UPS Pulse of the Online Shopper™ Tech-savvy shoppers transforming retail UPS Pulse of the Online Shopper is an independent study conducted by 3rd Party independent researcher that conducts studies on customer behavior not sanctioned by UPS. This data will help you know how your customers are researching, considering and purchasing. This data will help you grow you business by knowing how your customers what to buy from you. 2016 U.S. Study January 2017

Overview The 2016 UPS Pulse of the Online Shopper™ Study explores: Insights into consumers’ online shopping preferences Future online and omnichannel trends, particularly those driven by technology How social media and other promotional vehicles drive retail sales A total of 5,118 respondents were surveyed; data was then divided into: Shoppers who purchased luxury, non-apparel goods in the past three months: 277 consumers 277 luxury, non apparel - rolex,

Results summary

Demographics of luxury 52% millenials (18–34) 26% gen X (35–50) 20% boomers (51–69) 2% Other (70+) Age 54% male 46% female Gender 6% less than 25K 35% 25K–60K 33% 60K–100K 26% 100K+ Income

Shoppers are highly satisfied with their shopping experience Overall online shopping satisfaction Satisfaction is higher with online channels Consumer satisfaction has increased 40% over the past 5 years. Today it is 81%. Over the past 5 years 81% of customers who shopped online are satisfied. How are they shopping 71% of your potential customers are still shopping at stores. But to gain a wider audience you have to go online. As you will see satisfication is higher when customers shop online vs the physical store. Think 5 years of ago your comfort level and how that compares to today. There is a change in the mindset and you need to have an online presence. 70% smart phone – optimized for multiple types of devices, application (for larger retailers) Where do you think that is going to be in 5 years? Q10. How satisfied are you with your shopping experience in the last 3 months? – % Satisfied - Top 2 Box 7-Point Scale, n-=277 LUXURY NON-APPAREL

Cross-channel purchases are growing 47% Multi-channel net Frequency of purchases by method 35% 35% soley online 47% multi channels, app driven, email driven or in store 18% search and buy online Shopping and buying are two different experiences. Propensity for customers off the street is low vs if there is technology to support the purchase. 82% higher hit rate if online vs just a store. 18% Search and buy online Search and buy in store RB6. Thinking of all the purchases that you make, both online and in stores, how often do you purchase in the following ways? LUXURY NON-APPAREL

In fact, more luxury, non-apparel shoppers plan to increase activity through online methods Percent that will shop more by channel 41% 36% 29% 19% If not online, get with the program – vs 19% in store purchases. 41% of more purchases will be on a laptop. Where are you going to be in 3 years...where are your customers going to be in 3 years. Desktop or laptop computer Smartphone Tablet In store Fut7. Over the next year, do you plan to shop less, the same or more than last year using each of the following means? LUXURY NON-APPAREL

Digital is changing the way shoppers research and purchase goods Research online Purchase online 77% 65% Research is going to happen. Retail website. 16% physical store, 7% catalog. 26% store, catalog 9%. Product research. RB1. Thinking of your favorite retailer that has both physical stores and an online presence, what channel do you prefer to research and purchase products? LUXURY NON-APPAREL

What’s important to shoppers: pre-purchase Most important items when searching for and selecting products online Most influential content when visiting a site 75% 67% 66% 60% Product prices Return policy Detailed product info Retailer reputation Product reviews 71% Communities / forums 66% Photos submitted by consumers 64% Now that we got your customer to your website what will drive them to purchase. Movies... Product information, watch links, rings... Personalized reviews, builds reputation, creditability RB5A. How important are the following factors when searching for and selecting products online? Search1New. When visiting a retailers website, how influential are the following types of content? LUXURY NON-APPAREL

What’s important to shoppers: checkout Free shipping options 26% Variety of payment methods 18% Expedited shipping options Luxury shippers don’t want to be nickeled and dimed. Thresholds set and established 9% Check 2. What information or options are most important to you when going through an online checkout process? LUXURY NON-APPAREL

What’s important to shoppers: post-purchase Satisfaction with aspects of post-purchase experience Information & Communication Communication – post purchase – nurture the relationship Put testimonials of these key satisfaction drivers on your website it will drive sales. (list track) Track1. How satisfied are you with each of the following aspects of the post-purchase experience when shopping online? ? – % Satisfied - Top 2 Box 7-Point Scale LUXURY NON-APPAREL

