Chargebacks in charge
To meet consumer demand, some auto retailers have transitioned full steam ahead – without a fraud prevention strategy. Some companies have tried to increase their online offerings to entice consumers, but in the process open themselves to greater vulnerabilities, including expedited shipping, pick-up in-store, or loyalty programs. These can result in significant initial sales, that, unbeknownst to the retailer, are mired with fraudulent orders and open the business to more fraud.
These merchants won’t know that they were victims of higher fraud for several months. By the time chargebacks get fully reported, merchants are 60-90 days or more down the road. Furthermore, the lag in chargeback reporting means financial reports will show a distorted picture of a company’s performance. Those great sales and profits seen in December could actually turn out to be ugly losses in February, March and April.
Without a way to decipher authentic orders from fraudulent ones, auto parts merchants that are securing orders for $4,000 or $5,000 can find themselves in flood of chargebacks costing them thousands of dollars a month. While increased manual reviews may help to slow fraud, it’s ultimately inefficient for the business long-term.
Before implementing a fraud prevention strategy, one European auto parts retailer had one out of every five orders experience fraud, requiring them to manually review about 25 percent to 35 percent of orders. While it’s important to have some sort of manual review option available, it shouldn’t dominate your fraud-prevention strategy. Manual review is both tedious and costly, so it’s important to keep it to a minimum.
Ramping up the right security foundation
As aftermarket parts sellers are starting to make this transition from brick-and-mortar to online, it’s critical that they have the right fraud prevention and digital transaction security infrastructure in place that can respond to the risks of today and tomorrow. Find a solution that offers dynamic tools that can evolve along with fraud attempts and integrate easily to your business’ customer shopping experience. A one-off tool to solve today’s problems won’t be enough for a long-term eCommerce strategy. Fraudsters are constantly changing tactics to find something that works, and without tools that can adapt, they can ultimately circumvent security precautions.
Customization isn’t only for cars
The auto parts industry is all about customization – and that mentality should also transfer over to identifying the right fraud-prevention solution. Aftermarket sellers should be able to find a solution that can be tailored to the checkout experience they want to offer their customers and the unique aspects for their business. The fraud-prevention system they implement should not only be customizable but also offer features and functionalities that offer retailers greater control. There is an array of options that can make certain guarantees, such as eliminating chargebacks completely, but will offer you little to no control over your orders while costing significantly more.
Ecommerce, especially given the dominance of mobile shopping, within the aftermarket industry will continue to rise fast. To remain competitive, a comprehensive eCommerce offering, which includes a fraud-prevention strategy, is needed. Don’t let fraud ruin the gains and opportunities available online.
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