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Ecommerce Fraud Report

A Retailer’s Guide to Consumer Sentiments

Unprecedented Times Call for Unparalleled Protection

2020 has dramatically changed almost every facet of life and the world of eCommerce is no exception. Before changes in shopping behavior due to COVID-19 even began, ecommerce was already growing at a rapid pace with no signs of slowing down. However, there is another rapidly growing part of the equation that continues to have a detrimental impact on revenue: fraud.

Whether that’s evident from the global cost of card-not-present fraud expected to reach $130 billion between 2018 and 2023 or a 28% increase since last year in the average amount of fraudulent attempts that succeed every month, ecommerce fraud has made one thing crystal clear: it’s not slowing down either.

As we head into our first “digital-first” holiday season, companies need to prepare for both an unprecedented volume of online purchases and an unprecedented volume of fraudulent attacks. In a world where Amazon’s 1-click checkout dominates, independent retailers must match that same level of speed, security, and convenience if they’re going to make it to 2021.

Fraud and the Customer Experience

Most merchants are well-aware that providing a fast checkout and blocking fraudulent transactions are critical to ensuring a good customer experience. However, what’s important to remember is that the customer experience isn’t limited to only worrying about speed and security. It’s equally important for retailers to ensure they aren’t declining their shoppers’ legitimate orders in the attempt to combat an increase in fraud.

Bolt conducted a survey across the United States of shoppers that make at least one purchase per month to understand their thoughts about fraud and shopping online. We’re excited to share these learnings with our brand partners so they can get a better understanding of where to focus their energy and resources to compete against ecommerce behemoths like Amazon.


MAJOR FINDINGS

Finding 1: Even one false decline can deter a customer from ever doing business with a company again.

Approving fraudulent orders is a well-known problem for merchants that can turn away good customers for life. However, what many retailers don’t realize is that oftentimes the even bigger problem lies in the good transactions that are incorrectly declined.

Finding 2: Shoppers have the most confidence in online marketplaces and will abandon purchases they don’t trust.

Large, established brand names often connote a certain level of trust and security that shoppers gravitate towards. This not only puts smaller, independent retailers at a disadvantage, but it can also increase cart abandonment if a shopper questions a checkout’s security.

Finding 3: Shoppers expect speed, but not at the expense of security.

Consumers expect every facet of their shopping experience to be as convenient as possible and checkout is no exception. Although it’s critical to provide shoppers with a streamlined checkout, they are not willing to compromise fraud protection for the sake of speed.


FINDING 1

Even one false decline can deter a customer from ever doing business with a company again.

False declines, also frequently referred to as false positives, occur when legitimate transactions from good customers are marked as fraud and incorrectly declined. The reason behind false positives is that merchants are declining more orders in an effort to eliminate fraudulent activity. However, this often leads to overcorrecting since many of these declines are actually turning away good customers.

It’s important to note that a one-time false decline isn’t just a one-time loss of revenue. Declining genuine customers can deter them from ever doing business with a company again. According to our research, 35% of shoppers will abandon their current purchase if the payment was declined and more than half of online shoppers are unlikely to return to a retailer after experiencing issues with a payment. That initial false positive isn’t just losing the dollar amount of that order, but potentially the lifetime value of a customer entirely.

The Statistics

Here are a few of the more interesting statistics:

→ 34% of online shoppers have been wrongfully declined

→ 35 of online shoppers will abandon the purchase if the payment was declined

→ More than half of online shoppers are unlikely to return to a retailer after experiencing issues with a payment

→ More than half of online shoppers have a negative perception of a brand after having their payment method declined

 



The Research

Here’s the full list of responses to the questions asked to shoppers.


 

FINDING 2

Shoppers have the most confidence in online marketplaces and will abandon purchases they don’t trust.

Big marketplaces, like Amazon, set the standard for the online shopping experience. Whether that be from brand recognition, shipping guarantees like Amazon Prime’s 2-day shipping, or simply the ease of using saved payment and shipping information when making a purchase, consumers have a clear bias towards these large, online marketplaces. And this bias translates into trust as well.

According to our research, when asked which type of retailer do shoppers trust the most to protect them from fraud, 37% of shoppers said online marketplaces (such as Amazon, Ebay, or Etsy) and only 5% said independent online retailers (stores without a physical location that have only one brand). With this stark contrast in confidence levels depending on the type of retailer, it’s no surprise that trust translates into cart abandonment as well. In fact, over half of shoppers surveyed said they would abandon a payment if the checkout process did not seem secure. Since shoppers inherently trust these large marketplaces to be more safe, they will likely abandon a purchase if a checkout process doesn’t provide them with the same level of security.

The Statistics

Here are a few of the more interesting statistics:

→ 56% of shoppers abandon a purchase if checkout didn’t seem secure

→ 66% of shoppers say that the retailer is to blame if their data was compromised

→ 77% of online shoppers would have a negative perception of a brand if their information was compromised

→ Shoppers trust online marketplaces (Amazon, eBay) the most to protect their data; they trust unproven independent retailers the least



The Research

Here’s the full list of responses to the questions asked to shoppers.


 

FINDING 3

Shoppers expect speed, but not at the expense of security.

It should come as no surprise that customers expect speed when it comes to checkout. In today’s world, where virtually everything is instantly accessible, customer expectations have never been higher. Requiring too many fields for the consumer to populate or steps before they can complete their order is almost a surefire way to increase checkout dropoff rates. Consumers want every facet of their shopping experience to be as fast and frictionless as possible.

However, customers aren’t willing to sacrifice safety no matter how fast the checkout experience is. In fact, according to our research, when shoppers were asked to rank what they valued most when it came to making a purchase, price was ranked first at 34%, security followed closely behind at 31%, and convenience rounded out the top three responses at 26%. This reminds us that although it’s important to provide shoppers with a speedy and streamlined checkout, convenience should never come at the expense of security.

The Statistics

Here are a few of the more interesting statistics:

→ More than half of online shoppers are unlikely to return to a retailer after experiencing slow checkout

→ 46% of shoppers abandoned a purchase if the checkout process was too long/complicated

→ 73% of online shoppers would have a negative perception of a brand if they experienced a fraudulent transaction

→ Price, security, and convenience are the top factors shoppers value when making a purchase



The Research

Here’s the full list of responses to the questions asked to shoppers.


 

METHODOLOGY

A survey of 848 randomly selected U.S. adults (ages 18 and older) was conducted on September 22, 2020 to measure how perceptions of fraud impact online shopping behavior. Respondents were asked ten questions about payment methods, checkout, brand perception, personal data, among others.

The survey was commissioned by Bolt and executed by YouGov.

Full Report

You can download a copy of the full report here.


 

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