But the in-store experience isn’t dead 43% Love the thrill of hunting for and finding great deals 50% Shopping relaxes me 47% Shopping in-store is still a major part of my shopping routine 42% In-store visits help me gather new ideas New16_Omni_1. Thinking about the past year, please state your level of agreement with each of the following statements regarding your store behavior. ? – % Agree - Top 2 Box 7-Point Scale LUXURY NON-APPAREL

And, small retailers are very important Top reasons to shop at small retailers 44% Unique items 32% Support community or small business 29% Like to try new retailers 29% Service they provide is superior Customers are willing to make tradeoffs when shopping with smaller retailers 33% Limited hours or inconvenient locations 28% Longer delivery times 26% Paying for shipping and handling 25% Less sophisticated website Retailers must have unique products to compete Don’t follow the big retailers, be unique...that is what customers are looking for Retailer1new. For what reason would you shop with small retailers either online or at a store as opposed to larger, well-known retailers? Retailer2new. What tradeoffs are you willing to accept when shopping with small retailers, either online or at a store, as opposed to larger well known retailers? LUXURY NON-APPAREL

Ship to store is in favor 54% have shipped to store for pickup Plan to use ship to store more in the coming year: 46% of past users 72% Of those, made additional purchases in store Flex5(NewQ_OC4). In the past year, when purchasing online, have you ever chosen the “ship-to-store” or “pick-up-in-store” option? Flex6BNew. Do you plan to select “ship-to-store” or “pick-up-in-store” more often in the next year? Flex6. When you selected “ship-to-store” or “pick-up-in-store”, in the past, did you typically end up purchasing more items while you were in the store during pickup? LUXURY NON-APPAREL

Leverage store returns to drive repurchase Preferred method of return Made an additional purchase In store 81% 64% Online 65% 35% Return an item in store Ship an item back to retailer Ret4. For those retailers that have both a physical store and online presence, how do you prefer to return items that you ordered online? Ret4bnew. In the past year, when making a return to the store, have you also made a new purchase? Ret4cnew. In the past year, when processing a return on a retailer’s website, have you also made a new purchase? LUXURY NON-APPAREL

Social media should be integrated into your marketing strategy 47% 48% 33% 37% 2016 Follow retailers on social media Luxury Goods Non-Luxury Goods Social media influences their purchases 58% are likely to engage with the retailer via social media when they are satisfied with a purchase Critical. Facebook is still relevant #1. Influenced by those posts SM1. Do you use any of these social networking sites in the following ways? % that follow retailers on this site, and % influenced to purchase SM5. When satisfied with a brand or product you have purchased, how likely are you to engage with the brand or product via social media? LUXURY NON-APPAREL

Social media content can engage consumers 63% Promotions Likelihood to click and explore posted content 54% New product announcements 52% Store locators Social2new. How likely are you to click and explore the following types of content posted by retailers on social media? - % Likely - Top 2 Box 7-Point Scale LUXURY NON-APPAREL

Likelihood that these advertisement forms will prompt shopping Emails with promotions are more likely to prompt shoppers to buy from a retailer Likelihood that these advertisement forms will prompt shopping Email promotions are still the best options to prompt purchase. Nueture Ad2. How likely are the following forms of retailer advertising to prompt you to shop with a retailer? - % Likely - Top 2 Box 7-Point Scale LUXURY NON-APPAREL

Protect Your Reputation with Risk Management Major U.S. City Crime Rate per 1,000 Chicago 5.38 New York 2.57 Los Angeles 3.94 Miami 4.18 U.S. Average 2.3 Loss prevention best practices: Select a carrier that offers armed, secured, transportation and insurance Use shipping practices that are non-descript, secure and well packaged Conduct due diligence prior to engaging in new business Control of custody provides physical accountability for your valuables: Use Air Express Service Levels Limit 3rd Party logistics providers Use transportation companies with employees, not contractors When crime is up the threat is higher. Easy targeting, bigger prize, less work/risk for organized crime/cartels to target your valuables. Prevention is the focus. Threat assessments, intelligence gathering Source: FBI / CJIS / UNIFORM CRIME REPORTING (UCR) PROGRAM LUXURY NON-APPAREL

Why not partner with a shipping and insurance specialist who can preserve that reputation? Proprietary and Confidential: This presentation may not be used or disclosed to any person other than employees of customer, unless expressly authorized by UPS. © 2017 United Parcel Service of America, Inc. UPS, UPS Capital, the UPS brandmark, and the color brown are trademarks of United Parcel Service of America, Inc. All rights reserved.