Another holiday shopping season is upon us, and most of the e-commerce forecasts that we’ve seen are projecting double-digit increases over last year. For retailers, however, this year comes with a footnote: Supply chain shortages. Consumers have started shopping earlier than ever in hopes of getting the gifts they want before they sell out, while merchants compete within the supply chain to get the inventory that they need. A shopper may be willing to wait for delivery from a trusted merchant, but will order the same item from a competitor if they promise faster delivery. It’s becoming more common for consumers to order the same item from multiple sites, see who delivers it first, and then cancel the rest of the orders. Of course, this is a big deal for merchants who may have listed the item as “out of stock”, and turned away new orders based on the quantity of existing orders for the item.
In addition to inflating sales forecasts, this consumer behavior will result in an increase in disputes, as merchants are reluctant to cancel orders for which they have committed scarce inventory.
“Due to supply chain issues and parts/product shortages, many customers face constantly changing delivery dates, out-of-stock items, and similar frustrations. Coupled with overwhelmed call centers, many customers find it easier to dispute a charge versus trying to contact the merchant to cancel the order and seek a refund,” says Jeff Wixted, VP of marketing at ASccertify.
Merchants that are not prepared to address chargebacks and disputes in a timely and organized manner are risking their profits from this holiday season, since the fees and handling costs of a chargeback can make the actual loss to the merchant 20-30% greater than the value of the transaction. Mercator recently published research that studied the current environment of chargebacks, fraud, and disputes, and outlined an actionable plan that merchants can implement to minimize their losses. Among the key points in the Mercator report:
- Communicate with your customers, don’t let customer guess what’s happening with their orders. Be sure cancellation policies are prominent and make it easy for customers to contact you with questions about their order or delivery status.
- Organize the data storage of key points for easy retrieval in the event of a chargeback, you won’t prevail in a dispute if you can’t tell your side of the story. Chargebacks allow a very short window for rebuttal, and if you wait until you receive a chargeback to gather your evidence, you will lose.
- Be sure that your fraud prevention tool are up to date to screen out orders that are likely to be fraudulent.
Overview by Don Apgar, Director, Merchant Services Advisory Practice at Mercator Advisory Group
