DIpil Das
We present key insights from a Coresight Research webinar on October 14, in which Riskified’s Growth, E-Commerce and Payments Consultant, Jesse Thares, discussed challenges retailers face when confronting fraud in today’s rapidly changing environment. The webinar was hosted by Deborah Weinswig, CEO and Founder of Coresight Research.
E-Wallet and Mobile Purchases: New Users Drive Online Growth
Thares and Weinswig noted that much of the well-documented recent growth in online shopping has been generated by new adopters. These new users are ordering at nearly the same rate and volume of longtime e-commerce users. Equally surprisingly, these new online shoppers are using mobile purchasing options and e-wallets at high rates. Traditionally, desktop sales have dominated e-commerce sales, particularly among older consumers and newer adopters.
Thares credited this high online purchasing volume among new consumers partly to pandemic-induced purchasing but also to retailers’ emphasis and focus on improving their digital capabilities.
Brands are becoming more deliberate about their choice of channels to focus on and grow. Thares cited Subway’s recent reintroduction of the five-dollar footlong sub, only available to consumers purchasing two sandwiches in the Subway app. By focusing on mobile offerings, brands can not only boost their overall online sales but also direct new users to apps rather than websites to focus on the growing number of touchpoints they have with consumers. Thares mentioned that new users may also be drawn to mobile apps because they have in-store experience of using loyalty apps and looking up product information.
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Jesse Thares and Deborah Weinswig discuss how retailers can adapt to changing behavior among fraudsters
Source: Coresight Research [/caption] With New Shopping Behavior Comes New Fraud As online shopping has grown, so has the opportunity for online fraud. Thares told Weinswig that many fraudsters target high-volume shopping avenues, hoping to get lost amidst the hustle and bustle. As more traffic moves online, fraudsters are finding new shopping areas to exploit. According to Thares, BOPIS orders are at particularly high fraud risk, as the tight fulfillment window gives retailers less time to assess whether orders are legitimate. Expedited delivery options face similar challenges as consumers increasingly demand rapid delivery and grocery stores and mass merchandisers begin to offer same-day delivery options. Thares and Weinswig noted that retailers must find the right balance when it comes to addressing fraud that targets expedited fulfillment options; retailers are always determined to not turn away legitimate customers, but they must also be aware of their high-risk sales areas and monitor them carefully. Thares advises companies to identify such areas and then invest either internally or with a third-party solutions provider to bolster fraud prevention efforts in these areas. Retailers with internal systems that rely on customer service representatives to identify fraud may need to overhaul and automate their systems to keep up with rising opportunities for fraud. During the pandemic, fraudsters have begun to shift their focus to different product categories. Luxury goods, including high-end fashion and jewelry, are typically some of the most common targets of fraud due to their high resale value. However, as the pandemic reduced the size of the luxury market, perpetrators of fraud have started to target online gift cards and electronics as their primary areas of focus. Online gift cards are an easy target for fraud as they are easy to resell and have even tighter fulfillment windows than BOPIS or expedited shipping orders—many consumers expect to have electronic gift cards delivered instantly. While not delivered instantly, electronics are easy and profitable to resell and are still being bought at relatively high volumes compared to luxury goods at similar price points. As the holiday season approaches, order volumes are expected to increase sharply. Thares emphasized that retailers should ensure that their fraud prevention initiatives are properly scaled and focus on the right areas. Preventing Fraud as a Retailer and Consumer When asked by Weinswig how retailers can prevent fraud moving forward, Thares made it clear that they need to get customers involved. He cited e-mail notifications as one way that retailers can work with their customers to reduce fraud. The notifications let shoppers know when there is a login attempt on their account and when they place an order—customers only need to respond when they believe the notification to report fraudulent behavior. Thares advised customers to do their part to help retailers better identify fraud by taking advantage of these optional e-mail notification services and by being consistent in the ways in which they interact with retailers. Thares also extolled the benefits of dual authentication systems, a technique that Riskified uses to secure its internal systems, but he cautioned that it is not a cure-all solution. Retailers may also benefit from working with a fraud prevention company such as Riskified to better identify legitimate shoppers and reduce fraud and friction in the shopping process.
Jesse Thares and Deborah Weinswig discuss how retailers can adapt to changing behavior among fraudsters Source: Coresight Research [/caption] With New Shopping Behavior Comes New Fraud As online shopping has grown, so has the opportunity for online fraud. Thares told Weinswig that many fraudsters target high-volume shopping avenues, hoping to get lost amidst the hustle and bustle. As more traffic moves online, fraudsters are finding new shopping areas to exploit. According to Thares, BOPIS orders are at particularly high fraud risk, as the tight fulfillment window gives retailers less time to assess whether orders are legitimate. Expedited delivery options face similar challenges as consumers increasingly demand rapid delivery and grocery stores and mass merchandisers begin to offer same-day delivery options. Thares and Weinswig noted that retailers must find the right balance when it comes to addressing fraud that targets expedited fulfillment options; retailers are always determined to not turn away legitimate customers, but they must also be aware of their high-risk sales areas and monitor them carefully. Thares advises companies to identify such areas and then invest either internally or with a third-party solutions provider to bolster fraud prevention efforts in these areas. Retailers with internal systems that rely on customer service representatives to identify fraud may need to overhaul and automate their systems to keep up with rising opportunities for fraud. During the pandemic, fraudsters have begun to shift their focus to different product categories. Luxury goods, including high-end fashion and jewelry, are typically some of the most common targets of fraud due to their high resale value. However, as the pandemic reduced the size of the luxury market, perpetrators of fraud have started to target online gift cards and electronics as their primary areas of focus. Online gift cards are an easy target for fraud as they are easy to resell and have even tighter fulfillment windows than BOPIS or expedited shipping orders—many consumers expect to have electronic gift cards delivered instantly. While not delivered instantly, electronics are easy and profitable to resell and are still being bought at relatively high volumes compared to luxury goods at similar price points. As the holiday season approaches, order volumes are expected to increase sharply. Thares emphasized that retailers should ensure that their fraud prevention initiatives are properly scaled and focus on the right areas. Preventing Fraud as a Retailer and Consumer When asked by Weinswig how retailers can prevent fraud moving forward, Thares made it clear that they need to get customers involved. He cited e-mail notifications as one way that retailers can work with their customers to reduce fraud. The notifications let shoppers know when there is a login attempt on their account and when they place an order—customers only need to respond when they believe the notification to report fraudulent behavior. Thares advised customers to do their part to help retailers better identify fraud by taking advantage of these optional e-mail notification services and by being consistent in the ways in which they interact with retailers. Thares also extolled the benefits of dual authentication systems, a technique that Riskified uses to secure its internal systems, but he cautioned that it is not a cure-all solution. Retailers may also benefit from working with a fraud prevention company such as Riskified to better identify legitimate shoppers and reduce fraud and friction in the shopping process.