The holiday shopping season is finally over. Long live the holiday shopping season!
The 2020 holiday shopping season may have been a bit bonkers for most of us, pandemic notwithstanding. There was a major uptick in ecommerce anyway — 8.3% higher than 2019 — so anyone who did ecommerce, subscriptions, or sold specialty items probably saw an increase. On the other hand, physical foot traffic dipped by as much as 50%, according to some.
Now that it’s over, and you’ve had a chance to rest for a couple weeks, it’s time to start thinking about what you’re going to do for 2021.
No, seriously. The big retailers started planning for Holiday Shopping 2021 as soon as they got back from the holiday break. Depending on the size of the retailer, some of them even start pre-planning and making notes in the last couple of weeks of December.
So you can at least start doing a little analysis on what you did in 2020 to prepare for 2021.
A recent article in PaymentsJournal.com recommended that you should start analyzing your fraud data in order to prepare for this year’s holiday shopping.
It’s important because if you’re going to try new technologies, new ideas, or new processes, you want to start evaluating them in Q1, choosing and implementing them in Q2, testing and tweaking them in Q3 (especially around back-to-school), so that everything is operational by Q4.
To start off with, says PaymentsJournal.com, you need to look at how your fraud prevention system performed in November and December to determine your chargeback ratio. Then, compare that to the rest of 2020’s ratio, as well as the 2019 holiday shopping season. (While you’re at it, compare 2020 overall to 2019.)
If you had an increase in fraud alerts and chargebacks, what kinds of transactions were getting through? Are there any patterns? Did you see one type more than another? Was there one channel that got hit more than another? Or a certain kind of product? If you sell subscription services, did you see an increase of free trials that led to cancellations after a first month? And were there any locations that saw more fraud than any others? Look for any and all patterns and see if you can find new methods to overcome them.
You also want to determine if you rejected good customers too. There’s a good chance, says PaymentsJournal.com, that if you don’t manually review flagged transactions that you had a number of false declines. Some fraud detection tools will focus on things like a mismatch between the billing address on record and the one the customer entered.
That could be anything, from a customer sending a gift to a relative who lives out of town, or they moved and didn’t update their address yet, or it’s from an account takeover crook who’s sending something to a criminal associate. Or, it could even be that the customer made a typo in the address field, and the tool flagged it anyway. So you want to make sure you have a human reviewing the flagged transaction so you can avoid false declines.
That’s because those real customers may quit shopping at your store because of the decline. At least 39% of rejected customers will quit shopping at a store that rejects their payment. Also, 28% of rejected customers will post a complaint on social media, which means others may quit shopping at your store as well.
This is where a tool like CB-Alert can help you reduce a lot of chargebacks and prevent fraud by detecting past behavior and monitoring stolen credit card lists from Mastercard and Visa.
Of course, you also want to fine-tune any automated rules and processes. As PaymentsJournal.com said:
For example, what if you saw a spike in fraud by new customers using your mobile app during the 2020 holiday, but many good orders from new customers on your website? Next holiday season, you could adjust your rules to scrutinize new mobile shoppers more carefully than new desktop customers to stop more fraud without increasing friction for good customers using a different channel.
While it’s not related to fraud, now is also the time to start sourcing new products and adding new offerings to your product lineup. Look to possible sourcing networks like SPS Commerce’s sourcing network as a way to find new suppliers and even drop shippers. Get those companies lined up and start using the other shopping seasons to determine their feasibility and reliability for the next holiday shopping season.
If you don’t have any fraud prevention measures in place, beyond what you already get from your payment services provider, now is the time to start looking for new solutions. Be sure to enroll in Ethoca by Mastercard and CDRN/Order Insight from Verifi (a Visa company) to handle chargebacks and customer complaints, and third-party services like CB-ALERT to detect unusual patterns even before they’re recognizable to the human eye.
The goal of your analysis is so you can start getting ready for the next holiday shopping season without scrambling in September and October to make it all come together. Take the year to learn these new technologies and processes so they’re old hat when Black Friday comes and we start the dance all over again.
If you’d like to learn more about how CB-ALERT can help you reduce the headaches of chargebacks, disputes, and fraud, please visit the CB-ALERT website.
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