Order approval rate for ecommerce: what you need to know

May 2, 2022

The Bolt Team

order approval rate process

Many retailers turn away orders that look like fraud when in reality, they are placed with good intentions. These false declines cost you potential sales and customers for life. Here’s what you need to know about order approval rates and how a low one can hurt your business.

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What to know about order approval rates? 

Order approval rates have become a hot topic among modern fraud-protection software, with each one claiming to deliver a rate one-tenth of a point better than the next. And while that may sound insignificant, even a slight variance can mean the difference between a meaningful amount of sales and not.

Consider the following example. Suppose a retailer doing $1 million in sales must choose between platform A with a 99% order approval rate and platform B with a 98% rate. The answer seems straightforward. Platform A would approve $990,000 orders or $10,000 more than platform B. 

But the answer is not always this simple. You should not just look at the final approval number, which often serves as a marketing tool more than anything else, but how the number was calculated and its impact on the user experience. 

Order approval methodology tends to vary from one provider to the next. Each software solution will use a proprietary mix of signals, statistical techniques, and other factors to arrive at their final approval rates. 

But in the end, there will always be a few things in common, including the percent of auto-approved orders and the number of false declines. That is, how many orders does the software automatically approve without manual review, and of the total number of orders approved, how many were false declines or should have been declined.  

Looking at both these factors with the final approval rate paints a more accurate picture of the business impact of fraud software. 

The other thing you will want to consider is the user experience. A platform with a 100% order approval rate that takes 10 minutes to process an order may sound great to you, but customers won’t like jumping through the additional hoops. Order approval software must fit seamlessly into the current user experience without disruptions. 

How do false declines hurt your business?

You often have to balance those competing priorities. Restrictive fraud filters, which scrutinize every order, can leave businesses turning away potential sales and growth. And lax policies can have just the opposite effect; fraud is allowed to run rampant. 

Getting this tradeoff wrong has dire consequences. For one, you may be turning down many legitimate good orders. A recent study found that the average online store loses about 3% of annual sales from false declines. That translates to $300,000 for a merchant doing $10 million in annual sales. 

False declines also create bad feelings among customers. Our recent study with YouGov found that 59% of customers would view a brand poorly after a false decline. Your false declines turn lifetime customers into disinterested spectators who never complete a single order. 

Maybe now it’s time for you to ask: should I rethink how I approve orders or is my current fraud technology really working?

Fraud: 5 Letters that Keep Retailers Up at Night

Fraud leaves a bad taste in shoppers’ mouths, but it doesn’t have to be that way. Learn how retailers can protect their customers and sales from fraud.

Download Report

Improve your order approval rates 

False declines happen for numerous reasons, so businesses must partner with leading fraud solutions that can juggle all these moving parts. At Bolt, our fraud prevention technology analyzes over 200 behavioral signals to ensure retailers approve more good orders while still rejecting fraudulent orders. These invaluable insights fuel our supervised machine learning models that can evaluate orders in real-time. 

But we understand that fraud detection is just as much an art as a science. When our models need additional verification, our expert review team will manually review the situation before an order is approved. 

As a result, we have approved 99% of all orders on Bolt. That way, you never have to worry about false declines again. 

ThinkShop by Bolt does not constitute professional tax or financial advice. Contact your own tax or financial professional to discuss your situation.