March 29, 2018
Today’s retail market is hyper-competitive. 2017 witnessed retail brand names stumble, and industry stalwarts close. This past week alone, America’s toy store, announced that it was closing the doors to 735 stores after 70 years in business.
The extreme pressure that is affecting retail today reflects a shift in consumer habits. The influence of Amazon and other retailers, has developed retail channels that place a premium on delivering a personal and custom shopping experience. Amazon’s acquisition of Whole Foods last year illustrates this paradigm shift towards an integrated experience that crosses over from web to brick and mortar.
Amazon’s quick ascent to the top of the retail chain illustrates where the market is heading. It also showcases how a “new” company like Amazon that is not saddled with legacy systems and procedures is able to pivot and expand its offering towards an authentic omni-channel approach that leverages state of the art technology.
Most retailers are focused on creating united user experiences from brick-and-mortar to mobile-browsing and everything in between. Customers can download coupons, check prices and purchase products in store, via a kiosk, desktop computer, mobile app or directly from the telephone. For traditional retailers this is a hard but necessary transition, as they connect a multitude of legacy backend and front-end solutions, including supply chain, logistics, inventory, warehousing, marketing, payments, and more.
This change in customer expectations is supported by a number of key facts:
- U.S. cross-channel retail sales were projected to hit $1.8 trillion in 2017
- 73 percent of shoppers use multiple channels
- Digital interactions influence 36 cents of every dollar spent in brick-and-mortar stores
As omni-channel becomes more prevalent, so does a merchant’s risk of fraud. Fraud, including criminal and friendly, follows the money and looks to exploit weaknesses in an organization’s systems. Below are a few factors that make omni-channel ripe for fraudsters:
Card Not Present (CNP) Fraud: Because CNP fraud is anonymous, fraudsters exploit this channel, with ever changing fraud tactics and an ever-growing level of sophistication.
BOPUS: A recent trend is buy-online-pick-up-in-store (BOPUS). In this scenario, customers can order in a CNP environment (mobile device, laptop, etc.) and then pick up their order in the store. This scenario exploits a retailer’s systems that are not connected, allowing fraudsters to use one channel against another. This instantaneous fraud occurs because the instore and mobile application’s backend solutions are not connected.
Transaction Speed: Part of the customer experience is the speed at which transactions need to occur. The standard for approval is now instantaneous. This too places the onus on the retailer and its fraud solution to certify the identity of the customer and confirm with a high level of probability that the transaction is legitimate.
Mobile Payment Options: To deliver an omni-channel experience to customers, retailers must stay abreast of and support multiple payment options. While payment platforms continue to change, the onus is on the retailer to ensure that each of them are protected by the same level of security that is on the company’s ecommerce site.
Regardless of the tactic used, by the time the retailer realizes that it is a victim of fraud, it is out the stolen merchandize and having to absorb the charge as a loss. Leveraging today’s latest use of Machine Learning fraud solutions are allowing merchants to stay ahead of the fraudsters, provide better customer service and create better profits. Read the eBook, Omni-Channel Commerce Means Omni-Fraud, for strategies to fight fraud across all channels.