Last month, the World Health Organisation officially declared coronavirus to be a global pandemic. As a result, a quarter of the world’s population is now living in lockdown. Online shopping – once an added convenience – is now the only way billions of people can access certain goods.
The international upheaval caused by COVID-19 has led to unprecedented disruption in buying patterns. Certain aspects of this new consumer behaviour are consistent with what is typically perceived as fraud, which could lead to merchants unwittingly decline authentic orders.
Thankfully, there are ways that merchants can avoid those losses, keep attracting legitimate consumers and help shoppers complete their much-needed purchases.
Capitalising on the spike in new customers
The heavy reliance on ecommerce has meant that certain types of merchants have experienced an abrupt influx of new customers practically overnight.
For example, our data shows a spike in new customers buying low-end jewellery and watches from online department stores, and, perhaps counterintuitively, despite the steep dip in international travel, hotel rooms too. The latter would appear to address the need for individuals returning to their home countries who require a place to quarantine themselves away from their loved ones.
Traditionally, new customers represent a greater risk of fraud than returning customers. But these are extreme circumstances, so a rise in new customers makes sense. People who might have traditionally shopped in-store are instead turning to ecommerce to limit their potential exposure.
Rather than challenging all orders from these newcomers, merchants should instead focus on maintaining the highest possible approval rate for them. Not only will this have a positive impact on revenue, it may even convert these individuals to returning customers (both during and post-pandemic).
Mobile apps are on the rise
Since the start of March, we’ve seen a dramatic upswing in orders from mobile apps across our portfolio. Orders of this kind have grown almost 30% in two weeks and now make up nearly four of every five purchases, while orders from desktop and mobile web have declined. The reason for this may very well be that people in isolation are spending more time on their mobiles, and these devices have become the go-to option for their online shopping.
Our analysis indicates that, globally, this is currently the safest purchasing method. Merchants should, therefore, encourage payments of this kind by offering rewards or discounts to app users, whilst also driving other shoppers to pay via mobile.
Acknowledging stockpiling trends
Other industries, namely, anything deemed essential for extended lockdown periods, are also seeing an uptick both in the number of orders being placed and the average value of each order.
Unsurprisingly, whereas the likes of high-end fashion have seen purchases slump substantially (40% lower than this time last year), purchases of home accessories have thrived (13% higher than this time last year).
Common sense dictates that larger transactions should be positive for merchants, but abnormally high basket values frequently set alarm bells ringing as they tend to correlate with fraud. Although in times like these, merchants have to be extra careful not to decline regular shoppers who are simply stocking up.
In truth, no one has any real sense of how long this pandemic will last, or indeed how hard it’s going to hit the world economy. What merchants should do – and all they really can do – is try their best to be flexible to evolving customer behaviour and adapt accordingly. Doing so as quickly as possible now will help them avoid losses and help customers through this challenging period.
By Assaf Feldman, Co-Founder and CTO, Riskified