The 2020 holiday season is either a lifetime opportunity or an existential threat for many eCommerce companies, as the pandemic has impacted both typical commerce models and consumers’ spending habits, according to research from fraud prevention firm Kount.
Of those businesses engaged in digital commerce, 84% feel that compared to 2019, the 2020 holiday season is going to be absolutely critical to their business for recovery and survival, with nearly half of respondents saying they will need to catch up on sales in order to recover from the pandemic-driven economic downturn.
The research gives a 360-degree view of eCommerce and fraud prevention this holiday season from the perspective of both eCommerce providers as well as shoppers. The consumer survey of 1,008 adults in the US revealed the driving factors that motivate or disincentivize online shoppers. The business survey, which focused on mid-to-large online retail and eCommerce entities, surveyed 501 employees who were at the manager level and above, revealing major risks and opportunities.
Among the study’s key findings:
- More than half of business respondents said their company does not anticipate in-store sales volumes to return to pre-COVID levels within the foreseeable future, even after the pandemic subsides.
- Thirty percent of Americans say they will avoid shopping in store as much as possible this holiday season.
- Nearly three in four retailers expect higher digital sales than in 2019.
These opportunities, risks and trends in digital acceleration mean businesses need to focus on five key things:
- Securing and controlling inventory. Supply shortages and the importance of on-time delivery to consumers make it especially important to protect inventory levels. More than half of all businesses (56%) anticipate inventory issues related to having items in stock and shipping items in a timely manner this year. More than one in four businesses have dealt with a bot attack or inventory manipulation in the past.
- Protecting new and existing eCommerce models. Contactless and convenient options, such as Buy Online, Pick Up in Store; Click-and-Pick and same-day shipping, can make up for reduced in-store sales. 64% of merchants think in-store sales will be key for this season, but only 43% of shoppers agree. And 56% of Americans are concerned about receiving orders in a reasonable amount of time. More than half of consumers say they want free shipping more than any other deal or promotion.
- Eliminating chargebacks and manual reviews. An increase in eCommerce transaction volumes can correspond to an increase in payment fraud, friendly fraud and chargebacks. Bad actors know that overwhelming volumes and new channels will be key this season, and they’re looking to take advantage. Some 40% of businesses have noticed an increase in chargebacks since January of 2020. If a consumer doesn’t recognize a charge on their credit card statement, 89% would not first contact the company associated with the purchase. Instead, 54% would first call their credit card company or bank.
- Protecting digital accounts. As shoppers turn to online experiences, many will expect to have loyalty accounts, stored value and saved information readily available. All of these are targets of fraud, and consumers and businesses are thinking about data breaches. More than one in five business respondents say they expect more frequent data breaches to be a significant challenge to their employer’s business this holiday season. Six out of every ten consumers say they are most concerned about the credibility of an online retailer or data breaches to their personal information when online shopping.
- Reducing friction can drive conversions and loyalty. With stiff competition for digital business, fast and exceptional customer experiences will be key. Switching costs are low for shoppers, and businesses need to create every advantage to keep them on their site. One in four shoppers say they would not return to a site that turned them away from a legitimate transaction.
Interestingly, reasons that shoppers choose to abandon their online shopping cart included the following:
- High shipping costs – 52%
- Long estimated shipping/delivery times – 40%
- Complicated ordering and checkout processes – 27%
“The word ‘unprecedented’ may be being said a lot this year, but this upcoming holiday shopping season truly brings unknowns. Businesses are faced with high stakes and the need to make up for lost revenue, and they must also be scaling and protecting digital commerce,” concluded Brad Wiskirchen, CEO of Kount. “Now is the time to be reviewing, analyzing and implementing the resources needed to address the accelerated shift to eCommerce, which is sure to continue beyond this season.”