This 2021 holiday shopping season will be a wild one for ecommerce merchants. Not only are online sales expected to reach historic highs, but fraudsters are also going to pull out all the stops to seize as much as they can in the resulting (chaotic) environment.
Two-thirds of consumers are already buying more today than they did prior to the pandemic, according to a recent survey. Looking forward to the holidays, more than half (54.5%) say they will shop online as much as they did during the holiday season 2020, and 28% expect to shop even more online than previously.
Complicating matters, omnichannel shopping is coming into its own in force, with nearly half of consumers (47%) planning to do a combination of in-store and online shopping for the holidays.
The numbers put the holiday fraud threat in perspective
All of this opens up massive opportunities for fraud, amounting to conditions for facilitating what Signifyd calls a “golden age” for fraud. As ecommerce sales accelerated during and in the aftermath of the COVID-19 pandemic, Signifyd’s data showed that fraud in various forms accelerated with it. Signifyd’s State of Fraud Report 2021 found:
- A 146% increase in automated fraud attacks in 2020.
- A doubling of consumer abuse — including false claims that an order never arrived — in the first half of 2021.
- A 510% increase in fraud pressure — orders deemed to be fraudulent — by September 2021.
The Signifyd report goes into detail about what all these portends for fraud in the upcoming holiday season, including lots of real-life examples of how ecommerce retailers are fighting back. In this blog, we’ll touch on some of the highlights, while recommending you download the full report for the details.
Manual vetting won’t do the trick
Ecommerce retailers that have traditionally relied upon rules-based systems and manual order review are finding that these precautions don’t work in an era of high volumes and a plethora of new fraudster tricks.
If you’re still asking members of your risk team to personally vet transactions that look suspicious, they’ll be spending more and more hours pouring over dubious transactions and calling consumers for verification. This not only slows up the purchase approval lifecycle — something unacceptable to today’s consumers — but it may force you to hire more people, squeezing your profit margins. Then there’s the fact that when risk teams become overwhelmed they also tend to become more conservative, meaning more legitimate orders get declined. This is just as bad — or worse — for revenue as accepting more bad orders.
How Signifyd can help
Signifyd offers a Commerce Protection Platform that uses machine learning and big data to instantly sort fraudulent from legitimate orders. The platform informs decisions based on millions of transactions across thousands of merchants around the world. Its machine models constantly learn, meaning as fraud attacks shift, your defenses shift with them.
And Signifyd’s Abuse Prevention solution extends its protection to non-fraud chargebacks, such as false item-not-received claims and claims that a perfectly good item arrived damaged or not as described. And its Return Abuse Prevention solution assures retailers that they can protect themselves in an automated fashion from return fraud, while still controlling exactly how they will handle low-risk, medium-risk, and high-risk return requests.
And on top of all this protection, Signifyd’s solution enables fearless commerce by providing a full financial guarantee against all manner of chargebacks.
Real-world examples illustrate what the right anti-fraud solution can do
A common refrain among retailers during the height of the pandemic was that every day was a holiday.
Not as in a day off, but as in a day when ecommerce orders were adding up in a way that was previously unknown. Signifyd found that In the early COVID days, the percentage of retail sales conducted online doubled — hitting 33% of all retail revenue. Moreover, merchants’ ecommerce revenue more than doubled in the first month of lockdown as new online shoppers flocked to ecommerce to avoid stores that were either closed or viewed as a health threat to enter physically.
Here are some real-world examples of Signifyd in action during these times:
- Mack’s Prairie Wings, a venerable Arkansas outdoors goods emporium, faced its ultimate challenge at the height of the pandemic when its online orders increased by 50% overnight. Risk team members were manually reviewing 25% of the orders coming in, often calling customers to try to verify their identities. Sometimes this would result in one or two days’ delay to customers getting the products they ordered. But in a world measured by Amazon one- and two-day delivery times, this was clearly unacceptable. Mack’s turned to Signifyd’s Revenue Protection and boosted its approval rate by 5.5%, while reducing its seasonal customer service payroll by 60%.
- Sonos, a leader in home audio, saw holiday sales headed skyward in 2020. The holiday season went on to become the most successful the online retailer had ever experienced. The business nevertheless had the most “stress-free” holiday it had ever had thanks to the fraud-protection automation capabilities of Signifyd.
- Astound Commerce, an independent digital commerce specialist, found that online exploration of brands, products and experiences has become an intrinsic part of today’s customer journey, providing shoppers with endless store aisles, readily available reviews, a multitude of delivery and pick-up options. Not only did more options suit every customer’s lifestyle, they also opened the door wide to fraudsters. What were once considered benefits of purchasing digitally are now habitual practices that will prevail in retail indefinitely. Without a platform like Signifyd, Astound found online retailers struggling to balance the risk of allowing uncertain transactions with turning down legitimate ones.
Conclusion: The opportunities will be won by those who are prepared
Risk teams that have embraced this new era of ecommerce are looking at commerce protection in a new way.
They understand that retail leaders know what to do in order to compete — particularly with dominant players like Amazon.
They understand that many ecommerce executives have been unable to act, because they are afraid of what might go wrong if they take risks.
But embracing modern fraud solutions, built on data and artificial intelligence and backed by a financial guarantee spurs a mind shift — a shift to “fearless commerce.” Read the Signifyd report to get the full story.
The holiday shopping season is here. Let’s talk about scaling up for the crush of orders.