Top physical security threats affecting e-commerce this holiday season

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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:

Porch piracy (54%): Two in five e-commerce merchants said that porch piracy has increasingly affected their business in 2022, according to the report.
Damaged shipments (51%): Damaged items affected 36% of e-commerce consumers.
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.
Inventory delays (37%): Twenty-eight (28%) of consumers were affected by late shipping and 19% experienced unfulfilled orders due to inventory challenges.
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.

Madeline Lauver is the Editor in Chief of Security magazine. Lauver joined Security in 2021 as its Assistant Editor, and she covers news affecting enterprise security leaders, including physical security, cybersecurity, leadership and management, risk and resilience and more. Within her role at Security, Lauver focuses on news articles, Web Exclusives, features, and several departments for Security’s monthly digital edition, as well as managing social media and multimedia content. Lauver graduated in 2019 with a BA in English, German and Media Studies from Kalamazoo College.

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