E-commerce has shifted the retail sector in a number of ways — from fraud to theft prevention, retail security leaders have to respond to rising cyber-physical convergence in the industry.

The 2022 Annual State of Shipping report from UPS Capital asked 500 retail merchants and 1,000 e-commerce consumers about their experiences with online ordering and product delivery. The report asked merchants to rank the top threats affecting loss in their organizations.

E-commerce retailers ranked the following physical security threats as top sources of loss to their businesses:

  1. Porch piracy (54%): Two in five e-commerce merchants said that porch piracy has increasingly affected their business in 2022, according to the report.
  2. Damaged shipments (51%): Damaged items affected 36% of e-commerce consumers.
  3. Lost shipments (49%): Over half (55%) of consumers have experienced package or item loss during the shipping and delivery process over the past two holiday seasons.
  4. Inventory delays (37%): Twenty-eight (28%) of consumers were affected by late shipping and 19% experienced unfulfilled orders due to inventory challenges.
  5. Reverse logistics (30%): Delays in claim resolution have resulted in business loss for merchants, according to the report. Two-thirds of e-commerce retailers have had to cover costs of product replacement, reshipment or refunds out of pocket prior to claim resolutions.

Losses occurring during the shipping and delivery stages of e-commerce have affected the majority of merchants, with 92% of retailers surveyed reporting retail loss due to stolen, lost or damaged shipments. According to the UPS survey of small- to mid-sized businesses (SMBs), over half of SMBs have lost more than $50,000 in the last year due to shipping incidents.

In addition to the losses caused directly by theft and shipping issues, 37% of e-commerce merchants reported an increase in negative reviews due to shipping delays, package loss and theft that caused reputational damage to their businesses.

For more information, download the report.