In recent years, retail has been outshined by eCommerce, as online transactions have grown in popularity. The global pandemic has acted as a catalyst, compelling even the most hesitant internet users to embrace the convenience of online shopping. This shift in consumer behavior is expected to have a lasting impact, with projections indicating that worldwide eCommerce sales will soar to a staggering $6.4 trillion by 2024.
The history of the eCommerce sector is closely associated with the history of the Internet. The year 1991 was the first time the Internet was opened for commercial use, and online shopping became possible for the public. However, in the beginning, the term eCommerce was used to execute the transaction electronically with the help of technologies like EFT (Electronic Funds Transfer) and EDI (Electronic Data Interchange).
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The History of Retail and eCommerce
People started defining eCommerce as buying products and services online in 2000. During this time, numerous companies in Western Europe and the United States started repressing their internet services:
- Amazon and eBay were among the first internet-based companies to permit electronic transactions. In the United States, Amazon.com was one of the first eCommerce to start selling products.
- Thanks to these companies, we now have a robust retail and eCommerce sector. Amazon, eBay, Jingdong, Rakuten, and Alibaba are renowned names in the eCommerce industry today.
Undoubtedly, the retail e-commerce industry has reached its zenith, but it doesn’t mean it will not be going through any challenges. From ever-increasing competition to maintaining customer loyalty to identity theft, many challenges exist for businesses in the retail eCommerce sector.
This post will also discuss the role of identity verification in the retail eCommerce industry, but before that, let’s take a quick look at some significant problems in the industry.
Major Challenges of the Retail and eCommerce Industry
Absence of Proper Identity Verification
When a prospective buyer visits an e-commerce website and sign-ups, the website is unaware of the customer. Though a customer provides some basic information, whether the information is genuine or not remains questionable. Cash-On-Delivery purchases using fake addresses or contact details can lead to significant revenue losses.
According to a recent report, the most common type of fraud causing concern for e-commerce businesses is identity theft. Though security protocols such as SSL, firewall, and DSL are there, verifying customers’ identities is a big challenge for e-commerce businesses. To cope with this challenge, businesses need to have a proper identity verification system that identifies fake ID documents and other details offered by the customer.
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Cart abandonment is when a prospective buyer starts a checkout process for online purchases but leaves the process in the middle. There could be plenty of reasons for it, such as unexpected costs, not enough shopping and payment options, improper product details, etc.
Besides this, the biggest reason people drop out of the process before completing the purchase is a lack of trust. Again, with the proper identity verification setup in place, businesses can generate more trust among their customers and avoid cart abandonment. Remember, companies that focus on the prevention of identity fraud naturally improve their reputation.
Nowadays, people don’t shop the same way as they used to back in the day. They seek information about the service or product on multiple platforms before buying them. They even ask for recommendations on social media. As a result, eCommerce retailers must figure out what their audience is looking for before targeting them. Focusing on providing a safe shopping experience can be one excellent way to attract customers.
Some of the other significant challenges of the retail e-commerce sector include:
- Analyzing Competition
- Delivering an Omnichannel Customer Experience
- Order Fulfillment
- Visitor conversion, and more.
Identity Verification in The Retail eCommerce Industry
In addition to the challenges mentioned above, one big challenge that almost every small or big retail eCommerce firm is struggling with is online fraud. A report reveals that each year worldwide, organizations lose billions of dollars to online scams. In 2019 just three months – from January to March 2019- around 5,305 eCommerce frauds were reported alone in the United States. This is why giant firms like Amazon have invested in ML-enabled (machine learning) fraud detection devices.
Let’s look at how identity verification can help the retail & e-commerce industry cope with identity-related frauds.
Identity Verification Helps Reduce the Risks of Payment Fraud
Identity verification in the retail eCommerce industry can significantly minimize the risk of payment fraud. Don’t forget that security is customers’ primary concern; they expect that eCommerce retailers must protect their identity from falling into the wrong hands. Fortunately, with a reliable identity verification solution, you verify your customers’ identity and ensure only legit people are using your platform.
Identity Verification Helps Prevent Credit Card Fraud
Credit card transactions are the primary source of payment fraud in the eCommerce industry. Cybercriminals make an online purchase from a stolen credit card and pretend to be genuine users by taking over someone’s legit account.
Verify customers identity within 15 seconds. Schedule a free identity verification demo here.
Identity Verification Secures Business Transactions
In the e-commerce sector, businesses not only need to protect their customers but also themselves. Mergers and acquisitions have become common in the eCommerce sector. However, before entering any business relationship, you must confirm that the company is legit. By conducting identity verification, you can rest assured that the firm is genuine and does not perform business transactions to make money laundering and financial fraud.
Identity Verification Ensures AML and KYC Compliance
Today, the law requires almost every online business to perform Anti-Money Laundering (AML) and Know Your Customer (KYC) checks on their customers or users. And for that purpose, a reliable identity verification solution is required.
If you are looking for a reliable identity verification partner for an eCommerce business, don’t hesitate to give iDenfy a try.
We are a Lithuania–based identity verification solution provider, working with more than 500 global brands. We can turn your device into a robust identity verification system that can identify 3000+ types of ID documents from 300 countries. It will boost your onboarding process and ensure you have legit customers on your platform.
To learn more about our services, book a meeting with our specialists.