To be everywhere. That’s no longer a dream, but an expectation.
In today’s retail environment, relying on growth from a single channel is not enough. The reality is consumers want the freedom to shop everywhere, and it’s clear that their desire to shop when they want, where they want, and how they want will continue to drive omnichannel retail.
With Amazon piloting brick-and-mortar stores, which forgo checkout in favour of smoother shopping experiences, not being up to the omnichannel challenge increasingly means not being competitive. The rapid evolution of omnichannel, fuelled by the consumer’s embrace of mobile, creates opportunities and challenges for retailers in a number of ways.
Size of the Prize
There’s clearly much at stake when it comes to the omnichannel retail opportunity. A study by Harvard Business Review shows that omnichannel retailing works, and those shoppers are more valuable than consumers who only engage with retailers in one place. They spend on average 4% more money every time they are in a brick-and-mortar store, and 10% more when shopping online, compared with shoppers who interact with a brand on just one channel.
In addition to having bigger shopping baskets, omnichannel shoppers are also more loyal. Customers who engage with retailers on multiple channels visit their brick-and-mortar store 23% more often. Moreover, they are more likely to recommend the brand to family and friends.
Managing Omnichannel Fraud
Omnichannel commerce is here to stay. Shoppers love it. Unfortunately, there’s another group who finds it equally appealing, but for a different reason: these are the omnichannel fraudsters.
While the increasing choice of payment methods and devices across multiple channels meets consumer demand, it also makes fraud management more complicated. As customers are operating across a number of channels, fraudsters are too, and their methods are fast-changing and constantly adapting to technological advances. Omnichannel merchants in the meantime find it harder to know where there’s a threat and how to counter it.
A major challenge faced by many omnichannel businesses is card-not-present (CNP) fraud, as these transactions do not involve the cardholder or the card being present at the point-of-sale. According to Financial Fraud Action UK, CNP fraud against UK retailers totalled an estimated £432.3 in 2016, a rise of 9% from the previous year. Feedzai reports that 68% of fraud is actually multichannel.
It’s no surprise that merely 46% of merchants use fraud management solutions across all purchasing channels because the problem with a holistic approach to fraud detection has many layers. While more than 90% of merchants surveyed offer multiple service and purchasing shopping channels, 65% believe that they do not have adequate fraud management tools to support effective fraud management today, and only 46% have consolidated fraud management solutions across channels to date.
Omnichannel Fraud Prevention Tips
Because there’s no single answer to fraud management, there will always be a need for a multi-layered fraud prevention strategy to enable effective fraud management across all channels. To fight omnichannel fraud, it’s essential to employ a solution that’s smart and flexible. Having an agile platform that monitors all transactions and consumer activity that businesses can build on, connect channels through, and update as and when needed, will be even more important.
When planning omnichannel fraud prevention, here are a few considerations to keep top of mind:
- Understand and seal up all of your vulnerable security points. Prevent fraudsters from stealing data by employing fraud protection software that understands possible purchase and product return paths.
- Take a more holistic view across as many channels as possible. Funnel your data from different channels through the same data store. The challenge lies in the ability to associate different vertical silos of information horizontally, across all channels, to help with the detection of possible fraud.
- Unite organisational silos to address omnichannel threats. A crucial step toward moving to an omnichannel security stance is as simple as bringing people together from different teams and disciplines to share information. Sharing data and information often reveals new patterns and networks.
Retailers should assume that all channels in their organisation are vulnerable to omnichannel fraud, and make it a priority to deploy omnichannel security to protect themselves and their customers.