Business at UrbanStems was better than good. The trendy, flower-delivery, ecommerce startup had attracted loyal customers with its emphasis on good service.
And with the loyal customers came determined fraudsters. For a time, anyway.
“We were on the Visa fraud monitoring program for a while because fraud was running rampant on our site,” said Anna Viragh, UrbanStems special projects senior analyst.
So while UrbanStems flourished in attracting customers, Viragh was scrambling to keep them. Kount, the company they had hired for fraud protection, wasn’t working out, and a lot of legitimate orders were being declined.
“We worked with Kount for a while. They couldn’t get our automations right. They couldn’t understand; they couldn’t learn from the decisions — we were informing them of what were good orders, what were bad orders,” Viragh says. “It had to be a human decision to say whether or not [the transaction] was authentic, and because our chargeback rate was so high, we had to overcorrect for what we were seeing. So we were declining a lot of authentic revenue.”
UrbanStems is a retail startup success story. The brand persevered through growing pains and embraced innovative ideas in the challenging world of delivering fresh flowers with must-meet deadlines. UrbanStems said it turned to Signifyd after finding Kount couldn’t stay out ahead of fraud schemes coming at the business. After deploying Signifyd’s Guaranteed Fraud Protection, UrbanStems saw:
- A 3% revenue lift
- A 90% reduction in chargebacks
- An order flow that was 100% automated
Read the full UrbanStems case study.
After UrbanStems signed on to Signifyd’s Guaranteed Fraud Protection, its order approvals increased by 3% and its chargeback rate plummeted by 90%. They also were taken off of Visa’s fraud monitoring program, in which Visa places merchants who have an excessive level of fraud activity.
Signifyd’s guarantee allowed UrbanStems to approve more orders
“The biggest attractor for us with Signifyd was really the chargeback guarantee –– being able to have confidence with the decisions that were being made, and for us to really be hands-off, that was a huge, huge decision-maker for us,” Viragh says. “And to see our approval rate jump over 3% has been very, very, gratifying.”
Viragh talked with us about UrbanStems’ growth and its approach to challenges in the brief video interview below.
UrbanStems was started in 2014 by Ajay Kori and Jeff Sheely, both in their early 30s, and both knowing very little about flowers. They figured they could learn about flowers, but what they already knew was the important role good customer service plays in developing a loyal base.
Kori had been mentored at Quidsi by Marc Lore, who eventually sold that ecommerce site and another, Jet.com for billions. Quidsi was the parent company of Diapers.com.
“The reason his [Lore] sites were so successful was they created the best possible experience for customers,” Kori told the Washington Post. “Even if you could buy diapers cheaper, the moms who bought from Diapers.com wouldn’t go anywhere else, because they knew … if the diapers didn’t get delivered, someone on that team would go and drive it themselves.”
But flower delivery?
UrbanStems launched to innovate on ecommerce delivery
At the time, Kori was in a long-distance relationship and had some miserable experiences sending flowers, he told the Post. He learned that the track record of flower delivery wasn’t good, and the bad review rate of ecommerce florists was even worse. So when he and Sheely set out to start an ecommerce business it wasn’t so much about the product as it was fixing a problem, in this case, an outdated ecommerce delivery system.
And then came the other challenges.
“Since 2014 we’ve grown to be over 100 employees,” Viragh says. ”We do same-day delivery in New York and in D.C. and then next-day delivery nationwide. Being in the floral perishable space presents a lot of challenges when it comes to our supply chain and making sure that we’re not throwing away spoiled product at the end of each week.
“Another huge problem that we see is our spikes in holidays. Valentine’s Day, Mother’s Day, those are really busy times of the year for us and we see our traffic and customers grow on our website almost tenfold,” Viragh says. “And, obviously as it relates to fraud, it is another big challenge we face.”
In 2017, UrbanStems orders for Valentine’s Day had tripled from the year before, and delivery turned into a nightmare. The staff worked through the night and all the next day trying to make it right. Kori sent out an apology and his cell phone number to customers, and he got 300 calls.
Growing pains invite innovation
A year later, when new COO Seth Goldman (formerly head of HelloFresh) met with employees to unpack the debacle and prepare for the next Valentine’s Day, he said there was almost PTSD. “I had a guy who said he had nightmares. Big, strong men said they cried,” Goldman told the Washington Post.
In some ways, that all seems like a million years ago now. As of last year, UrbanStems, based in Washington, has grown 500% since 2018 and had a valuation of more than $100 million. Goldman is now the CEO and Kori remains the chairman.
Viragh says Signifyd has helped UrbanStems achieve its growth: “With Signifyd, we can be proactive and don’t have to worry about refunding customers or canceling orders. We have confidence right at checkout that the correct decision is being made.”
Photo courtesy of UrbanStems
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