Omnichannel Chargebacks
Some people like to shop on their phones. Others get their shopping done on their work computers when their boss isn’t looking. And then there are those who still want to drive to a brick-and-mortar location and select their purchases in person.
There are countless ways to shop these days, and there only way for a merchant to satisfy them all is with an omnichannel strategy. It’s a great way to make sure you’ve got all your bases covered, but the omnichannel experience comes with some unique vulnerabilities. What do merchants need to know about dealing with fraud, disputes, and chargebacks in the new reality of omnichannel retail?
- What is Omnichannel Retail?
- What are the Most Common Omnichannel Retail Features?
- How Do Chargebacks Affect Omnichannel Retail?
- What Can Merchants Do to Protect Themselves from Omnichannel Retail Chargebacks?
- Conclusion
The assumption used to be that if you could bring a truly unique and exciting product to market, the world would beat a path to your door.
In a world of drone deliveries, free next-day shipping, and DoorDash, we’re not entirely sure that’s still the case.
Consumers will still clamor for quality products and low prices, but they’re getting very used to shopping on their own terms.
Smartphones, social media, and other new technologies have spawned an endless variety of new retail channels, and merchants now realize that the more options you can offer, the more customers will buy from you. Nearly three quarters of consumers prefer using multiple channels for shopping, and those customers spend 10% more than the average e-commerce consumer and are 23% more likely to come back as return customers.
Omnichannel retail aptly describes the way consumers shop now, but it does come with some drawbacks. The convenience, flexibility, and seamlessness of omnichannel shopping can also make it attractive to fraudsters, who can probe all of a retailer’s many channels in order to find the ones most vulnerable to exploitation. In order to utilize the omnichannel approach to their full advantage, merchants need to know how to protect themselves.
What is Omnichannel Retail?
Omnichannel retail describes a sales and marketing approach that seeks to provide a consistent, unified customer experience across a wide range of commerce channels. In a broad sense, it refers to total integration between in-person and e-commerce channels.
Consumers like researching and comparison shopping online, but sometimes they prefer to make their actual purchase in a physical retail location.
It’s also not uncommon for consumers to bounce around multiple apps and platforms when considering an e-commerce purchase, and merchants are well-advised to make sure their customers can complete a purchase no matter where they happen to have landed when they make their final decision.
The crucial element of the omnichannel experience is making sure that the merchant never “forgets” the customer as they hop from channel to channel. A customer who engages extensively on social media to research a purchase, but then gets treated as an anonymous visitor once they land on your website, is less likely to purchase than a customer whose interests and preferences are taken into account no matter where they interact with your brand.
What are the Most Common Omnichannel Retail Features?
The possibilities for omnichannel shopping are limitless and ever-expanding, but here are a few of the most popular features currently in use:
- Buy Online, Pick Up In Store (BOPIS) or curbside pickup, also known as “click and collect”
- Websites that provide in-store stock status
- Allowing returns of e-commerce purchases at physical store locations
- Purchasing on social media
- Purchasing through shopping platforms like Amazon, Google, eBay, or Etsy
All of these features provide customers with more options, greater flexibility, and more convenient purchasing experiences—especially when some or all of them are offered in conjunction.
How Do Chargebacks Affect Omnichannel Retail?
Many merchants have learned the hard lesson that the same convenience and seamlessness that makes it easy for customers to purchase also makes it easy for fraudsters to take advantage of you.
BOPIS offers a clear example. Many merchants allow customers to order online and pick up their purchase in the store. However, merchants don’t always check the ID of the person picking up the order.
This can lead to two forms of fraud. First, thieves can walk into a store, confidently pick up somebody’s waiting order, and walk out before anyone challenges them. Second, customers can pick up their own orders, then file a dispute under the false claim that they never received it.
If the merchant can’t prove that they verified the identity of the person who walked away with the order, there’s not much they can do to contest the resulting dispute—in either scenario.
What Can Merchants Do to Protect Themselves from Omnichannel Retail Chargebacks?
Identity verification processes can do a lot to prevent fraud and chargebacks from coming at you through the omnichannel, but too much friction can annoy customers and spoil the seamless experience you’re trying to provide. It can be challenging to strike the right balance.
One thing to remember is that a little friction in the right places can reassure customers that you take their security seriously, and you’re looking out for them.
When a customer switches from one e-commerce channel to another, make a brief request to re-validate their identity—followed by some personalized content or offers. If you’re doing BOPIS, don’t be afraid to check the customer’s ID before you hand over the merchandise.
With respect to omnichannel features like in-store returns, it’s important to process them immediately and refund the customer as quickly as possible. If you delay too long, the customer may assume that your brick-and-mortar stores aren’t doing a good job of communicating with your e-commerce unit and that the only way they’re going to get their money back is to file a chargeback.
Conclusion
Managing an omnichannel strategy requires dealing with some special challenges, but that doesn’t mean you should cling to a single-channel approach while your competitors assume all of the risks and benefits.
With a cautious but flexible approach to security, you can mitigate the dangers of the omnichannel’s most convenient features while protecting yourself from fraud and disputes.
If you’re really struggling with first-party misuse, true fraud, and other costly disputes, never forget that the right chargeback management firm can help you come up with an effective and far-reaching chargeback prevention strategy that is fully compatible with a modern omnichannel approach to retail.
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