The COVID-19 pandemic has disruptive impacts on our individual lives. Suddenly, our habits, interpersonal relationships, shopping preferences and our relationship dynamics with technology have revolutized with the rising internet penetration and advent of AI.
A study from Bain & Company titled “How India Shops Online” indicates that the Indian e-commerce industry, that has seen significant upsurge in the last 5 years, is expected to grow at 30 percent CAGR ($100–120 billion in GMV) over the next 5 year.
Driven by consumers’ need for safety and convenience because of COVID-19, online shopping is expected to gain salience and reach 300 to 350 million shoppers by FY2025. The growth will also be spurred by factors such as growing internet penetration (1 billion Internet users by 2030), increasing smartphone usage (820 million smartphone users by 2022), availability of cheap, ubiquitous data (data prices have reduced by 95 percent since 2014) and digital natives coming of age (more than 75 percent of India’s population in 2030 will comprise of Millennials and Gen Z).
What E-commerce Companies Must Do To Adapt To This Change?
With online becoming the primary channel for shopping, it is extremely vital for e-retailers to improve their online capabilities. Highlighted below are several action points for the industry:
- Focus on Realigning Product Categories
Consumer preferences need to be constantly reassessed. Product categories and offers need to be aligned accordingly. By automating predictive analysis for consumer behavior, companies will be able to analyze consumer trends and match offerings and demand accordingly.
- Build Immediate Response Capabilities With Suppliers
E-commerce companies need to adapt their supply chain network and logistics to ensure availability of adequate supplies according to the demand. Agile approaches like dropshipping, fulfillment centers and distribution centers, among others, can be implemented to expedite the delivery of online orders. For instance, to improve their presence in Tier 3 and Tier 4 cities, Amazon India recently set up 10 new fulfillment centers.
- Scale Up Operational Agility To Ensure Delivery Assurances And Flexibility
According to the Consumer Behavior Survey conducted by Capgemini Research Institute in April 2020, more than 50 percent consumers prefer e-tailers that offer delivery assurances and flexible delivery options. To ensure that delivery assurances and flexibility are offered and fulfilled, e-commerce companies need to scale up their operational agility and improve last-mile delivery. Else they’ll risk losing existing and prospective customers to competitors who offer these assurances. Jio, for example, plans to tie up with over 30 million kirana stores for last-mile delivery across 200 cities.
- Focus On Innovative And Personalized Customer Engagement
E-commerce platforms need to start using augmented reality (AR), virtual reality (VR), chatbots and personal assistance apps to personalize customer experience. This will not only make online transactions more seamless, but also improve brand credibility and trust. For example, Lenskart uses augmented reality (AR) to allow customers to try on different frames and choose the one that looks best on their face.
- Specialization And Customization Will Be Key Growth Drivers
While big players like Amazon and Flipkart will continue to dominate, the demand for niche/ specialized players will also grow. Instead of shopping from online superstores like Amazon and Flipkart, customers will prefer niche players that exclusively sell cosmetics, furniture, eyewear, etc.
- E-commerce Localization Will Help Reach A Wider Audience
According to a study conducted by KPMG and Google in 2017, the Indian language internet user base is expected to reach 536 million by 2021. Hindi internet user base is expected to outgrow English user base. Content written in Marathi, Bengali, Tamil, Telugu and Kannada will also be searched for. E-commerce companies will have to make content in local languages and curate regional offers to get a wider audience.
Challenges In E-commerce Ecosystem: Mitigating Fraud
While going online has been the lifeline for many retailers, operating online carries several risks. According to a 2019 American Express Digital Payments Survey, 27 percent of online sales end in fraudulent transactions - and concerns about fraud have only grown as the virus has spread.
In the fiercely competitive e-commerce environment, merchants are constantly looking for ways to attract and retain customers by offering them new products and services, as well as an optimal experience. For their part, the crooks are continually trying to get ahead of the curve.
Historically, merchants have focused on preventing credit card fraud at the time of the transaction, which has led fraudsters to explore other aspects of the customer journey.
The Basics Of E-commerce Fraud
Delivery fraud is of particular interest to criminals. Today, retailers are competing with giants like Amazon that offer same day shipping and delivery services. Such an offer exerts strong pressure on retailers who are obliged to in turn offer increasingly shorter deadlines, which then benefit fraudsters. Delivery fraud works as follows - after an individual makes a purchase using a stolen credit card, the merchant allows them to change the delivery address. Then, this type of fraud can take different forms.
Purchases made online with in-store collection are also a very popular form of fraud. In this case, the criminals demand that the package be kept at the merchant before using a fake ID, using a mule, or manipulating the vendors to receive the package at a new location.
Another tactic that fraudsters use is address manipulation. Here, they deliberately trick automated means of control, such as Address Verification Services (AVS), by changing part of the address so that it does not match the actual address or the change is sufficiently insignificant so as not to be noticed, creating a conflict between the systems. With minor changes and bypassing validation processes, scammers can redirect items between the intended delivery location and drop-off locations that are more convenient for them. All that remains is to resell the fruit of their theft and pocket the profits.
How To Prevent Fraud
Faced with the increase in fraud and the need to deliver a seamless customer experience, retailers must rethink their current protection strategies. Retailers or any company marketing goods or services on the Internet must use a unified solution combining a high level of technology and in-depth expertise in fraud techniques, while meeting the expectations of brands and the specificities of different sectors.
The ability to ensure full automation coupled with real-time decision-making capacity is essential, especially in terms of scalability during seasonal peaks such as sales and promotional periods (Black Friday or Cyber Monday). This will allow businesses to protect the entire customer journey and deal with multiple online fraud methods.
Finally, by protecting the customer journey from A to Z, it is possible to fight against fraud beyond the transaction itself - and to be able, for example, to detect and stop BOPIS frauds, which take place. excluding transactions.
On the other hand, using a solution designed to protect the business by detecting fraud in real time and in an automated manner while blocking fraudsters without penalizing the customer experience will allow you to provide excellent service to consumers. Retailers need to quickly and easily identify legitimate customers to increase approval rates, as they detect and repel fraudsters. It's a delicate balance, but when it is struck, the business can grow with the confidence that it can count on a truly secure system.