Why Retailers Can't Afford a Bad Delivery Experience

In recent years, the blame game around shipping mishaps has shifted. According to a recent report from UPS Capital Insurance Agency, Inc., only 39 percent of surveyed consumers now blame shipping providers for delivery issues — a stark contrast to 83 percent in 2022. This means consumers are holding retailers directly accountable for a superior delivery experience, and brands that fall short will face the consequences of customer dissatisfaction.

This change is driven by rising consumer expectations. Nearly a third (31 percent) of consumers rank fast delivery as their top priority when choosing a retailer, surpassing both price and product selection. Retailers are feeling the heat: 85 percent of merchants surveyed report operational impacts from rising delivery expectations, and 42 percent cite major disruptions. The pressure to deliver packages quickly, on time, and in perfect condition has never been greater, and any failure reflects directly on the retailer’s brand.

Reputation on the Line

How retailers handle the last mile is important as it heavily influences purchasing decisions. An overwhelming 98 percent of merchants believe the delivery experience impacts brand reputation, and 58 percent consider it one of the most important factors.

As the retail landscape becomes more competitive, smooth and reliable delivery isn’t just a convenience, it’s a requirement for customer satisfaction and loyalty. About 61 percent of consumers check reviews before making a purchase, and a single bad delivery experience can lead to lost sales and negative word-of-mouth. Furthermore, if a brand mishandles a shipping issue, a quarter of consumers hesitate to shop with that retailer again.

The Cost of Delivery Issues

Poor delivery experiences don’t just damage a brand’s reputation, they hurt the bottom line. The same report reveals 42 percent of merchants experience damage, loss or theft in at least 2 percent to 5 percent of their shipments each quarter, representing substantial financial drains.

Compounding the problem, 73 percent of merchants cover these losses out-of-pocket due to disputes or a lack of adequate insurance, a 14 percent increase over 2022. This highlights a critical vulnerability for many businesses, as they absorb costs that chip away at already thin margins.

Taking Back Control

To address these challenges, many retailers are taking proactive steps to improve delivery outcomes. Beyond insurance, 41 percent of merchants are considering advanced real-time tracking solutions, and 32 percent are exploring AI-driven route optimizations to enhance efficiency and reliability. These technological investments provide greater visibility and control over the last mile.

However, implementation isn’t easy. More than a third (36 percent) of merchants say high costs of visibility tools and the complexity of managing multiple carriers are major obstacles. Retailers looking to overcome these hurdles are exploring innovative solutions such as:

• Partnering with trusted logistics providers to streamline delivery operations.
• Offering subscription-based shipping programs to offset costs.
• Leveraging crowdsourced delivery networks to expand fulfillment capabilities without large infrastructure investment.

Win the Last Mile

Shipping mishaps, whether due to theft, damage or delays, now affect more than just financials. They directly influence brand trust, customer satisfaction, and long-term loyalty. Retailers can take control of the last mile by embracing innovative solutions that offer a transparent and reliable delivery experience — from the cart to the customer's doorstep.

Ashley Hillman is vice president of product at UPS Capital, a financial services division of UPS that offers multicarrier, multimodal shipping insurance and additional services to reduce risks and preserve cash flow.