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3 Shipping Scams That Are Killing Your Ecommerce Profits

3 Shipping Scams That Are Killing Your Ecommerce Profits

In our last article, Are DTC Companies Risking it All For Killer Customers, we discussed the 4 common return tactics abusive customers use. Unfortunately, the abuse doesn’t stop at your return policy… With the holiday season in full effect, killer customers are on high alert and merchants should be too, considering more than 2.5 billion packages are expected to ship this holiday season. We teamed up with our fraud prevention partner Signifyd and the team at ShipStation to help online merchants stand clear of the 3 most common shipping scams killing ecommerce business profits this year.

1. Package Rerouting

 

Fedex truck on street with smoke on the side

 

Package rerouting commonly occurs when a customer commits payment fraud and uses a stolen credit card to make an online purchase. In most cases, the transaction is cleared because the legitimate cardholders address is used without being flagged. However, once the customer receives shipping confirmation and the package is en route, the original address is changed.

In another case, the customer purposely provides a false shipping address and monitors the package through the online tracking information given upon confirmation. Once they’re notified that the package is undeliverable, the customer contacts the shipping company to provide a new delivery address. Unfortunately for merchants, additional fees may occur when the package is successfully rerouted.

Lastly, a customer can make an online order and after confirmation, call the merchant to ask if their preferred shipping service can be used. Most likely, these customers have an established relationship with outside shipping services and are confident about receiving shipped items unflagged, making it harder to track and prove the package was ever delivered.

In all three cases, by the time the legitimate cardholder notices the unauthorized purchase, the scammer’s already enjoying their products free of charge. These types of fraud leave the online business with losses up to $10,000 in shipping fees, lost product, and lost profit… so now what?

 

Preventing Package Rerouting

Solving this issue requires a multi-step approach. First, it’s important to note not all customers have malicious agendas. In fact, many may have good reason to reroute a package. To avoid upsetting or offending legitimate customers, merchants should start with a clear shipping policy stating there’s a zero-tolerance for package rerouting on their website, social media profiles, and email confirmation.

Creating detailed shipping terms and conditions that address various errors that arise during shipping is important when dealing with customer claims. One major way to gain clarity into issues is to offer tracking. Tracking lets you know that an item has been delivered.

                                                            -Jennifer Ruben, Partner Marketing Manager, ShipSation.

 

In addition to providing these details, make sure a customer’s zip code and address are validated before shipping. Lastly, be sure to ship only to the original address provided in the confirmation details, especially for a large order.

 

2. Item Not Received 

by Mike Cassidy at Signifyd

 

4 Wrapped gifts on doorstep

 

One of the most insidious shipping scams occurs when the item marked ‘not received’ actually was received. False INR claims cost retailers millions every year, but they also cost merchants their reputation. Once word’s out that a retailer tends to give in to INR claims, be it via social media, dark web forum, or even a legitimate publisher, similar claims will flood in.

The scam is popular because it’s easy. No need to commit online identity theft by stealing someone’s personal information, or hack into a customer’s retail account. All abusive customers need is the will to cheat the system without care.

To put it simply, scammers accomplish this by ordering a product, bringing the product into their homes, and then telling  their credit card companies their orders never arrived. Such claims create one of the thorniest situations in the retailer/customer relationship.

If the retailer challenges an item-not-received claim and it’s legitimate, chances are the retailer just lost a customer for good. Signifyd’s consumer survey, conducted by market research firm Survata, found that nearly half of consumers will endure no more than one bad experience before abandoning a retailer for good. Let’s agree that being called a thief by a retailer counts as a bad experience.

On the other hand, if a retailer accepts the INR claim and it’s not true, the merchant is out of the goods and the revenue it would have received. You can up your fraud protection game, by adding a few things to your to-do list.

 

Preventing INR Claims

The first step is to make sure your return policy is clear, and your return process is easy. You also want to be clear in your descriptions and presentations of the products you’re selling. Not only does this provide your customers with a better shopping experience, but it also reduces the possibility they’ll be unpleasantly surprised when their order arrives.

Some consumers become frustrated with the work required to return a product and decide to get a refund by claiming the product never came. Being clear about returns and the products you’re selling helps reduce the incidence of unhappy customers who suddenly feel entitled to game the system.

There are also ways to challenge an INR claim, of course. Finding photos on social media of a customer with a product they claimed they never received, for instance, is fairly strong evidence that the item was received — as is a customer’s signature accepting the order. (It happens.)

Dealing with INR claims will never be pleasant, but with some forethought, it can become much less of a chore.

3. Hijacked Shipping Accounts

 

Shipping railroad tracks with multiple trains during sunset to represent hijacked shipping accounts

 

Nothing’s off-limits when it comes to fraudsters, not even shipping accounts. If your company’s shipping account is online or accessible to the public, you should keep reading.

Hijacking shipping accounts is a free and undetectable way to use a stolen shipping account number to make large shipments. Once these account numbers can be accessed, they are often used in the same manner as stolen credit cards and become can punch your profits in the gut.

