AI Drives the Future of Shipping and Customer Satisfaction

In a new report by UPS Capital, surveyed merchants reported a staggering 30% increase in shipping volume driven by eCommerce growth over the past two years.

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In a new report by UPS Capital, surveyed merchants reported a staggering 30% increase in shipping volume driven by eCommerce growth over the past two years, confirming that the shipping and logistics sectors are at a critical junction. The explosive rise in online shopping, expected to grow by more than 10% annually through 2027, has introduced significant challenges, including increased risks of lost, delayed and stolen packages. These issues threaten not only merchants’ bottom lines but also their ability to deliver exceptional customer experiences, which is vital for maintaining brand loyalty.

The Future of Shipping: A Path Paved by Innovation and Personalization Report, commissioned by UPS Capital, uncovers valuable insights into how the rapid growth in eCommerce has influenced merchants’ approach to shipping and explores key trends that are shaping the future of logistics.

Key Takeaways:

  • The recent surge in eCommerce has led to a significant increase in shipping volume, with over half (54%) of surveyed merchants reporting a rise of more than 30% in the past two years. This aligns with customer trends, as 48% of surveyed consumers intend to increase their online spending in 2024.
  • Top Three Challenges Surveyed Merchants Anticipate as eCommerce Volumes Rise:
    1. Fulfillment speed challenges
    2. Managing spikes in demand during peak periods
    3. Enabling more real-time shipment tracking and transparency
  • The UPS Capital report discovered that three in four (77%) of surveyed SMB decision-makers have implemented some form of AI-enabled technology.
  • Surveyed merchants anticipate AI-driven solutions will reshape the shipping industry by enhancing efficiency (67%), reducing human error (58%), and improving inventory management in warehouses (44%), showcasing AI’s enormous potential in transforming the shipping landscape.
  • By offering tangible rewards and exclusive experiences, loyalty programs serve as more than incentives for repeat business. They play a pivotal role in shaping brand image and customer perceptions.
    • This is why nearly half (49%) of surveyed consumers rank loyalty programs as one of the most appealing benefits that retailers offer, second only to free shipping (81%). Consequently, more than half of the merchants surveyed are prepared to offer exclusive discounts (55%), redeemable rewards (55%), and early access to new products/services (54%).
  • Interestingly, while an impressive 92% of merchants in the study express confidence in their returns logistics, they also candidly report encountering significant challenges in processing returns, such as time, cost, customer service impact, and inventory management.
  • Top Challenges Surveyed Merchants Face When Processing Returns:
    • Processing time (50%)
    • Cost of reverse logistics (43%)
    • Identifying root causes (36%)
    • Customer service impact (36%)
    • Inventory management (33%)
    • Financial forecasting (30%)
  • Surveyed merchants see data analytics and automation as potential solutions to alleviate some of the challenges posed by returns. Specifically, they see these technologies as instrumental in optimizing inventory management (50%) and reducing return processing costs through optimized return shipping (37%).