The e-commerce industry has become an easy target for online fraudsters. They are using various new techniques to obtain buyers’ crucial information and perform different fraudulent activities. If you’re into retail e-commerce business and want to know about the importance of identity verification in the retail and ecommerce industry to minimize online frauds, read this post.
The retail e-commerce industry is growing at a tremendous pace. According to Statista, retail e-commerce sales worldwide are expected to reach 6542 billion U.S. dollars by 2023. Undoubtedly, the industry has come a long way, but the journey was not straightforward.
The history of the e-commerce sector is closely associated with the history of the internet. The year 1991 was the first time when the internet was opened to commercial use, and online shopping became possible for the public. However, in the beginning, the term e-commerce was used for the process of executing the transaction electronically with the help of technologies like EFT (Electronic Funds Transfer) and EDI (Electronic Data Interchange).
People started defining eCommerce as the process for buying products and services through the internet in the year 2000. During this time, numerous companies in Western Europe and the United States had started repressing their services on the internet.
There is no doubt that the retail e-commerce industry has reached the 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, there are many challenges for businesses in the retail e-commerce sector.
This post will 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 Retail 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 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’ identity is a big challenge for e-commerce businesses. To cope with this challenge, businesses need to have a proper identity verification system in place that identifies fake ID documents and other details offered by the customer.
Cart abandonment is when a prospective buyer starts a check out process for online purchase but leaves the process in the middle. There could be plenty of reasons for it, such as unexpected cost, not enough shopping and payment options, improper product details, etc.
Besides this, one biggest reason people drop out of the process before completing the purchase is 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 frauds naturally improve their reputation.
Nowadays, people don’t shop the same way as they used to back in the days. 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, e-commerce 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 e-commerce firm is struggling with is online fraud. A report reveals that each year worldwide, organizations lose billions of dollars to online frauds. In 2019, in just three months – January to March 2019, around 5,305 e-commerce 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.
Reduce The Risks of Payment Frauds
Identity verification in the retail e-commerce industry can play a significant role in minimizing the risk of payment fraud. Don’t forget, security is the primary concern for customers nowadays; they expect that e-commerce 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.
Prevent Credit Card Frauds
Credit card transactions are the primary source of payment fraud in the e-commerce industry. Cybercriminals make an online purchase from a stolen credit card and pretend to be genuine users by taking over someone’s legit account.
Protection to Business Transaction
In the e-commerce sector, businesses not only need to protect their customers but also themselves. Mergers and acquisitions have become common in the e-commerce sector. However, before you enter into 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.
AML and KYC Compliance
Today, almost every online business is required by the law to perform Anti-Money Laundering (AML) and Know Your Customer (KYC) checks on their customers or users. And for that purpose too, a reliable identity verification solution is required.
If you are looking for a reliable identity verification partner as an e-commerce business, you can give iDenfy a try. We are a Lithuania–based identity verification solution provider, working with more than 150 global brands. We can turn your device into a robust identity verification system that can identify 1300 types of ID documents from 200 countries. It will naturally boost your on-boarding process and ensure you have legit customers on your platform. To know more about services, you can book a meeting with our specialists.