2016 was another stellar year for eCommerce. US online year-end sales matched forecasts and surpassed $110 billion, a 13% increase over the previous year. In China, Singles’ Day sales totaled $17.8 billion, breaking the record for single-day online revenue.

Global retail eCommerce sales are expected to reach $2.3 trillion in 2017, and by 2020 the market will be worth a whopping $4 trillion! In this post, I cover key trends eCommerce merchants should look out for in 2017, along with relevant fraud management advice.

Global eCommerce Will Boom, Driven by Asia

While North American eCommerce sales are still growing, analysts believe the market isn’t far from its saturation point. Globally, however, eCommerce growth shows no signs of slowing down, largely due to the booming Asian markets. In fact, 2017 eCommerce sales are expected to exceed $1 trillion in China alone.

Retailers looking to capitalize on growing international demand, particularly from Asian markets, must adjust their eCommerce site and fraud systems to properly handle cross-border orders:

  • Remove fraud filters that are unsuitable for international orders
    Roughly 70% of merchants surveyed in the MRC’s Global Fraud Survey stated they rely on AVS for order validation. AVS is largely superfluous for global eCommerce. Many merchants also block IPs from specific countries, fail to support payment methods that are popular abroad, or require a domestic billing addresses. These practices shut the door in the face of millions of international shoppers, limiting your ability to generate online revenue in global markets.
  • Don’t let shipping concerns curb your outreach
    Setting up logistics and negotiating pricing for worldwide shipping may seem like a daunting task. Fortunately, Riskified data shows that US merchants offering domestic shipping only stand to boost eCommerce revenue by over 10% simply by accepting international cards. In orders from countries to which you do not offer shipping, or to which shipping costs are high, expect to see many legitimate shoppers use freight forwarding services (aka reshippers).
  • Add international online shopping days to your calendar
    While Single’s Day has become well-known across the globe, eCommerce merchants have not yet capitalized on other international holidays, like Brazil’s Three Kings Day, or the Chinese New Year. To make the most of cross-border eCommerce, retailers need to be familiar with holidays that can impact online shopping patterns. Check out this comprehensive list of international holidays that could generate significant online revenue for your business.

Organized Fraud Attacks Will Increase

As the global eCommerce market expands, so does the opportunity for fraudsters, who constantly refine methodologies to outsmart fraud prevention measures. The majority of merchants included in the MRC’s latest Global Fraud Survey reported that “clean fraud” is the most frequent form of CNP fraud they encounter.  Clean fraud means there was no indication of fraud before the chargeback was incurred. Essentially, attacks are becoming more sophisticated, which may indicate a rise in organized fraud ring activity.

There are several ways to ensure your business is better protected against sophisticated CNP fraud attempts:

  • Collect more data to support automatic anomaly detection
    Fraud rings usually follow a certain MO, but identifying a sophisticated attack can be difficult when focusing on a single order. Having more data at your disposal improves your ability to spot anomalies. A spike in purchases from the same operating system and browser may be indicative of fraud ring activity, even if each order is placed from a unique IP address, using a different email. Collecting customer age data, for example, may highlight uncharacteristic shopping patterns, like a sudden surge in iTune gift card purchases by senior citizens.
  • Link orders to distinguish fraudsters from good customers
    Linking involves cross-checking data from new transactions against previous ones. If there’s a match, the same person has likely returned to shop with you. Order linking can help prevent fraud. For example, when a new order is placed via the same device and IP address from which a fraudulent chargeback was previously incurred. Linking also helps approve orders placed by good customers. For instance, it will allow you to identify legitimate shoppers returning with a different surname (due to marriage), or shipping to a new address.
  • Don’t let fraud prevention spoil your customers’ experience
    Fraudsters are growing more sophisticated every day, but the majority of online orders are still valid. Focusing solely on protecting against fraud without considering the shopping experience may result in significant revenue loss and will harm your brand reputation. High friction measures that undermine customer experience, such as 3-D Secure, may be effective at verifying customer identity, but lead to high drop off rates. Invest in friction-free methods to determine the validity of your eCommerce orders.

eCommerce Will Rise, mCommerce Shall Soar

Fresh research indicates that mobile traffic accounted for 59% of sessions on global eCommerce sites in 2016, while mobile purchases generated nearly 40% of all online revenue. Although most shoppers still prefer purchasing on desktop, citing privacy and security concerns, mCommerce is closing the gaps in terms of user experience and security. Last year, over 50% of eCommerce sales in Japan and the UK were via mobile. Some analysts project the US will also pass the 50% mark in 2017.

