This commentary was written by Eduardo Lopez-Soriano, vice president at UPS Capital. The views expressed here are solely those of the author and do not necessarily represent the views of Modern Shipper or its affiliates.
The e-commerce boom of the last decade paired with ongoing supply chain disruption has caused an influx of logistical challenges for carriers of all sizes. Carriers looking to remain competitive must now contend with rising costs and increasing rates of theft and damage in the last mile. In this new environment, the shipping experience has become more important to a brand’s bottom line and reputation than ever before.
As carriers attempt to meet growing demands for faster and same-day shipping, they often take the fall from customers when mishaps arise. A recent research report commissioned by UPS Capital shows that 83% of the time, the carrier is blamed when a delivery goes wrong. This can end up hurting customer relationships for both carriers and merchants, damaging their brand reputations. And while it can be hard to prevent unpredictable incidents like porch piracy, carriers can differentiate themselves from the competition by offering more personalized options that prioritize peace of mind.
That same research report illuminates some of the most pressing risks affecting the last mile, while identifying opportunities to improve the customer shipping experience along the way.
Meeting same-day delivery demands drives heightened risk
This research study found that more than half of merchants surveyed (57%) believe that same-day delivery is critical to their business to remain competitive. Consumers echo that sentiment, with 63% of those surveyed stating they are more likely to shop with a business that offers same-day or next-day delivery options, and one-third reporting they are “significantly” more likely. To meet these new demands, many merchants have expanded their carrier networks to include gig economy carriers (such as DoorDash or Shipt), in addition to traditional regional and national carriers.
However, working with a variety of carriers that follow disparate shipping policies has created challenges for merchants seeking to provide a standard, seamless customer experience. This expanded last-mile carrier network introduces more risk, with 60% of businesses surveyed reporting an increase in loss and theft with gig economy carriers compared to traditional carriers. And with the carrier being held responsible for these mishaps the vast majority of the time, same-day delivery and quick-turn shipments are clearly an area for improvement and standardization.
The rise of porch piracy
Another major factor hurting brand reputations is the rise of porch piracy. According to a study conducted by Safewise, about 210 million packages were stolen from residential properties in 2021. To put this number into perspective, there are approximately 122 million households in the United States today according to the U.S. Census. That means the average household is experiencing more than one package theft per year. Carriers and merchants that deliver direct-to-consumer are feeling the pain of these losses – over the last two years, UPS Capital has seen 2x the loss rate for home deliveries vs. B2B deliveries. Our research shows that 64% of merchants have had to pay out of pocket to cover these kind of losses, damaging their bottom line and hurting their carrier relationships. Carriers that are better able to protect their shipments will prove more attractive to both merchants and customers.
Improving CX through personalization
Personalized shipping experiences have emerged as an opportunity for carriers to provide an excellent customer experience in the wake of these disruptions. In addition to delivery speed, today’s consumers are also looking for reassurance that their shipment will arrive safely through personalized shipping options. In another study commissioned by UPS Capital, 87% of consumers reported they would be more likely to shop with a merchant if they could personalize their shipping experience.
As customer concern about shipping mishaps continues to rise, carriers can offer options that reduce a potentially negative experience, including offering date and time definite delivery windows, options for alternate secure delivery locations, and real-time package tracking.
Shipping insurance is another way for carriers to differentiate and keep merchants happy, with 95% of merchants surveyed in the Presonalized Shipping Experience report expressing interest in offering customers the option to purchase insurance for their packages in the event of a loss, theft, or damage. Providing options like shipping insurance gives merchants and customers more control, while reducing out-of-pocket loses for carriers.
Quelling last-mile anxieties
Even though same-day deliveries may only travel a short distance, the risks around loss, porch-pirated theft, and damage remain – especially following these last few years of turbulence. And for emerging, gig economy carriers, their ability to protect packages despite a volatile landscape could make or break their reputation. In addition to personalization options, giving customers more opportunities to protect the items they order online will help quell increasing last-mile anxieties and improve customer experience overall.
About the author
Eduardo Lopez-Soriano is vice president of marketing at UPS Capital and leads the development of insuretech solutions to address the needs of small and midsized businesses (SMBs) in the U.S. and international regions. Eduardo’s deep understanding of SMBs’ emerging supply chain needs and the evolving ecommerce ecosystems in which they operate enables his team to develop relevant and timely solutions to mitigate SMBs’ risk and improve their customer experience. Previously, Eduardo spent several years at UPS in various roles including Vice President of New Product Development where he led an initiative to enhance UPS Weekend Services.