In less severe cases, employees use their company’s account number to ship personal packages from time to time. In the worst case, these stolen accounts are used to ship drugs, stolen goods, or fake checks long distances, sometimes across the country.

Take Montana State University for example, in 2010 the school had a $180,000 pile-up in fraudulent shipping costs after more than 9,000 consumers received fake checks. Fake checks are normally used to trick recipients into wiring money for a small fee.

Businesses of all sizes are easy targets, as their shipping bills typically aren’t monitored close enough. However, with little knowledge of who’s accessing your account, it becomes harder to track down the culprit.

Preventing Hijacked Shipping Accounts

In order to properly prevent hijacked shipping account numbers, there must be a central management system that includes these features:

  1. Make account numbers accessible only to specific and trustworthy employees. Remember, less is more.
  2. Implement a reporting system that allows these users to be able to regularly schedule pickups and track packages, without constant authorization needed.
  3. Monitor frequently. With a tracking system in place, data can be used to track user’s activity for cross reference purposes.

 

Final Thoughts

Tracking down evidence of fraud (be it wire-fraud or shipping) takes time and not many merchants got into the business to become Sherlock Holmes. However, without proper detective work, shipping scams can be a legitimate threat to merchants, their customers, reputation, and profits. Luckily, there are fraud-protecting and chargeback-management solutions that highly automate the INR dispute process and some also eliminate the merchant’s risk. Ask us more about INR Protection here. 

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Can Shopify Fulfilment Beat Amazon?

Can Shopify Fulfilment Beat Amazon?

Scooch over Amazon! Shopify may be stealing the crown…

It’s not about who did it first, but who did it right, and inclusivity wins every time. Undoubtedly, Amazon is the king of eCommerce. However, small businesses pack a powerful punch, and they want their recognition.

The workforce is changing as technology advances are leading to growth in small businesses. According to the US Small Businesses Administration, there are almost 30 million small businesses in the United States, employing nearly 47.8 percent of U.S workers. In 2014, Forbes reported that 50 percent of the workforce may be freelancers by 2020; with just four months left until the new year, it seems as those analysts knew what the heck they were talking about.

 

Introducing Shopify’s Fulfillment Center

Details of the fulfillment network were first revealed at Shopify Unite 2019. The network looks promising to merchants of all sizes. However, those who own and operate under a small business will benefit. The responsibilities are endless for a business that has under 50 employees; Shopify is ready to clean up shop. Getting inventory out of a cluttered office or space and into a fulfillment center sounds like a huge relief. Doesn’t it? Merchants no longer have to worry about logistics or fulfillment and can finally focus on building their business.

More power is going to the platforms that facilitate relationships between third-party logistics providers (3PL) and end-users. We saw it in 1998 with Fulfillment by Amazon and now with Shopify. While Amazon and Shopify are no direct competitors. Shopify is diversifying and acquiring consumers through indirect interfacing a.k.a, merchants and 3PL providers. As a result, this formula has over 820,000 third-party merchants doing all the talking for Shopify; bringing in the big buck.

Shopify will win with Inclusivity.

There is no business too small or big. The Fulfillment Network is set to support merchants who ship from 10 to 10,000 packages per day, with hopes of expanding from 3 to 30,000. Craig Miller, the Chief Product Officer at Shopify stated, “the services will be offered to small and medium-sized business owners whose fulfillment processes are not typical or ideal and those whose needs are not being met by their third-party logistics provider.”

“If Shopify can bring an amazon class logistics and fulfillment to small and medium businesses, Shopify could change the world as we know it. Wal-Mart famously changed the retail world with logistics and pushed out many other retail businesses. Amazon re-invented this model for the web, and similarly pushed out many other eCommerce retailers.  If Shopify is able to democratize the logistics model, we will enter a whole new realm of competition in retail, dramatically benefiting the consumer, and providing a wealth of opportunity to businesses of all sizes.”

-Adam Morris, Redstage, CEO

With a $1 Billion budget to own and operate fulfillment networks, there are already seven centers. These centers are located in some of the larger states that house major metro cities with the most small businesses such as Georgia, Pennsylvania, California, and Texas. There are also centers located in Ohio, Nevada and New Jersey.

Shopify’s solution is a merchant’s dream come true.

Early last year, Shopify published an article that told us everything we needed to know about 3PL’s and how the market was booming.

The market for 3PLs providers exploded following the birth and exponential growth of ecommerce. Most Fortune 500 (86%) companies and 96% of the Fortune 100 use services like these.

A year later, Shopify found a solution for its’ end users by introducing this network that will also give merchants an opportunity to differentiate themselves.

Artificial Intelligence is at the forefront of the Fulfillment Network. Merchants will find this opportunity hard to pass up with all the features the network includes.

“I don’t want to make life easier,” said no one, ever.

The Shopify Fulfillment network includes the following features:

Custom Packaging and Branding

  • The customer experience is now controlled as merchants will have the ability to customize their packaging that compliments their brands’ aesthetics. This is the extra touch merchants need to ensure consistency in their brand even during delivery

Returns and Exchanges

  • Merchants have less hassle to worry about returns and exchanges as the fulfillment centers will work to handle all logistics.