The trend is clear – retailers need to be prepared for mobile shoppers (and fraudsters):

  • Make your eCommerce site mobile friendly
    Consumers use various devices to browse before making a decision to purchase. Already in 2014, 4 out of every 10 transactions involved a cross-device shopping journey. Whether it’s a loyalty app or a mobile-enabled website, make sure to give mobile shoppers access to the same goods and functionalities available on desktop. Complicated and unfriendly mobile eCommerce sites lead to frustration and negatively impact customer retention rates, which can hurt revenue and brand reputation.
  • Support mobile-friendly payment methods
    Mobile-friendly payment methods can make the checkout process smoother, boosting conversions. According to analysts, mobile payment methods are expected to exhibit compound annual growth rates of 80% through 2020, and millennial shoppers are especially fond of the app-like engagement capabilities that mobile wallets offer. Be sure to support or embed mobile wallets and payment methods such as Google Wallet, PayPal, Amazon Payment, and Apple Pay.
  • Devise an mCommerce-specific fraud strategy
    While many merchants worry about fraud in mobile orders, Riskified data shows that in 2016, mobile purchases were 45% safer than desktop orders. Tracking CNP fraud & order approval rates by channel – mobile, desktop, call center – will allow you to identify risky segments. Mobile orders provide unique data points such as connected social apps, carrier information, and GPS location. This data can be leveraged to shed light on the identity of the person behind an order, and to better distinguish between good customers and fraudsters.

Omnipresent, Omnipotent, Omni-Channel!

Everybody is talking omnichannel, and businesses are putting their money where their mouths are. In 2016, the amount of omnichannel services provided by US merchants grew by 300% over the previous year. And the reasons are clear: a recent survey of 46,000 shoppers found that 73% used both digital and physical retail channels as part of their shopping journey.

By definition, omnichannel encompasses transacting with customers as they browse, buy, choose delivery options, return, complain or praise; in-store, online, via app, or over the phone. To provide the optimal customer experience, retailers must track customer visits (both online and off) and offer the correct options at every step. So how can retailers remain competitive while avoiding fraud?

  • Offer the omni-channel services shoppers want
    As the omnichannel experience evolves, retailers need to accommodate the services shoppers demand. A review of 30 retail chains found that while they all offered “buy online, return to store” services, only 22 offered “buy online, pickup in store.” Businesses need to understand  what shoppers want, and to offer services to meet consumer demands. Whether it’s allowing shoppers to buy online while in-store, supporting real-time in-venue online ticket sales, or simply offering multiple shipping and delivery options, providing customers with a sense that your services are available anytime, anywhere is well worth your time and money.
  • Track your customers across devices & channels
    Recognizing returning customers should be a priority for online retailers. Per purchase, returning customers spend 3 times more than one-time shoppers, and their orders carry half the fraud rate. Identifying customers across channels requires accurate device fingerprinting, and linking across devices. A customer may start browsing on their iPad at home, add items to the cart while on their work computer, eventually making the purchase via a mobile phone.
  • Leverage data to personalize the shopping experience
    Tracking omnichannel visits makes it much easier to understand consumers, and to suggest offers or content they will appreciate. Retailers who recognize their customers can provide services based on their personal preferences, the relevant stage in the shopping journey, and more. This personalization can leverage past purchases, geographic location, seasonality, market trends, demographic group, and other brand interactions.

Here’s To a Fraud-Free 2017

As long as eCommerce merchants are aware of the trends in the market and are willing to make the changes required to take on new challenges, they can look forward to successfully managing fraud in 2017, making it another year of record growth, expansion to new markets, and success!