Read “The State of Fraud 2023” report
January’s ecommerce sales prove that even when money is tight, and eggs cost double what they did a year ago, and grocery prices rise so fast store clerks gave up changing price tags, fashion remains a priority.
We still want to look good.
Sales of apparel, accessories and footwear led all ecommerce verticals in January, posting a 22% overall increase from a year ago and a 20% increase in order count, according to Signifyd’s Ecommerce Pulse data. Sales of footwear led all fashion categories with a 47% increase in sales from last year, which, when you think about it, is a whole lot of new shoes.
January is usually a sluggish month for shoppers, a leveling out of sorts from the holiday splurge, but merchants helped keep wallets open with post-holiday markdowns. Overall, it was a healthy month for ecommerce sales, up 5% in January from a year ago, helped in part by a 36% increase in shoppers spending their gift cards, Signifyd data shows.
Gift cards were still a big draw in January
And robust sales of gift cards – favorites of the holiday season – continued into January, rising 41% from a year ago. Sales of apparel gift cards rose the highest, up 71%, followed by electronics, at 29%.
Shoppers continued to embrace the purchasing options merchants offer. The buy online, pick up in store or at curbside (BOPIS) option was used 41% more in January than a year ago, and the use of buy now, pay later (BNPL) plans rose 5%.
All these options, markdowns and human vanity helped sales in most verticals increase from a year ago, with only home goods declining by 5% overall and sporting goods sales finishing even, which is not a surprise.
For the sports-minded, January is somewhat of a transition month. It’s a time geared more toward spectating, i.e., couch-sitting, than participating. People already bought their skis and snowboards, the NFL playoffs require intensive couch concentration, as does hockey and basketball; baseball and pro soccer are cocooned, and, with most of the country still in winter, golf and tennis have yet to inspire and ice fishing isn’t exactly for everyone.
Home goods were for the holiday
Understandable also is the January decline in home goods – mostly due to a drop of 12% in furniture and decor sales from last year. Most people buy that new table or a tablecloth for the holidays, not after. And who has money left, anyway?
Conversely, home improvement sales were up 22% in January from last year, Signifyd data shows. And even though this category includes such mundane items as hammers and wax rings for toilets, it can also include paint and new fixtures. All of which shows that even in the midst of a brutal winter and a bipolar economic existence, and a scarcity of eggs, we strive to carry on.
- The National Retail Federation reports that online sales in 2022 were expected to account for approximately $1.29 trillion of total U.S. retail sales. Of that, approximately $212 billion were expected to be returned, and 10.7% ($22.8 billion) will be fraudulent.
- With the overall sales growth of 5% in January came a significant increase in fraud pressure (46%) and in consumer abuse claims (45%), Signifyd data shows.
- Device spoofing, which masks the device being used, was up 150% overall in January from a year ago, with apparel hit the hardest, increasing 107% from last year. Geo-spoofing attacks, which mask an IP address to gain illegal access to a computer or network, increased in the health and beauty vertical by 99% in January from a year ago, according to Signifyd data.
- January sales in home goods show a stagnant average order value but a 22% increase in product volume – a trend in several verticals that shows consumers are trading down and purchasing more low-ticket items than a year ago, Signifyd data shows.
Fraudsters don’t stop with the holidays
The flip side of this healthy January ecommerce news is the downside: fraud. The loss from online fraud for a merchant is double the cost of the item itself — $206.80 once fees, customer acquisition, shipping and other expenses are factored in — according to Signifyd’s State of Fraud 2023 report.
Fraud pressure rose 46% overall in January from last year, with home goods and apparel leading with increases of 68% and 42%, respectively. Signifyd defines fraud pressure as the fluctuation in the number of transactions that Signifyd machine-learning models deem very risky.
In January, consumer abuse, which is fraud by real customers trying to scam a merchant, rose 45% from last year, according to Signifyd data. In most verticals, consumer abuse was in negative figures in January, year over year, but it exploded in the categories of footwear, which rose 729%, health and beauty (543%), and home improvement products, (216%).
Customer abuse costs ecommerce merchants as much as $15 billion a year, Signifyd research shows. And here’s how it works: a survey for Signifyd found that 21% of consumers polled had filed false claims saying their order never arrived. Additionally, 22% falsely claimed that an order that did arrive was unsatisfactory in an attempt to keep the product and get a refund.
Retailers eye returns season warily
Another favorite scam by fraudsters is return abuse, which in January, along with the flood of holiday returns, is absolute misery for merchants. The marketing genius of “easy online returns” has spoiled countless digital customers with the ease of shopping, and though most returns are legitimate, fraudulent returns are rampant.
The National Retail Federation reports that in 2022, $212 billion of online sales were expected to be returned – and of that, $22.8 billion (10.7%) will be fraudulent.
Signifyd can help. Its Commerce Protection Platform uses machine learning and vast transaction intelligence to sift fraudulent orders from legitimate ones in fractions of a second. It comes with a financial guarantee, meaning that Signifyd will pay all costs related to orders it approves that turn out to be fraudulent.
And the platform’s Decision Center determines the level of risk of each return and refund request. Merchants can customize automated responses to return requests based on whether they are high risk, medium risk or low risk, for instance. A low-risk return might result in an immediate refund while a high-risk return might call for issuing store credit once the product has been returned and inspected.
Explore more live ecommerce data from Signifyd
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