For any small business owner looking to expand their presence online, one pressing question looms – how can you protect your business from fraud without creating unnecessary friction for customers?
Article at a glance:
- Learn why manual order reviews are now a necessity, not just for large companies, as digital threats evolve alongside surging ecommerce demand.
- Discover how to protect your online growth through strategic fraud screening without jeopardizing the customer experience that drives sales.
- Find out how small businesses can equip themselves with robust fraud prevention typically reserved for enterprises, from a partner designed for simplicity and power.
As ecommerce sales continue to expand across Asia Pacific (and beyond), moving your business online offers a great opportunity for growth. However, moving online also means more exposure to the devious tactics used by bad actors around the world.
By the end of the year, ecommerce is expected to account for some 22% of total global retail sales. Across APAC this growth is extraordinary, with 41% of worldwide ecommerce sales coming from the region. Furthermore, despite the belief that shoppers post-pandemic would return to physical stores in droves, buyers across APAC are embracing mobile retail experiences.
Therefore, for businesses, taking the plunge into ecommerce is seemingly a straightforward decision given the scope of opportunity online. However, before you buy that domain name, let’s take a look at the other considerations:
- Customer experience
Together, these considerations will be determining factors in the success of your online debut. With attention to both, businesses can feel more confident in pursuing digital customers wherever they may be. Now, let’s dig into these considerations to learn what they are and how your business can thrive online:
Accompanying APAC’s extraordinary ecommerce growth are some rather extraordinary customer expectations. Indeed, between streaming services, car-share rides and piping hot pizza delivery via mobile, consumers’ expectations have been well and truly set by seamless digital experiences. In fact, according to a report commissioned by us, nearly three-quarters of consumers expect instantaneous results, while 92% want security without friction.
In today’s digital economy, nearly one in five shoppers abandon their shopping cart due to a “too long/complicated checkout process.” Therefore, staying competitive means implementing what we call strategic friction. This enables a balancing act between customer experience and fraud prevention by only introducing friction when a high-risk identity is proven. As we discuss more in detail below, this saves time – and money – on costly manual reviews.
But first, who, exactly, are these high-risk identities?
It is well documented that fraudsters found multiple ways to exploit the vulnerable during the pandemic. In fact, across APAC, one in four consumers has been victims of online fraud, more – 29% – in China and India. Below we will outline why manual order review is so important to online businesses as a core component of effective fraud management. But first – let’s look at the fraud your manual review team will be reviewing.
As ecommerce surges, so does online fraud. According to Juniper Research, online merchants have lost $130B US since 2018. As we outline in a recent blog post dedicated to ecommerce fraud, there are four key types of online fraud that merchants big and small should be on the lookout for.
- Account takeover fraud (ATO)
A form of identity theft, account takeover (ATO) fraud is a universal problem across industries. While this type of fraud is not new, it is being used more aggressively as more and more merchants move online. ATO losses increased 90% in 2021, alone, totalling $11.4B globally.
- Synthetic identity theft
As detailed in our recent eBook, synthetic identity theft is one of the fastest-growing crimes and accounts for nearly 80% of all identity fraud in the US and is on the rise across APAC, in particular Southeast Asia (SEA). Put simply, synthetic identity theft occurs when a fraudster combines the personal information of a real identity to create an authentic-looking (but synthetic) digital identity.
- Chargeback fraud
Also known as first-party fraud or friendly fraud, there is nothing friendly about chargeback abuse. Indeed, in the last 12 months alone, merchants have been expected to pay $100 billion in chargebacks – 61% being considered “friendly.” More serious still, the average cost of a chargeback is $191, with merchants bearing more than 75% of the financial impact.
- Promotion abuse
Also detailed in a separate eBook, promo abuse has significantly impacted nearly half of ecommerce businesses since 2020. Occurring when a customer abuses the terms and conditions of a loyalty program or promotion, loss from direct and indirect program fraud currently sits are an estimated $1 billion a year. Regionally, over 75% of merchants surveyed across SEA have acknowledged a moderate to significant financial impact on their business due to this type of abuse.
As account takeovers, synthetic identities, payment fraud and chargebacks, promo abuse and shipping fraud run rife, it’s important to know when and how to invest in a more rigorous fraud prevention strategy.
What are the benefits to manual review?
At the end of the day, the reason the manual review process is so essential as you move your business online is that it applies human intuition and analysis to review individual transactions and identify anomalies or red flags that automated systems can miss. Of course, as mentioned above, the process is only as good as the team behind it. And, integrating a manual review step into your fraud-fighting workflow isn’t as simple as it sounds.
This is especially the case for smaller businesses that lack the resources and/or technology. Indeed, while recent studies seem to suggest that manual reviews are still the name of the game for some 28% of large ecommerce enterprises worldwide, small and midsize businesses eschew the process, with only 18% choosing manual reviews as part of their digital fraud prevention strategy.
How can we help?
Built specifically for manual review, Pro Insight is a seamlessly integrated identity review solution that can equip small and medium businesses going online with the tools and resources of larger, enterprise companies.
To provide further detail into the benefits of partnering with the right fraud prevention and global customer identity verification platform for ecommerce, we have written a guide about taking your offline enterprise online – smoothly.
Work through our checklist on platforms, marketing, payments, processing and shipping to ensure you cover all ground before launching.