No Beating Amazon on Shipping, So Compete Elsewhere

The clash of the titans goes on: Amazon rolls out free, one-day shipping for Prime subscribers, and Walmart immediately counters with a free next-day shipping offer of its own, with a $35 threshold to qualify and no membership requirement.

But where does this epic battle leave smaller retailers? How can those who aren’t monoliths remain competitive when the big players set the standard too high to match?

Don’t Cut Corners on Crucial Verification Practices

Data from the National Retail Federation shows that fast, free shipping is a major selling point for consumers. Roughly 40% of buyers expect retailers to ship goods for free within two days. If retailers can’t meet that expectation, a considerable portion of consumers will abandon their purchase.

It’s a hard bar to reach as Amazon and other major retailers have the scale, resources and infrastructure to define customer expectations. The decision to introduce one-day shipping for Prime, for example, will cost $800 million this quarter. And with more than 100 million U.S. subscribers, Prime reaches an overwhelming majority of American households.

If you’re like most merchants, the pressure to keep up with retailers like Amazon and Walmart leads you to look for any opportunity to increase efficiency or speed up processes. For some, that takes the form of reduced verification standards, which is a big mistake.

The card-not-present environment is already a hotbed of fraudulent activity. According to the 2018 True Cost of Fraud study from LexisNexis Risk Solutions, mid- to large-size companies lost $3.20 in fraud related costs for every $1 of fraud results last year. This takes the form of lost merchandise, chargeback fees, overhead and other threats to merchant sustainability.

The fraud problem is already substantial but reducing your verification standards could aggravate the problem even more.

It’s true that there is some nuance to the issue. Generally, you never want to cut corners when it comes to ecommerce security. So, what can you do? The best solution is to identify points where unnecessary friction exists while leaving valuable fraud and error-mitigating processes untouched.

Identify the Right Kind of Friction

When you think of ecommerce friction, your mind probably goes to images of angry customers, cart abandonment and bad reviews online. It’s doesn’t have to be like that. Some points of resistance in the process are helpful.

For example, requiring customers to provide a CVV number during checkout verifies that the user has legitimate access to the card used. Directing customers to a page to verify their order and their shipping information before completing a sale gives them the opportunity to correct any errors before submitting. Both cases involve a degree of friction in the transaction process. The friction is negligible though, relative to the benefit provided.

The key is not to eliminate all friction. The objective is to identify and eliminate genuine pain points without impacting those reasonable verification standards that are in place for a very good reason. Broken site navigation, unnecessary fields at checkout and forcing customers to create an account are all examples of bad friction that should be eliminated whenever possible.

Even with a streamlined process, carefully reviewing your customer experience from beginning to end will likely still reveal a few points of unnecessary friction you can remove. Just be sure not to interfere with any processes that serve an important function. Who knows? You may even free up enough resources in the process to make faster shipping a reality.

Monica Eaton-Cardone is COO and Co-Founder of Chargebacks911

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