UPS Pulse of the Online Shopper™ A customer experience study

Table of contents Background: e-Commerce Growth 3Background: e-Commerce Growth 3 Research Study Methodology 9Research Study Methodology 9 Executive Summary13Executive Summary13 Online Shopping Experience: Search & Browsing27Online Shopping Experience: Search & Browsing27 Online Shopping Experience: Via Mobile Devices38Online Shopping Experience: Via Mobile Devices38 Checkout & General Shipping Preferences50Checkout & General Shipping Preferences50 The Delivery Experience61The Delivery Experience61 The Post-Purchase Experience66The Post-Purchase Experience66 Social Media77Social Media77 Loyalty83Loyalty83 Future of Retail 87Future of Retail 87 Appendix96Appendix96 2 PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS.

Background e-Commerce Growth

Desktop e-Commerce (retail + travel) reached $322B n in 2013, up +11% Y/Y overall and +13% Y/Y for retail PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 4

In Q4 2013, m-commerce accounted for 12% of all retail e-commerce for the year, m-commerce nearly hit $25 billion & grew +22% vs 2012 PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 5

When including both mobile and desktop spending, e-commerce accounted for 12% of consumers’ discretionary spending in Q PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 6

m-Commerce continues to gain share, accounting for 12% of all retail e-commerce sales in Q PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 7

Mobile and desktop sales combined grew 13% in Q and nearly met Q levels 8 PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS.

Research Study Methodology

Research objectives What do consumers want in an online shopping experience? How important is information (product and service) when making a purchase? How are mobile and social media channels changing consumers' shopping habits and expectations? What do consumers want to see from retailers in the online checkout and delivery experience? What do consumers want in returns options and how important are returns? What drives repeat customers and retailer recommendations? What current and future technology offering for retailer do shoppers value? To gain insights into consumers’ online shopping preferences and understand what pre-purchase, purchase and post-purchase experiences create consumer satisfaction and loyalty. PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 10

comScore panelists were sent s inviting them to participate in a survey The link re-directed participants to a minute custom online survey designed by comScore in conjunction with UPS Data collection occurred between February 27 and March 9, 2014 A total of 5,849 respondents were surveyed and the following quota groups were observed: 2-3 online purchases in a typical 3 months: 20% 4-6 online purchases in a typical 3 months: 40% 7+ online purchases in a typical 3 months: 40% Data were balanced to reflect the age/gender/shopper distribution of the total online population PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. Research methodologies Quantitative – online survey 11

Confidence intervals A confidence interval (CI) is used to indicate the reliability of an estimate. At 95% confidence, the sample of roughly 5,849 respondents has a confidence interval of Anything outside of +/- 1 point on either side of the measure means that there is real credence in the selections being different. PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 12

Executive Summary

Executive summary The “flex shopper” emerges in the fluid multi-device, multi-channel world: 1.Convenience dominates the shopping landscape online and in store 2.Comprehensive information is essential 3.Technology adoption is changing the dynamic In unexpected ways 4.Logistics plays a role all along the path to purchase PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 14

Executive summary: Convenience dominates 1.Convenience Dominates the Shopping Landscape Online and In Store ─Convenience often becomes the driving force behind channel selection ─With retailers fulfillment times improved, the differences among channels are less critical for consumers ─Retailers will be pressed to create compelling online and in-store shopping experiences coupled with exceptional service. Choice of channel is based on many variables and is in a constant state of flux as shoppers weigh personal circumstances, shopping needs and logistics (or shipping) options PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 15

Executive summary: Convenience dominates PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 16

Executive summary: Convenience dominates Mobile gains ground as consumers seek convenience in accessing online shopping and connecting to retail stores for a variety of tasks PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 17

Executive summary: Comprehensive information 2. Comprehensive information is essential Information is central to decision-making and each retailer makes choices about how much information is ideal to satisfy the shopper Investments in content from photography to educational tools must be weighed carefully This information may never replace a well-informed sales associate but properly delivered can support researching in advance of store visits Information in the context of customer service is also a concern for shoppers wanting easy access and clarity on policies PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 18

Executive summary: Comprehensive information Retailers are not always supplying enough information to facilitate shopper decision-making – from imagery to customer service elements (especially returns) PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 19

Executive summary: Comprehensive information PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 20