Order Fulfillment

  • With a 99.5 percent accuracy rate, Shopify is promising merchants that their orders will be picked, packed, processed and shipped within 2 days.

Inventory and Back Office Management

  • Through intelligent machine learning the back office keeps track of inventory and provides restock alerts. Customer data syncs across warehouses and sales channels to reduce errors, and lastly, Customers will have access to fast and low-cost delivery.

Final Thoughts:

Everyone wants the underdog to win. While Amazon is focusing on serving only larger businesses. Shopify will focus on ensuring merchants have the opportunity to operate on Amazon’s level delivering the best experience on all levels. There is an application process for those interested in joining the network which requires an assessment based on product types and fulfillment needs. No worries. If you are not accepted, Shopify has provided 3PL checklist just for you.

Your fulfillment network is just one piece of the enterprise puzzle. Dive into our eCommerce platform analysis kit to find out which tech is best for your store! Take the quiz now!

Update: Data reveals that Shopify has recently overtook Ebay, making them the second biggest shopping site after Amazon. Shopify is showing no signs of slowing down. They be stealing the crown quicker rhan we predicted.

Amazon Key & In-Home Delivery Are Only The Beginning…

Amazon Key & In-Home Delivery Are Only The Beginning…

Amazon Key & In-Home Delivery Are Only The Beginning...

Amazon’s recent launch of their Amazon Key camera & smart lock system will allow Amazon to bring packages directly into your home… but what’s the endgame? Here’s why more than simply retailers should be worried…

Amazon Key

To put things in context, the Amazon Key seems an imminent response to Walmart’s plan to use August Home’s smart lock system to allow Walmart personnel to deliver groceries directly to your house, even when you’re not home. The key part of Walmart’s plan, however, lies in the fact that they intend to stock your fridge for you. Something the average consumer might be weary about. Considerable worry emerged across social media when the plan was first announced, though seemingly less since Amazon Key became trending today, suggesting some customers are warming-up to the idea. But while Amazon hasn’t announced plans for grocery shipments just yet, Peter Larsen, Amazon’s Vice President of Delivery Technology, recently said to Reuters, “This is not an experiment for us. This is a core part of the Amazon shopping experience from this point forward.” So what exactly are they planning?

“This is not an experiment for us. This is a core part of the Amazon shopping experience from this point forward.” —Peter Larsen, Amazon’s Vice President of Delivery Technology & VP of Amazon Devices

The Tie-In

Moving away from Amazon Key, you may recall hearing about another Amazon project, the ecommerce giant’s first grocery store, Amazon Go. Currently setup in Seattle, the store (video below) allows shoppers to walk in, pick up their groceries, and walk out, while a range of Internet of Things devices carefully track which items are removed. The system then adds them to the customer’s cart via Amazon app and charges their account when they leave. While it’s currently only open to Amazon employees, the system is so precise that Amazon challenged their employees to try to steal anything, which appeared to be impossible… So it looks like this technology is ready for a wider testing group sometime soon. Another big news item that shook up the markets earlier this year was Amazon’s $13.7 billion purchase of Whole Foods. Now do you smell a connection?


The Prediction

While Amazon hasn’t explicitly noted their intention to stock fridges yet (and that’s a fat YET), this move seems directly poised to counter, or at least match Walmart’s intention to stock your fridge, which would have given Walmart a convenience edge in this race. As customers grow accustomed to this level of delivery service, it wouldn’t be such a stretch to say Amazon’s Prime Air drones could soon be stocking your fridge. What’s more, once these companies get into your home, maybe Amazon’s drones will be helping you try on clothes before a purchase, or open a whole new range of services like walking your dog and straightening up the place like Rosy from the Jetsons. While those things might be a stretch, at least we can agree that Amazon Key looks and acts suspiciously similar to Walmart’s smart lock concept (below).


Final Thoughts

We’ll find out soon enough what plans these ecommerce megaliths have for us. In the mean time, if you’d like some help keeping your edge in the world of ecommerce, shoot us an email today, or click on the red speech bubble in the bottom corner!

Let us know your theories in the comments below!

Streamline Your Shipping and Fulfillment with ShipStation

Streamline Your Shipping and Fulfillment with ShipStation

We are thrilled to be a part of the ShipStation solution provider program! ShipStation is the leading shipping software that is entirely web-based. They offer support for any web browser as well as Android and iOS devices (free native apps!), regardless of screen size. With support for Magento, Shopify and 150 more carts, ShipStation allows you to ship however you want on nearly any ecommerce platform available.

Not only does ShipStation offer advanced shipping controls, there are also sophisticated automation features to save time during fulfillment processes. The automated functionality as well as the screen views, user permissions and more allow you to customize ShipStation to your own needs and to fit your process.

Ever since our first demonstration of the ShipStation system, we were excited to recommend it to our clients.

For more information and to try ShipStation for free, visit https://www.shipstation.com. today!