Report: As e-commerce grows, retailers must strengthen supply chains

As the e-commerce industry continues to grow around the world, a new report highlights the challenges retailers face in keeping up with the growth in demand.

According to research firm EMarketer, global e-commerce sales are expected to exceed the $6 trillion mark in 2024, up from $5.8 trillion the previous year. It is also estimated that just over 20% of all retail sales will take place online. With this in mind, UPS Capital surveyed 500 e-commerce sellers and 1,000 consumers, highlighting that “companies that fail to adapt and strengthen their supply chains risk being left behind in the e-commerce revolution.”

Of the merchants UPS Capital spoke with, 45% said they currently ship more than 20% of their e-commerce orders internationally, as 73% of consumers say they shop online from other countries. Over the last 12 months, 73% of e-commerce sellers have had their businesses impacted by international shipping issues such as delays, damaged products or theft, mainly due to congested overseas ports.

With the increase in e-commerce orders, clothing retailers in particular have faced warehouse management problems. Half of all clothing retailers surveyed said their biggest challenge was physical warehouse space, followed by the ability to ensure quality at 47% and inventory gaps at 43%.

E-commerce sellers also struggle with returns processes, with 49% saying they suspect more than 20% of their returns were fraudulent. Sellers point to several different factors that make it difficult to identify fraud, including the use of lax returns policies and pressure to please customers.

On the consumer side, counterfeit goods are the main problem. About 42% believe that the number of counterfeit products is increasing, and 23% said they received a counterfeit product after ordering an authentic product online.

The UPS Capital report also highlighted the discrepancy between the relative shipping speeds of many retailers and the speed consumers expect for their orders to arrive. About 42% of sellers said it takes two or more days for an online order to be ready for shipment, while 46% of consumers expect online orders to arrive within three days.