Several months since COVID-19 emerged in the United States, it’s becoming increasingly clear that pandemic-triggered changes in consumer shopping behavior are here to stay. As a result, the upcoming holiday shopping season will be one like never before.
The most prominent and talked about change in consumer behavior is the ongoing shift from in-store shopping to e-commerce. Merchants were abruptly forced to pivot their business model to accommodate more digital buyers.
To talk about what to expect in the 2020 holiday season, what merchants need to do to be successful, and what barriers could inhibit this success, PaymentsJournal sat down with Gary Sevounts, CMO at Kount, and Tim Sloane, VP of Payments Innovation at Mercator Advisory Group.
How will this holiday season be different for merchants and consumers?
Many businesses have struggled to stay afloat during the economic downturn caused by COVID-19, making this holiday season crucial for survival—a fact that many businesses recognize. Kount recently surveyed 500 e-commerce companies about the holiday season and found that the vast majority (96%) of merchants agree that this year’s holiday shopping season is more important to their business than 2019’s.
In addition to surveying businesses, Kount asked 1,000 consumers the same questions, finding some interesting and unexpected inconsistencies. “For example, 64% of businesses expect to see the bulk of their holiday shopping in-store, but only 43% of consumers expect that to be their primary shopping outlet,” explained Sevounts. “So what does that mean? It means that online commerce is an even bigger deal than most businesses anticipate.”
This is in line with what other studies have found. Forbes recently cited a study that forecasts online retail to grow 18.5% in 2020, reaching 20.2% overall penetration in North America. Meanwhile, other estimates predict that e-commerce holiday retail sales could grow by 25% to 35% from November to January.
Merchants need to adopt e-commerce to see success…
In Sevounts’ words, “e-commerce is growing very, very fast.” This means that merchants—particularly those with depressed sales due to the pandemic—need to become successful e-commerce providers if they want to survive the holiday season.
“It’s becoming really critical for commerce providers to become e-commerce providers and become very quickly native in e-commerce, bringing new incentives online quickly in a secure way that enables risk management and a positive customer experience with little friction,” remarked Sloane.
“E-commerce is at a major and vital intersection,” added Sevounts. Some merchants will emerge from the season profitable and stronger than ever, but merchants that fail to execute best practices risk losing it all.
… Which requires them to be aware of key risk areas
But what do merchants need to keep in mind when becoming e-commerce providers? To accommodate the record number of consumers shopping online, inventory management needs to be a top consideration.
Like previous holiday seasons, most of the season will revolve around a relatively small number of popular inventory items. Merchants that can deliver those high-demand items in the right quantity with the right use experience will come out on top.
Similarly, new channels and shipping will be needed. From in-store or curbside pick-up to other shipping options, merchants need to offer consumers a range of new channels to purchase and receive their goods.
Security matters too. Fraud, customer account and inventory protection, and chargebacks all need to be managed properly. Over one in four merchants (29%) said that their organization has dealt with bot attacks or inventory manipulation in the past. “Some bots have been programmed to identify inventory that is in high-demand or will be in high demand, then buy that inventory at a low price to resell elsewhere for multiples of their regional price” explained Sevounts.
Also crucial to security is chargeback prevention. Chargebacks are a major threat during the holidays and can take many forms, such as criminal chargebacks on stolen credit cards, friendly fraud, and inventory issues requiring a refund.
One way to prevent chargebacks is to intercept disputes before the chargeback occurs. That’s why Kount offers its Near Real Time Chargeback Prevention Solution, which helps resolve dispute cases to avoid chargebacks.
Merchants have more on their plates than ever before. They have to shift to e-commerce, juggle fraud prevention, bot attacks, and chargebacks, provide a seamless customer experience, and manage inventory—all during a holiday season with a record number of online shoppers.
Believe it or not, this doesn’t have to be complicated. “There are advanced fraud prevention and digital identity platforms out there like Kount’s that identify risky, malicious, and fraudulent behavior and activities from both users and bots,” explained Sevounts. Threats like chargebacks, account takeovers, and bots are all handled by the platform, giving merchants less to worry about. “For merchants, it’s as simple as turning the switch on and focusing on their core business,” he concluded.
For full survey results and Kount’s 2020 Holiday eCommerce Guide: Risks, Tools, and Keys to Succes, visit kount.com/holiday