Mitigating the Risks of BOPIS

Like many trends that have become the new normal in the past few years, BOPIS (buy online, pick-up in store) got a big boost due to the COVID-19 pandemic. Even once the pandemic restrictions were rolled back, a lot of consumers—and merchants—were in no hurry to get rid of BOPIS. In fact, 64% of consumers who use BOPIS say they use it more often now than they did during the height of the pandemic.

Shoppers like BOPIS for a number of reasons. When compared to e-commerce, BOPIS allows them to avoid paying for shipping and receive their goods faster than waiting for home delivery. When compared to shopping in store, BOPIS avoids wasting a trip for an item that’s out of stock and cuts down on time spent looking for the right shelf or waiting in a checkout line. In one survey, 50% of BOPIS shoppers said they choose the option for convenience.

Giving consumers the options they want keeps them happy and builds loyalty, increasing the chance that they’ll become repeat customers. But there’s a catch—BOPIS is a magnet for fraud. How can merchants use BOPIS to their best advantage while avoiding the increased threat of fraud and chargebacks?

 

 

The Benefits of BOPIS

One of the biggest advantages of BOPIS is that it gets shoppers into your store, where some of them—as many as 85%, according to one survey—will end up making additional purchases. This means that BOPIS can have a direct and positive impact on your sales revenue, which is one of the greatest benefits any merchant could hope for.

Another benefit of BOPIS is that the apps and websites that facilitate these orders can integrate loyalty and reward programs, making it easy to get customers to sign up and making them more receptive to marketing communications and enticing offers like coupons and special deals. In this way, BOPIS can be a huge driver of customer retention and repeat purchases.

The convenience of BOPIS can also help retailers compete with Amazon for customers who prefer shopping online. 25% of customers say they prefer to shop with local retailers over Amazon when an efficient BOPIS option is available.

How BOPIS Leads to Chargebacks

The downside of BOPIS is that it is vulnerable to fraud on multiple levels. BOPIS transactions have a 7% attempted fraud rate, compared to 4.6% for other purchasing methods.

Fraudsters often take advantage of BOPIS in combination with account takeover attacks or credit card fraud. One of the big challenges for fraudsters is finding a way to pick up the goods they’ve ordered with their victim’s money. They can provide their own shipping address, but this can send up red flags to the merchant. With BOPIS, they can walk in, pick up their order, and go.

BOPIS is also more vulnerable to first-party misuse, AKA friendly fraud. Most retailers want to make the pickup process as smooth as possible, and therefore don’t ask the customer for any identification. That means that even if the order was legitimate, the customer can claim they weren’t the person who picked it up., trusting that the merchant won’t have evidence to prove otherwise.

How to Mitigate the Risks

Merchants should look for ways to increase the security of their BOPIS procedures, especially the final pick-up, which are both cost-effective and acceptable to their customers.

For example, you can require customers to present their ID or payment card when they receive the order. Records of this verification can be the key to reversing a later chargeback that you would otherwise be unable to fight. Some retailers implement these measures only for high-value orders to avoid inconveniencing most customers.

It’s also a good idea to communicate clearly to your customers that you will refund their money if anything is unsatisfactory about their order. This can help keep genuinely upset customers out of the dispute process and give you a chance to win them back.

It’s also important to deploy strong anti-fraud protections for your online checkout process. AI tools and fraud filters can catch and block fraud at the point of sale, saving you the time and trouble of fulfilling a fraudulent order. While some data points, most notably the shipping address, won’t be available with BOPIS, there are other ways to spot fraudulent orders. For example, an order with a billing address hundreds of miles from the store it’s due to be picked up at might warrant a closer look.

The Bottom Line

For merchants, BOPIS can be a practice that carries risks as well as rewards. It leads to higher sales and increased customer loyalty, but at the cost of additional fraud and chargebacks. The answer isn’t to retreat back into the business practices of the past, but to proactively meet the challenges of the new era head on. Employing the best tools and strategies available for fighting fraud and chargebacks can help ensure the benefits of BOPIS far outweigh the costs.

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