Consumers have always had high expectations, but as they become more sophisticated and increasingly adopt an omnichannel, digital-first experience, brands cannot solely rely on their traditional distribution channels anymore.
According to eMarketer, total global e-commerce sales rose to $4.9 trillion in 2021, a towering 16.3% increase from 2020. Even more recently, in a joint EverC/Ipsos survey conducted in the last quarter of 2021, 72% of shoppers surveyed report using e-commerce marketplaces at least once a month. For better or worse, today’s consumers are purchasing more online and enjoying more spending options than ever.
Consequently, brands have therefore increasingly been going omnichannel, too, by also offering their products on marketplaces. Advantages for brands are numerous, including customer acquisition, brand awareness and exposure, internationalization or just plain fear of missing out (FOMO).
Marketplaces have been opening their gates wide open to attract and onboard more third-party sellers and their related gross merchandise value (GMV). When doing so without sufficient and efficient scrutiny, bad sellers and their illicit products unavoidably infiltrate the system and pollute the whole ecosystem. And when consumer trust is violated, it’s extremely tough to win it back.
Direct-to-consumer (DTC) and marketplaces are often pitted against each other, especially as DTC brands continue to lose customers to Amazon’s unbeatable prices and unparalleled shipping rates. One recent estimate claims 40% of all online transactions occur with Amazon. But when retailers move to marketplaces, they run the considerable risk of having their brand trust and reputation harmed by fraudulent and counterfeit products on those sites.
The Organization for Economic Cooperation and Development (OECD) estimates that pirated and counterfeit products currently make up 3.3% of world trade, and there is more than $1.5 trillion worth of illicit products sold online globally.
As consumers have access to more internet options for their purchases, the risks involved with losing consumer trust have never been higher. In fact, Adobe’s new Future of Marketing research reveals that 74% of consumers surveyed say they will stop purchasing from brands that break their trust. And with the rise of shopping alternatives, consumer loyalty has plummeted.
Gone are the days when marketplaces could solely act as a tech platform and shy away from the responsibility for whatever is being traded on their platforms.
Regulation is here, and there are strong tailwinds toward stricter regulations for platforms. The SHOP SAFE Act, America COMPETES Act, European Digital Services Act, Total Recall Act all aim to promote more transparency and compel seller platforms to implement proactive measures for screening goods before displaying those to the public.
Navigating The New Era Of Fraud
Customer loyalty is severely threatened when consumers experience fraud with a brand transaction, especially when they have so many other options to choose from if they encounter an unsatisfactory experience with one site. In fact, in the recent EverC/Ipsos survey, 41% of consumers surveyed reported that the presence of counterfeit, illegal or unsafe products negatively impacted their willingness to purchase from e-commerce sites. Additionally, a staggering 52% of consumer respondents aged 18-34—a prime shopping demographic—reported changing their purchasing behavior due to fraud risks.
While determining who is responsible for fraud will be unique to each circumstance, marketplaces need to prioritize protecting e-commerce in its entirety—if consumers lose confidence in the overall process, everyone will suffer the consequences. That’s why major marketplaces, including Amazon, have introduced initiatives to stop the sale of counterfeit goods and win back customer trust. Another emerging strategy is the institution of authentication programs to verify items such as shoes, high-end watches and sports memorabilia. And some marketplaces are even deploying large teams of analysts to verify products and combat fraud on their platforms—literally examining individual goods for legitimacy. While the commitment to authenticity is impressive, the process is incredibly time-consuming and expensive.
Protecting The Customer Experience And Re-Instilling Trust
For long-term success in the ever-growing digital shopping world, e-commerce marketplaces need to safeguard their customer experience and loyalty. The most effective way to halt fraudulent and counterfeit products is by catching criminal listings quickly and keeping them from ever reaching the marketplace. This rapid response can only be accomplished through the powerful artificial intelligence (AI) and machine learning platforms that are now emerging.
Here are three steps marketplaces should consider for creating a safer shopping experience.
1. Create a strategy to ensure your sellers follow your unique policies. This strategy will also help reveal any vulnerabilities, such as sellers offering illicit products through your platform.
2. Ensure your tech partners are up to speed with all the industry’s existing and upcoming rules and regulations. This is a necessity if you don’t want to be caught off guard by the everchanging and ever-strengthening regulatory environment.
3. Consider an automated AI-driven solution to scale and grow your business into new markets and geographical regions. This can help to keep up with the fast-paced digital payments industry.
Human beings, no matter how proficient or numerous, can never scrutinize the vast landscape of online selling or keep up with the increasingly devious exploitation tactics of savvy criminals. For protecting consumers, maintaining trust and staying competitive in the rapidly evolving e-commerce marketplace, proactive advanced technologies can be an invaluable piece of the puzzle.
Source: Forbes
