When it comes to the holidays — it is not just bells that jingle, but cash registers too. Online shopping has grown tremendously in recent months, mainly driven by movement and travel restrictions caused by the pandemic. For instance, at Southeast Asia-focused shopping platform Lazada, sales during 9.9 in 2020 were double that of 2019. Retailers are no doubt noticing this and are taking stock of ways to capture the pool of 40 million new Southeast Asian digital consumers that came online in 2020.
As the mistletoe and holiday promotions go up in the ‘new normal,’ e-commerce is turning out to be the panacea for physical retail woes. There was a flood of new e-commerce entrants joining the fray as traditional or brick-and-mortar merchants switched to digital sales in the first year of the pandemic. From small businesses coming online to major retailers expanding their online presence, customers were inundated with choices, benefitting from the intensified competition in the market.
However, an increase in online traffic and growth in sales volumes also translates to another challenge for e-retailers: The problem of fraud, especially during the festive shopping season. This is the period of bounty for e-retailers when they maximize revenue and customer conversion. Still, to stay competitive and provide a stellar shopping experience, they must begin to plan, anticipate and prepare for any potential issues now to mitigate fraud risks during the holiday rush.
This checklist is a sure-fire way for e-retailers to get the most out of this year’s holiday shopping season in the new normal:
1. Setting the stage for a standout customer experience
This year, e-retailers need to stand out by ensuring a stellar customer experience throughout the customer lifecycle. An underrated and often overlooked priority in this process is moving beyond fraud system limitations and manual reviews, which can cause significant bottlenecks during the peak season and present a treacherous bump in the customer experience journey.
Australian fashion retailer Hello Molly struggled with exactly this. Their reactive risk management and manual fraud reviews essentially delayed order fulfillment and slowed business growth. Adopting a real-time fraud prevention platform embedded in multiple customer touchpoints allowed Hello Molly to overcome this challenge, raising transaction approval rates to 99% while removing the bottleneck of manual reviews. As a result, the Hello Molly team can now approve orders in under one second – fulfilling them quickly while still staying one step ahead of would-be fraudsters.
Retailers should leverage integrated fraud prevention platforms that generate insights based on consumer behavior rather than rely on rote manual reviews. These platforms allow them to scale their fraud prevention approach to correctly identify fraudsters while dodging slow and bothersome approvals caused by rigid rules.
2. Getting the bang from your promotion buck
Singaporeans are known for their penchant for hunting down a good deal – and the promotions and discounts of year-end sales from 9.9, Singles Day, Black Friday, and Cyber Monday are a classic strategy for e-retailers to welcome existing customers and bring in new ones.
However, these enticing promotions can also attract an unsavory pool of fraudsters and may tempt good customers to abuse these discounts, resulting in a spike in promotional abuse and customer acquisition costs.
Online beauty retailer Adore Beauty adopted a real-time, automated fraud management platform to address the challenge of new customer transactions being unduly judged as suspicious. The platform enabled the Adore Beauty team to determine the legitimacy of each shopper through real-time evaluations and introduce high-risk product categories like perfumes to grow the business.
3. Fulfilling holiday orders and wishes
In the season of giving, a holiday surge is a norm. We have all been guilty of ordering gifts a little too close to the holidays and hoping that retailers can make it work, just as Santa’s little helpers do in the lead up to Christmas. Especially since social distancing measures are still in place, the restrictions will likely cause a strain on fulfillment processes when order volumes go up during the holiday season.
Last year when Singapore implemented strict restrictions that only allowed essential businesses to remain open during its ‘circuit breaker’ period, supermarket chain NTUC FairPrice nearly reached full capacity at daily delivery facilities. RedMart, an online grocery shopping and delivery platform owned by Lazada, also reported delays for deliveries for up to a week before they could be fulfilled.
Time is money, and order fulfillment is a vital part of retaining and attracting customers. And retailers could be missing out on opportunities to accelerate order fulfillment through real-time and instantaneous approval of orders. Dependence on manual fraud review is inherently unscalable. A spike in orders can result in longer confirmation processes and potentially delay order fulfillment enough for retailers to end up on consumer blacklists.
This is where automation can play a contributory role. Automated fraud prevention eliminates manual reviews, allowing businesses to scale their offerings and order volume seamlessly. Additionally, automation allows retailers to take a proactive fraud management approach by leveraging a global network of fraud data - instead of reactive rules that can be one step behind agile fraudsters.
4. Reaping the returns from flexible returns
Flexible returns are vital to converting customers, especially those who are deliberating over holiday gifting. However, this incredibly convenient feature can become a double-edged sword with returns abused for fraudulent purposes. For e-retailers, this can impede the process of expanding product offerings to newer, high-demand goods.
To overcome this challenge, fraud prevention solutions deployed at multiple touchpoints, such as point of return initiation, can assist e-retailers in mitigating return abuse. At the same time, e-retailers can still offer the convenience and value-added service of flexible return to consumers.
Additionally, modern fraud prevention technology taps on advanced behavioral data augmented by machine learning to help e-retailers distinguish between genuine customers and policy abusers. Data analytics allow e-retailers to effectively identify and stop first-time abusers of return policies without risking blocking a potentially good new customer. The larger the fraud prevention network, the better chance e-retailers have at spotting fraudulent actors, as is the ability to cross-reference data to spot repeat offenders seamlessly.
With much on the line, even as the pandemic brings new challenges, e-retailers cannot run the risk of dropping the ball. So as they gear up for the ‘new normal’ holidays, preparation should be made sooner rather than later – before they end up on consumers’ ‘naughty lists’.
Monica Acree, vice president for APAC at Forter, wrote this article.
The views and opinions expressed in this article are those of the author and do not necessarily reflect those of CDOTrends. Image credit: iStockphoto/AlbertPego