Social media has become an invaluable tool for ecommerce. It’s common knowledge that many consumers turn to social media for advice before making a purchase, but the masterminds behind these platforms now want to make social media a much more intrinsic part of the ecommerce environment.
The Expansion of In-App Shopping
Several social media platforms allow retailers to connect directly to their customers using in-app “Shop Now” buttons.
In September, Facebook announced plans to take that idea even further by allowing customers to make purchases through Facebook Messenger. Users will be able to save their payment data in messenger, enabling them to go from initiating to completing a purchase entirely in-app in a matter of seconds.
At the same time, Instagram is piloting an expansion to their ecommerce tool, allowing merchants to add tags to images with additional information such as price, color and other specifics. If successful, both changes are targeted for a wider rollout within the coming months.
It’s important to note that this isn’t a “plug & play” matter. Once this technology takes off, merchants will need to closely monitor the marketing strategy. While social media shopping opens doors for new potential sources of profit, it can also lead to problems if not properly managed.
The Challenge of Impulsive Consumer Behavior
In-app shopping reduces friction by minimizing the barriers between consumer and product. The goal of actionable ads is to put the product in front of a consumer, and encourage them to follow through with a purchase in the moment.
It’s true that this approach may increase sales. However, one factor being overlooked here is that, in many cases, customers electing to mull over a purchase works toward a merchant’s benefit. Much like the candy rack right next to the register at the grocery store, these ads encourage impulsive consumer behavior. In turn, this can lead to buyer’s remorse—one of the primary drivers of friendly fraud.
Reduced Friction and Impulsive Consumers: A Recipe for Fraud
We generally think of reducing ecommerce friction as a good thing, but some measure of friction is useful to prevent consumers from clicking “buy” before they’ve had a chance to fully justify the purchase. When consumers experience buyer’s remorse, many are tempted to request illegitimate chargebacks to reverse the transactions, a practice known as friendly fraud.
At present, chargebacks cost merchants as much as $40 billion annually, with up to 86% of all chargebacks being the product of friendly fraud. This is already a serious challenge, and encouraging consumers to act even more impulsively when shopping online will only further exacerbate the problem.
Balancing Reduced Friction with Customer Service
Is it necessary to accept a measure of eCommerce friction as a safeguard against fraud, even knowing that it will dissuade a certain number of valid transactions? Not necessarily.
More than 60% of customers who regularly engage in impulsive shopping prefer to buy from merchants with liberal return policies. That makes sense—if you are a self-professed impulse buyer, you’re likely to prefer merchants who will accept returns as graciously as possible. For merchants, the key to “having your cake and eating it, too,” in this case, is emphasizing stellar customer service.
It’s possible to capitalize on the value of the “Shop Now” button, but only when that button is employed alongside policies which adhere to business best practices including:
- Reduce the number of steps involved in your return process.
- Engage and build relationships with regular customers, especially via social media.
- Provide round-the-clock service across all channels including phone, email, and social media.
- Offer live phone service instead of relying on IVR systems.
- Regularly review return policies to ensure that they keep pace with industry changes.
- Provide free return shipping.
Offering free return shipping may not only help prevent chargebacks, but it can also be a powerful incentive for consumers to make an initial purchase. In one study, consumers reported that they were nearly three times as likely to make a high-ticket value purchase if the merchant simply provides free return shipping.
Embracing Customer Preferences for Increased Revenue
Consumer preferences are constantly changing. The businesses most attentive to this evolution are the ones who will thrive. Rather than resisting innovations like the “Shop Now” button, merchants should embrace them, but remember to do so with a heavy dose of business best policies.
Monica Eaton-Cardone is the co-founder and COO of Chargebacks911.