Peak season is just around the corner. (Yes, really.) There's plenty to do over the next few months to get ready, so we've put together a series of tips to help. Here we discuss five tips to focus on now in preparation.
During the upcoming peak shopping season, your business almost certainly anticipates handling a higher-than-usual volume of sales. Peak season transactions can account for 30 percent or more of the year’s total volume for retailers. To take advantage of consumers' increased appetite for shopping at this time of year, you may be implementing unique selling strategies, special promotions, and even some new channels. These could, however, open your business up to increased fraud risk. They could also lead you to apply a more stringent fraud strategy that could compromise the shopping experience for genuine customers.
Drawing on the experience and insights of Cybersource Managed Risk Analysts worldwide, we've put together a series of tips to help retailers protect their business against fraud and risk, while delivering a frictionless experience for genuine customers. Below are five recommendations to prepare for peak season now.
Tip 1. Understand the holiday chargeback cycle
Chargebacks, or charges returned to payment cards after customers dispute items on their account statements from orders placed during peak season, may be reported up to 120 days after the purchase. So that the financial impact of chargebacks doesn't catch anyone off guard, make sure that the responsible team understands the holiday chargeback cycle. To do this, create a chargeback forecast based on:
- Chargebacks reported in 2020
- 2020 peak transaction volume
- 2021 peak volume expectations
If the forecast amount looks like a cause for concern, you may need to plan for fraud strategy updates, while acknowledging the potential increase in customer friction and false positives.
Tip 2. Collaborate with marketing to identify promotion and sale periods
Your marketing and sales teams will put a lot of effort into planning the peak season sales rollout, including:
- Which products will be on sale
- How they'll be marketed to different target groups
- The schedule by which those marketing campaigns will launch
You may already be planning changes to your fraud strategy to take account of how customer spending patterns are different during peak season than at other times. But when you layer in sales and promotions, those changes in spending patterns can look even more extreme.
To avoid adding unnecessary friction, consider making fraud strategy changes that tie in with those campaigns. Think about, for example, loyal customers who receive an email promoting a particular product that's available at a special price on a certain day. When one of those customers goes to buy three of them on the same day, you need to be able to recognize this behavior as normal and prevent standard screening checks (such as velocity) from flagging the order as suspicious.
Tip 3. Manage product restrictions driven by COVID-19
We've seen the toll that COVID-19 has taken on manufacturing and distribution streams over the past year or more. As peak season approaches, those effects continue to be felt. You'll need to work out whether to apply quantity restrictions on any of your products and, if so, what those restrictions should look like.
Although eCommerce websites can generally restrict the number of identical products that can be bought at the same time, customers wanting to buy larger quantities may simply bypass these restrictions by making multiple purchases.
To prevent that, you should be able to implement limitations (or policy rules) within your fraud management solution to limit purchases of a specific product to, say, two per day per email address. You'll want to be sure you build and test this kind of functionality well ahead of peak season, and that you're ready to make last-minute adjustments to reflect the supply chain situation.
Tip 4. Plan and justify IT enhancement requests
You'll know full well that IT teams wisely tend to put a development freeze in place during peak season. If you’re trying to get an enhancement made in time for peak season, make sure you get regular status updates from the team.
But no matter how far in advance you put in your request, the IT roadmap may have changed over time, pushing your enhancement back. So be ready with a business case showing the impact on peak season of your requested IT enhancement. Express it in financial terms that everyone can understand. For instance: if you explain that the 1 percent increase in order acceptance enabled by the IT enhancement could translate to millions of dollars during peak season, you may have much more chance of getting it over the line in time.
Tip 5. Start planning your peak season staffing
Peak season generally brings staffing challenges, but COVID-19 has made it more difficult than ever to find the right people, even on a temporary basis. Get a head start on the hiring process by building forecasts, obtaining HR approvals, and preparing workstreams for new hires.
Of course, hiring is only half the battle: You also need to train them. (This takes time—so another reason to plan well ahead.) Set expectations with your company's training team so that they know what resources they need to provide, and when.
The direct impact of a merchant's fraud system on the company's financial success makes it vital that fraud team members are properly trained for peak season.
Look out for the next series of blog posts for tips as peak season gets closer. In the meantime, learn how Cybersource can help you manage peak season confidently with Decision Manager, our fraud management solution, and the expertise of our Managed Risk Services team.