New Research Reveals the eCommerce Keys to Holiday Survival
Businesses are speeding towards a holiday season like no other, and it’s a vital crossroads in eCommerce. The 2020 holiday season is either a lifetime opportunity or existential threat for many businesses, with the pandemic impacting both businesses’ typical models and consumers’ spending habits and abilities.
In two new, parallel surveys, Kount gives the first 360-degree view of eCommerce and fraud prevention trends this holiday season from the perspective of both eCommerce providers as well as shoppers.
- The consumer survey of 1,008 adults in the U.S. 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.
eCommerce Acceleration and New Shopping Habits
96% of participants say that, compared to last year, the upcoming holiday season is more important to their business.
Nearly half of all respondents (48%) say that their business will need to catch up on sales in order to recover from the economic downturn, with another 36% saying it’s “critical” or “essential to survive” as a business.
Nearly ¾ of participants expect higher sales on eCommerce/online retail channels compared to 2019.
Two in three (66%) respondents say they will use promotions to drive more eCommerce purchases this holiday season:
But, there are risks: Businesses are redirecting more resources and/or employee time toward preventing:
eCommerce site issues44%
Critical Risks and Lifetime Opportunities
The survey identified five key areas of risk and opportunity this season: inventory, new channels, chargebacks, customer accounts, and customer friction.
1. Inventory Issues
The most reported challenges that respondents expect to face this holiday season:
Increase in online cart abandonment37%
More than half of all survey respondents (56%) anticipate inventory issues related to having items in stock and shipping items in a timely manner this year.
The top 5 holiday inventory issues among participants who anticipate problems (N=281) are:
Keeping websites in-sync with inventory management systems44%
More than 1 in 4, or 29%, of participants say their organization/business has dealt with a bot attack or inventory manipulation in the past
Of those participants who say their organization/business has dealt with a bot attack or inventory manipulation (N=145), the most common bots attacks are:
32%say they have encountered “spider bot” attacks
2. New Channels and Shipping
More than half of the survey respondents who are employed at retail businesses that serve customers both online and in brick-and-mortar locations (53%; N=453) say their organization or business does not anticipate in-store sales volumes to return to pre-COVID levels within the foreseeable future, even after the pandemic subsides.
30%of Americans say they will avoid shopping in-store as much as possible this holiday season
Around 1 in 6 Gen Z Americans (16%; N=121) say they expect to do the bulk of their holiday shopping through Alexa or another voice connected device.
Delivery matters this holiday season. Merchants are scaling Buy Online, Pick up in Store, Curbside Pick Up, shipping options, and more. And, that’s a concern:
42% of Americans say that longer shipping times make them furious when shopping online
3. Chargebacks, Friendly Fraud, and Returns Abuse
40% of businesses have noticed an increase in chargebacks since January of 2020.
- 51% say they expect to experience an increase in chargebacks this holiday season
- When asked to rank their largest concerns around chargebacks and the holiday season, businesses, on average, ranked the “cost of chargebacks” as their top concern. “Negative customer experience” came in second.
89% of consumers would not first contact the company that their purchase came from if they saw a charge they did not recognize on their card. Instead, 56% would contact their credit card company or bank first about the unrecognized charge.
Friendly Fraud can include returns and policy abuse:
- 42% of respondent say that their organization or business allows customers to abuse promotions (e.g.customers buy extra items to reach the free shipping threshold and return some items later while keeping only one)
- But, 40% say they use tools to prevent this behavior
Some consumers are comfortable taking advantage of policies:
82% of Baby Boomers would NOT buy extra items to hit a sales/free shipping threshold and then return the extra items, whereas the majority of Gen Z (60%) Millennials (53%), and Gen X (53%) Americans say they would
Baby Boomers return the fewest number of items after the holidays are over compared to the younger generational cohorts:
51% of Gen Z say they typically return five or more items, 46% of Millennials say they return five or more items, and 44% of Gen X say they return five or more items. Only 8% of Baby Boomer say the same
4. Protecting Customer Accounts
6 out of every 10 (60%) consumers say they are most concerned about the credibility of an online retailer or data breaches to their personal information when online shopping.
5. Improving Customer Experiences
On average, these are consumers’ top priorities when shopping this holiday season:
Finding the best gift for others
1 in 4, or 25% of Americans say they would not return to a website if turned away from a legitimate transaction (i.e false declines). Instead, they would take their business elsewhere.
Other reasons American choose to abandon their online shopping cart include long estimated shipping/delivery times (40%), complicated ordering and checkout process (27%), and having to enter in their information (credit card #, address, etc.) too many times (27%)
Since the beginning of the year, consumers say the following are the most prominent shopping issues they have most experienced:
1 in 5 say that they have experienced more difficulty with customer service requests
Furthermore, more consumers expect to experience these issues during the time leading up to the holiday shopping season:
23%expect to experience more difficulty with customer service requests (up 3 percentage points)
Looking In the Mirror: How Expectations Differ
Compared to last year, 84% of American consumers report they plan on spending more or about the same on online retail or eCommerce this holiday season. Only 16% say they will spend less. But how and where they spend money, and why they choose a particular business is changing, and not always in line with merchant assumptions. The chart below illustrates some of those gaps.
Online Payments and the 2020 Holiday Season
|Where to Shop||Merchant Expectation||Consumer Expectation|
Mobile Web Browser
Over the Phone
|How to Pay||Merchant Expectation||Consumer Expectation|
Credit Card Rewards
|Delivery Method Ranking||Merchant Expectation||Consumer Expectation|
|Ship to Store
Next Day Shipping
Same Day Shipping
|Free Shipping- No matter Speed
Next Day Shipping
Same Day Shipping
Ship to Store
|Important Incentives||Merchants Will Offer||Consumer Expectation|
Loyalty Account Perks
5 Keys to Success This Season
These opportunities, risks, and trends in digital acceleration this holiday season means businesses need to focus on five key things:
- The ability to scale eCommerce is key. Volumes are already high, and the ability to quickly scale and protect all digital services is essential.
- A successful season will include new eCommerce models. Options like Buy Online, Pick Up in Store (BOPIS), Click-and-Pick, and same day shipping, among others, can make up for reduced in-store sales.
- Reducing friction can drive conversions and loyalty. With stiff competition for digital business, fast and exceptional customer experiences will be important.
- Businesses will face new types of fraud. Malicious bots, friendly fraud, account takeover and more will target high transaction volumes and new models, undercutting revenues and clogging up operations.
- Secure and well-managed inventory is essential. Supply shortages and the importance of on-time delivery to consumers make it especially important to protect inventory levels