Executive summary: Technology adoption 3. Technology adoption is changing the dynamic in unexpected ways Web and mobile facilitate the ability to comparison shop at every stage of the shopping journey Price comparison engines are powerful, and Amazon.com serves as the de facto price check for shoppers Technology enhancements are continually made available to consumers, and present new ways of shopping that are taking product recommendations and personalization to new levels Retailers must now make it a top priority to deliver an efficient shopping experience for all devices – desktop/laptop, smartphone and tablet PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 21

Executive summary: Technology adoption Price-sensitive shoppers, living in a promotionally charged retail climate, take advantage of technology to secure best prices PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 22

Executive summary: Technology adoption New technologies are making the shopping experience in store more dynamic while bringing some of the informational and personalization advantages of online shopping to brick-and-mortar stores PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 23 Satisfied or dissatisfied shoppers will voice their opinions on social media

Executive summary: Logistics plays a key role 4. Logistics plays a key role all along the path to purchase Logistics – defined here as fulfillment, delivery and returns – plays a major role in customer experience in the pre-purchase, purchase and post-purchase phases The availability of free or discounted shipping is an important factor for many shoppers at the outset of a product search Providing a full range of delivery options at checkout as well as convenience and flexible returns should be key areas of retailers’ focus Returns continues to be an area where consumers are dissatisfied, providing a opportunity for retailers to create a competitive advantage PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 24

Executive summary: Logistics plays a key role While online shoppers seek out free shipping, successful retailers have develop strategies to incent, reward and retain customers PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 25

Executive summary: Logistics plays a key role Returns remains an area highly valued by consumers but underserved by retailers PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 26

Online Shopping Experience Search & Browsing

Researching and purchasing are still strong on PCs, while mobile shopping continues to grow PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 28

PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 29 Consumers tend to begin their searches for products on Amazon or through a search engine 43% of product searches begin on the retailers’ channels

Shoppers made almost half of their purchases in store, yet satisfaction with in-store shopping lags PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 30

Customer service and return policy access are key focus areas of shopper dissatisfaction PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 31

The products purchased most in the last three months are books/music/movies and apparel PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 32

Shoppers are divided between waiting and turning to competitors when items are out of stock PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 33

Consumers expect detailed information and choices up front for purchase considerations PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 34

The desire to do additional research drives consumers to search items in store but later on buy online PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 35

Regardless of where online shoppers are researching, they prefer to buy online nearly 60% of the time 36 PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS.

Shoppers prefer a personal touch in store at checkout, but some are open to mobile options PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 37

Online Shopping Experience Via Mobile Devices

Over half of tablet users and over a third of smartphone users have made a purchase on those devices PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 39

The majority of consumers make online purchases on only a desktop or laptop PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 40

Desktop/Laptop is the most frequently purchased on device among multiple device purchasers 41 PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS.

Consumers prefer using a retailer’s full website even when shopping on smartphones and tablets PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 42

PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 43 The mobile shopping experience drives shoppers to desktop/laptop purchases Hard to see, find and compare are barriers on mobile

Mobile devices are most frequently used to track deliveries, research products and locate stores PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 44

Two out of every three consumers use smartphones in store to expand shopping capabilities PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 45

Shoppers embrace mobile wallet activities for couponing, paying, buying and ticketing PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 46

Access to mobile applications reduces cross shopping and drives loyalty PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 47

Consumers who use retailers’ apps access them to seek information and rewards, make purchases and connections PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 48

Consumers who don’t use retailers’ apps are deterred by security concerns and low comfort level with technology PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 49

Checkout & General Shipping Preferences

PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 51 Online purchase satisfaction is high, led by transparent delivery dates and easy checkout

Besides free shipping, shoppers value knowing delivery date and shipping costs at checkout PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 52

93% of consumers take action to qualify for free shipping PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 53

Online cart abandonment is driven by consumers’ desire to research products and total purchase cost PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 54

Consumers expect many shipping options, however, two-thirds of the time they select economy ground PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 55

While speed is important, consumers are surprisingly patient on delivery times 56 PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS.

Consumers are willing to wait even longer in exchange for free shipping 57 PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS.

