Therefore, businesses need to ensure they're doing all they can to maintain customer loyalty. To do this, issues in the supply chain must be analyzed for risks, consistent pain points addressed, and retailers must have a plan for communicating and offering quick resolution to customers in the event of disruption.

Mark Robinson is president and CEO of UPS Capital, a business unit of UPS that protects its customers' finances and provides supply chain solutions.