ChargebacksMarch 30, 2022

Post Holiday eCommerce Pick-Me-Up

Navigating the post holiday downs and creating positive upturns

The holiday banners have come down and the influx of orders and inquiries have slowed. Now what? The post holiday season can seem like a bit of a downer for eCommerce businesses. In this guide, we will delve into two aspects of better handling the off season.

  1. The unfortunate reality of post holiday return fraud and chargeback disputes
  2. Six tips for generating new revenue in the quiet off season months    

What is Return Fraud?

Return fraud is when ill-intentioned shoppers take advantage of a store’s return policy for personal financial gain. While return fraud is more prevalent in brick and mortar stores, eCommerce businesses should be on the lookout for the following three types of eCommerce return fraud: 

  1. Wardrobing
  2. Merchandise Swapping 
  3. Friendly Fraud

Wardrobing Fraud occurs when a customer purchases a designer or pricey item with the intention of using it briefly and then returning it for a full refund. Designer dresses, evening wear, tuxedos, high end TVs and electronics are the most popular targets of wardrobing fraud. A woman may purchase a gown for a black tie event, tuck the tags inside the dress, and return it after the affair. Similarly, a large TV or powerful speakers may be purchased for a special event and returned after the occasion.   

Merchandise Swapping Fraud is a little more sinister. This type of fraud is committed by unsavory shoppers as a way of keeping their products “up to date.” A criminally minded person will purchase the newer version of something they already own and return their old product in the new packaging. 

Friendly Fraud is a term used to describe unsubstantiated “Items not received” claims via the chargeback process. A customer disputes a charge on their credit card, untruthfully claiming to have never received their purchase. They feign innocence in hopes of receiving a full refund and not having to pay for their purchase. The customer often justifies their behavior by assuming that the credit card company, whom they view as a large greedy corporation, can “afford” to take a small loss on the order, without realizing that the retailer is the one that actually loses out.

How to Mitigate Return Fraud

A good return policy is vital to every online retailer. The convenience and show of good will that a user friendly return policy provides is beneficial in increasing legitimate customer patronage and trust. However, eCommerce businesses must walk the delicate line of offering a generous return policy without getting abused by customers committing Return Fraud. 

Publicizing your generous return policy is good practice, and it encourages customers to complete a purchase with confidence. This can be accomplished by clearly stating your return policy on your website, on your FAQ page, on your checkout page, and including a printout of your return policy in every order. 

To deter fraud from occurring, it is advisable to clearly state in your policy the precise conditions of merchandise that are eligible for a refund. For example, items need to be unworn and will be inspected upon return, all sales tags must be attached and intact. A practice many retailers are adopting is attaching tags to side seams or button holes that can’t be inconspicuously tucked away and make wardrobing fraud more difficult. 

Preventing Merchandise swapping can be done with a few shifts in policy and some education. Requiring documentation, such as a receipt of purchase before a refund is issued, as well as training staff to inspect returns, ensuring the item returned is the same one on the packing slip, can help root out shoppers attempting to swap merchandise. 

Issuing tracking numbers to prove delivery of goods is an effective way of mitigating fraudulent ‘items not received’ claims. Requiring signature confirmation for high value goods can also be an effective method to prevent INR chargeback abuse/Friendly Fraud and can also be used as additional proof to the bank that the package was, in fact, delivered.

If, however, you are noticing an increase in returns, a decrease in the salability of returned items, or inventory inconsistencies, it may be time to upgrade your fraud prevention solution. Being preemptive, as opposed, to reactive, is the most strategic way to get ahead of fraud. An advanced fraud prevention solution is trained to identify and prevent any type of fraud without any heavy lifting on behalf of the merchant.

Post Holiday Chargebacks

Being hit with increased chargebacks are a sure sign that your fraud prevention measures need examining. The off season is the perfect time to take an accounting of how much time and money your business spends on fraud and fraud related tasks, such as manual review, shipping delays due to fraud screening, rate of canceled orders, chargebacks, disputing chargebacks, etc. An upgraded fraud prevention solution can relieve your business of all fraud related tasks and liability. The right fraud prevention will work to increase your approval rate and often offers a full chargeback guarantee and chargeback dispute management service. 

Six Methods of Increasing Post Holiday Revenue

Now that you’ve taken stock of the impact of the holiday season, the revenue and fraud losses, let’s discuss how you can maximize this time to lift your bottom line. 

  1. Take advantage of all new visitors to your site during Q4. Studies show that 96% of first time visitors are “window shopping” and not ready to buy on their first visit. Retargeting first time visitors is a great way to bring them back and turn them into customers.
  2. Send a ‘Thank You’ offer to all the holiday shoppers who made a purchase on your site this past season. Repeat customers spend 33% more than new shoppers. Use the following tips to make the email most effective. 
    1. Send a unique, promo code, and have it auto-load into their shopping cart.
    2. Offer a small gift and automatically add it to their shopping cart. Having an item already in their cart makes adding additional items easier. It also serves the purpose of initiating automatically generated “Cart Abandonment Emails” if they do not complete the order. (Read more about “Cart Abandonment Recovery” HERE.)
    3. Provide offers with extended expiration dates, this can serve to compel shoppers to save your email for later use instead of instantly deleting it.
  3. The New Year often brings new resolutions in with it. Market your products as being able to assist in upholding New Year’s Resolutions. 
  4. Even after a month worth of holiday promotions, shoppers never tire of a good deal or sale. Now is a good time to clear out old merchandise by offering a clearance, final sale, or BOGO deal. 
  5. Most businesses experience a downturn in order volume in Q1. Now is a good opportunity to get attention by introducing a new product or service. 
  6. Keep up with your social media presence. Ensure that you are keeping up with new social media channels, like Tik Tok. Being aware of what’s new and hot should be part of every company’s social media strategy. Tik Tok’s popularity has been soaring in recent months and those brands that have been clever about monetizing that traffic have seen incredible impact on revenue and new customer acquisition.

Most importantly, always remember that being proactive is usually more cost effective than being reactive. This is true in regard to your fraud prevention as well as to your marketing. Don’t let your brand be forgotten in the off season. Stay vocal, stay current, and stay true to your brand. Happy off-season to you! 

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