Consumers who shop on international retail sites select economy about three-quarters of the time PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 58

Half of consumers have abandoned a purchase due to a long delivery estimate Roughly one-third did so because no delivery time was provided PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 59

Over half of consumers prefer seeing the expected date of arrival versus the number of days to arrive PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 60

The Delivery Experience

Consumers prefer one in four packages routed to locations other than their home or residence PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 62

Shoppers embrace alternate delivery locations and rerouting when not at home to sign PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 63

UPS is the preferred carrier for shoppers surveyed PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 64

Shoppers’ unmet expectations impact repeat purchase and retention PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 65

The Post-Purchase Experience

Most consumers prefer delivery information proactively sent to them by , text or mobile app PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 67

Lack of delivery options can negatively impact the post-purchase experience PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 68

Setting delivery expectations and giving consumers control over deliveries are important PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 69

PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 70 “Ship to store” services are often viewed by the consumer as a means to avoid paying shipping costs This can lead to incremental sales gains for the retailer

66% of consumers view a return policy before purchasing an item PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 71

Cost and convenience are the top returns factors influencing purchase decisions PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 72

Online returns are consistent with last year, as 3 in 5 reported they have returned an online purchase PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 73

Paying for return shipping and restocking fees are top shopper issues for online returns PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 74

Free returns and hassle-free ‘no questions asked’ policies are the best elements of a returns experience PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 75

Aside from product value and quality, on-time delivery is the highest factor of customer satisfaction PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 76

Social Media

More than one-third of all online shoppers use social media to make purchase decisions PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 78

Close to two-thirds of Facebook users have “liked” a retailer while most pay attention to retailers’ updates PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 79

Over one-third of consumers who are happy with their purchase are very likely to promote their purchase on social media, primarily on Facebook PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 80

Reviews on marketplaces and retailers’ websites are the most influential PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 81

If dissatisfied with a purchase, one in five will complain via social media PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 82

Loyalty

38% of online shoppers participate in retail loyalty programs PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 84

Shoppers most value savings and exclusive access from their loyalty programs PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 85

Price and personal preference trump brand loyalty PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 86

Future of Retail

88 PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. While online subscription services are appealing to a niche market, almost half of non-participating consumers would consider enrolling

Shoppers find ratings and reviews most helpful when deciding on purchases PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 89

Privacy protection is the top influencer in consumers’ likelihood to shop with a retailer among non-product- related options PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 90

More consumers have gained trust in online shopping than have lost trust in the past year PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 91

One in four are interested in new technologies that bring customized and personalized online shopping benefits to stores PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 92

Millennials find new technological conveniences more appealing than the average shopper PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 93

One in five desktop and tablet users foresee shopping more on those devices in the future PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 94

Thank you © 2012 United Parcel Service of America, Inc. UPS, the brandmark and the color brown are registered trademarks of United Parcel Service of America, Inc. All rights reserved.

Appendix

Over half of consumers who purchase items online have opted to ship to store for pickup PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 97

Recent credit card security breaches have impacted trust in online shopping for over 4 in 10 consumers PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 98

99 PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. Consumers are neutral about what day they receive their packages

Half of online consumers of healthcare supplies and medication place importance on real-time package visibility and notifications PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 100

Over half of consumers have a preference in the type of packaging used for their items when shipped PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 101

Nearly half of all consumers have purchased additional items from retailers based on coupons, samples or information included with their shipment PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 102

Groceries were ranked as the top purchase category, followed by Books/Music/Movies in the last 3 months PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 103

PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS % of consumers are willing to wait 5 days for their online purchases and many are willing to wait additional days if shipping is free

105 PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 83% of consumers are willing to wait an additional two days for free shipping

While online subscription services are appealing to a niche market, almost half of non-participating consumers would consider enrolling PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 106

PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 107 For consumers willing to wait two days for their online purchases, 69% would be willing to wait an additional two days to receive free shipping.

PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 108 For consumers willing to wait three days for their online purchases, 80% would be willing to wait an additional two days to receive free shipping.

PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 109 For consumers willing to wait four days for their online purchases, 80% would be willing to wait an additional two days to receive free shipping.

PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 110 For consumers willing to wait five days for their online purchases, 85% would be willing to wait another two days to receive free shipping.

PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 111 For consumers willing to wait six days for their online purchases, 82% would be willing to wait an additional two days to receive free shipping.

PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 112 Consumers willing to wait seven days to receive their online purchases are even more apt to wait additional days to receive free shipping.

PROPRIETARY AND CONFIDENTIAL: THIS PRESENTATION MAY NOT BE USED OR DISCLOSED TO ANY PERSON OTHER THAN EMPLOYEES OF CUSTOMER, UNLESS EXPRESSLY AUTHORIZED BY UPS. 113 Consumers willing to wait eight days to receive their online purchases are even more apt to wait additional days to receive free shipping.