The success of ecommerce and marketplace platforms hinges on the ability to attract and serve trustworthy sellers and qualified buyers. Following best practices for any online business, these platforms rigorously vet buyers before they are allowed to transact—it’s crucial to reducing fraud losses. But how much effort is taken to vet sellers? And how much does a lopsided vetting process ultimately cost ecommerce and marketplace platforms in brand reputation and lost revenue?
To answer these questions, Socure surveyed more than 1,500 online shoppers between Thanksgiving and Cyber Monday. We asked respondents for their opinions on platforms’ accountability in prohibiting fraudulent sellers, and how fraud—or the perceived risk of fraud—influences their shopping decisions.
The survey results reveal how seller-related fraud is emerging as one of the biggest risks to online shopping brands.
Here are three key takeaways from our survey on what ecommerce and marketplace platforms need to know about consumer attitudes, brand reputations, customer re-engagement, and the potential impact of fraud on the bottom line during this most wonderful-revenue-driving time of the year.
Takeaway #1: 85% of Consumers Anticipate An Increase in Fraud1 vs 2020
Shoppers cited an increase in online transactions (31%) followed by perceived risks within ecommerce and merchant platforms (21%) as the biggest drivers for their impressions of an expected increase in fraud incidents this shopping season.
What this means for merchants: Overall, shoppers expect an uptick in online ecommerce and marketplace fraud as a price to pay for the convenience of shopping online. The pandemic attracted new online shoppers and an increase in average order value for returning customers, but the fear of fraud can negatively impact this trend. Now is the time to elevate fraud controls by vetting sellers before they can cause damage.
Takeaway #2: 51% of Consumers Think Small Online Merchants are Dangerous2
With many consumers experienced in the costs of identity theft, stolen purchases, and other dangers of ecommerce fraud, many are opting to limit their online shopping to well-known brands they can trust. In fact, the survey found that 51% of consumers are concerned about fraud occurring with previously unknown merchants vs established online retailers.
What this means for e-commerce merchants: The best way for smaller online retailers to build trust is to verify sellers as thoroughly (or perhaps even more thoroughly) as customers. Trustworthy sellers will ensure consumer orders are fulfilled as expected and will prevent small businesses from having their brand names tarnished by the sale of counterfeit goods, shipping fraud, money laundering, or other consumer-trust and brand-damaging acts.
Takeaway #3: 72% of Consumers Reject Any Business After Fraud3
Depending on order value, 68% to 72% of shoppers surveyed said they won’t return to a platform after a seller-related fraud incident. And a shopper doesn’t even have to suffer the fraud themselves to reject the brand. According to a survey by Kantar Research, 93% of consumers trust a family and friends’ brand recommendations more than anything else4. Word-of-mouth from one seller-related fraud incident travels faster than any advertising campaign and can be the spark that starts a wildfire of brand damage.
What this means for e-commerce merchants: ecommerce and marketplaces can protect themselves and their customers by onboarding only verified and trustworthy sellers. A robust identity verification check at seller onboarding or at the time of offering an item for purchase will keep out bad actors hoping to make a quick buck with counterfeit goods or launder funds (a looming risk that even the biggest names in the digital economy have fought against)5.
What Can You Do Now to Protect Consumer Confidence?
With the 2021 holiday online shopping season well underway, it’s critical that ecommerce merchants and marketplaces establish controls to assess the safety of buyer and seller interactions, prevent fraud losses, and protect against long-term brand damage.
A modern, holistic approach to identity verification and fraud prediction is the best way to protect your shoppers from unvetted sellers. With 17,000 different risk signals on top of more than half a billion known identity decision outcomes, Socure has proven highly accurate in determining the fraud risk of buyers and sellers. By accurately assessing the risk of the device, email, address, phone number, and more, Socure achieves fraud capture rates of up to 90% in the riskiest 3% of populations for leading ecommerce and marketplace platforms.
Let us show you how Socure’s ecommerce solution provides the most comprehensive approach to identity verification and fraud, ensuring superior seller identity verification and consumer confidence so you don’t get frostbitten by seller fraud this holiday season.
1 85% of consumers anticipate more or the same amount of fraud this year as compared to 2020
2 51% of consumers are reluctant to do business with smaller merchants due to the perceived risk of fraud, according to survey results.
3 72% of consumers said that if a purchased item was not received due to seller fraud, they would never do business with that platform again.
Brigitte Engel is a Senior Director, Product Marketing at Socure responsible for emerging markets such as Buy Now, Pay Later, Cryptocurrency, and Online Gaming. Previously, Brigitte held marketing leadership roles with leading endpoint security companies, including Cylance and Guidance Software, and identity fraud vendor ID Analytics.
Balancing Fraud Reduction and an Exceptional Customer Experience
Digital organizations operate in real time, and their users have come...
Super Bowl LVII: Sports Betting Hits Historic Highs...
Sports betting hit historic new highs during the 2023 Super Bowl...