Every e-commerce merchant looks forward to holiday season sales with much anticipation.
It’s the best time of the year, a time when you get the most revenue boost.
Look at the numbers:
- Retail sales for the holiday period of November and December 2020 were 4.1%, up from last year (excluding automobiles and gas), as United Census Bureau indicates.
- For the three months of October through December, retail sales were up 4.9% over last year, hitting almost $ 1.3 trillion. Non-store sales (primarily e-commerce) were up 24.1% for the three months and up 23.4% for the season.
- For this year, analysts estimate that holiday sales could hit $ 876 billion.
But with the revenue boost from the holiday sales season comes significant post-holiday sales chargebacks.
Post-holiday chargebacks often occur in different forms. They could be actual fraud, friendly fraud, and return fraud.
For instance, one research projected the value of returned items in 2020 to be $ 57 billion. And analysts reveal that “dispute volumes rise by 40% or more in January, compared to November and December.”
Hence, we share exclusive insights and hacks to help you prepare adequately for the holiday season and avoid the rude shock of post-holiday chargebacks. Learn the wisdom in the article and adapt the hacks to suite your business process.
How the fastest growing e-commerce brands stop post-holiday chargebacks
If you want to get better results in your life or business, you’ve got to be proactive about the end result. You can’t dabble and expect things to work out alright. You have to commit to the process.
The same goes for stopping fraud and mitigating post-holiday chargebacks. It’s a matter of determinate focus on maximizing merchandise sales while limiting loopholes. Consequently, ensuring you have real-time chargeback mitigation strategies will make all the difference in stopping post-holiday chargebacks.
The thing you have to bear in mind, though, is that post-holiday sales chargebacks aren’t just incidents of fraud. They can also stem from buyer’s remorse. So the decision point is usually to balance the tension between creating an authorization policy that’s too lax and an unflexible chargeback mitigation process.
The good news is, crafting your chargeback and fraud mitigation framework to ascertain the who, what, when, where, how, and why of your buyers can help you create a seamless sales process.
But that’s easier said than done. Following the tips below can be extremely useful.
Post-holiday sales chargeback prevention tip #1: Design a multi-layered fraud prevention framework.
By now, you should know that the spike in e-commerce transactions isn’t going to slow down in the foreseeable future. That’s easy to estimate because, according to recent research by Retail Systems, there’s been a 74% growth in online shopping since the pandemic began. Additionally, “nearly half of respondents to the study said they’ve received more parcel deliveries during the lockdown than ever before.”
That brings us to the first point of consideration when designing a multi-layered fraud prevention technology: Get smart with IP intelligence.
Conducting a thorough evaluation of cardholders’ IP Addresses used for transactions can help you ferret fraud patterns and avoid processing transactions from fraud hot zones. Below are 10 of the best IP Address tracker tools
- Solarwinds IP Address Tracker
- Gestio IP
- BlueCat IPAM
- Advanced IP Scanner
- BT Diamond IP
- IP Tracker
- Angry IP Scanner
- LizardSystems Network Scanner
- Bopup Scanner
- Alcatel-Lucent VitalQIP
- Infoblox Trinsic
Next to IP Address mastery is ensuring that each transaction is valid.
For starters, you can use the cardholder’s device information and reputation scoring to assess the transaction’s validity. Also, it would be best if you were sure to establish Address Verification Service (AVS) and tokenization for each transaction.
EMV 3D Secure also helps validate credit and debit card purchases, and geolocation traces the cardholder’s location to ensure it is authentic. And integrating SSL in your store helps to establish secure encrypted communication between customer devices and payment solutions.
Surely, the list above is not exhaustive. But it’ll help to put you in a comfortable position in thwarting fraud and post-holiday sales chargeback in their tracks.
Post-holiday sales chargeback prevention tip #2: Use your return policy to stop returns from turning to chargebacks.
You already know this, but it bears repeating: Not everyone who visits your store is a real customer.
Wardrobing is a growing consumer fraud where a customer buys an item and uses it for a one-time purpose with the intent of returning it.
Wardrobing fraud by the numbers:
- Research from Checkpoint Systems states that U.K retailers are losing up to £1.5bn potential sales because dishonest customers return products after using them.
- The study of 1,542 shoppers found that a fifth (22%) buy items to use and return them.
- That rises to 43% of 16-24-year olds and 39% of 25-34-year-olds, compared to 6% of over 55-year-olds.
- According to the National Retail Federation, U.S. retailers lost $ 24 billion to wardrobing in 2018.
What’s the way out, you ask?
For the most part, the answer lies with your posted return/refund policy. It’s your arsenal for addressing order issues and setting better expectations for each transaction. It’s also your key to ensuring that order issues do not push real customers to commit friendly fraud.
Imagine that a customer purchased the wrong gift and wishes to return it. But due to the rigid nature of your policy, they can’t do so. In that case, their only recourse is a chargeback.
Here are some ideas. Consider designing a unique, flexible return/refund policy for holiday sales. Below are valuable consideration points in crafting your policy to avoid post-holiday chargebacks.
- Provide a more extended refund and return timeline. You can increase the timeframe of your usual order return or refund schedule, bearing in mind the intricacies of the holiday season.
- Spell out your customer services processes. Ensure your customers know how to connect and communicate with you for their needs. Give more options, and be sure they can reach you 24/7.
You should also be effective in communicating with your customers. If you make it easy for them to contact you before reaching their bank for a chargeback, the real ones will respond accordingly. Plus, educate your staff on the demands of your policy and give them room to use their best judgment for decision-making.
But most importantly, ensure your customers can easily access your return/refund policy. You can have the best draft in the world, but if no one can easily find it, you might as well not have any policy.
Get an extra layer of security with chargeback automation.
It’s easy to work hard and pour your earnings in a leaking bag if you don’t plan your holiday sales efforts with online shoplifters in mind.
The sad reality is that while you’re busy working to serve your clients and create the best business online, there are folks who make it their mission to steal your lunch money. It’s the nature of e-commerce today. And hoping it wouldn’t happen to you is not going to change anything.
The best strategy is to take proactive action and protect your company. And ensure you can reap the total rewards of your efforts this season without post-holiday sales chargebacks taking you back to zero in the New Year. While the above recommendation will help reduce post-holiday sales chargebacks from actual customers, they won’t suffice for all instances.
Originally published here.