Participation in such rapidly growing markets involves risks as well as opportunities, and perhaps the most major of those risks is chargebacks.
Salt Lake City, UT (PRWEB) August 30, 2016
According to a report focusing on the growth of eCommerce in the U.S., merchants can expect a 56% increase in online sales over the next five years due to more consumers utilizing digital payments on mobile phones and tablets. The projected increase will push eCommerce sales to $523 billion, up from $335 billion in 2015. The report, from Forrester, expects an additional 26 million shoppers to participate in digital payments and eCommerce sales in the U.S. by 2020.1
In Europe, there are an estimated 296 million online shoppers, spending and estimated 1,540 euros ($1,720.26), according to eCommerce Europe. While this year, the European eCommerce market predicts to finish around $566.2 billion, 2017 and 2018 expect to be around 598 billion euros ($668.3 billion) and 660 billion euros ($737.6 billion) respectively.2
“For direct marketers and consumers both in the American and European markets, this is wonderful news,” said Asad Khan, CEO of ePlanet Communications, a global business process outsourcing (BPO) provider. “The rapid growth in these large markets indicates a global rise in digital payments and eCommerce sales.”
According to the Forrester report, $1 trillion of the total online purchases in the U.S. for 2015 were influenced by mobile devices, and with India’s expected growth, similar numbers can be anticipated for them by 2020.
“However,” cautioned Khan, “participation in such rapidly growing markets involves risks as well as opportunities, and perhaps the most major of those risks is chargebacks.”
Chargebacks, which involve the reversal of an already completed credit card transaction, were originally created to protect consumers against spammers. To a merchant, a chargeback is significantly more detrimental than a simple refund; the merchant must pay higher rates to cover a chargeback (and has a greater reserve held back) than in the case of a refund. Chargebacks can therefore quickly become a true financial burden to the company. Worse, a chargeback rate above a certain level can lead to the termination of the direct marketer’s merchant account, making it impossible for that brand or website to do business at all.
In dealing with chargebacks, per Khan, an ounce of prevention is worth a pound of cure. This view is echoed by other direct response industry experts, who agree that the safest approach is to give customers a quick refund, and to avoid creating refund policies that are too protective of the business. (Product costs are minimal compared to the damage even one chargeback can cause.) Beyond that, best practices emphasize clear communication: be sure the customer knows when an order is going to arrive; make it easy to cancel a shipment or make a return; and—a golden rule—never bill the customer’s credit card until the order is ready to ship.3
According to the 2016 Lexus Nexus report, on average, US merchants reported an 8% increase over last year in the cost per dollar of fraud losses, from $2.23 to $2.40. This means that for every dollar of losses, merchants are losing $2.40 based on chargebacks, fees and merchandise replacement.3
“We know both American and European markets,” Khan said, “and we are helping our customers take advantage of the opportunity they represent—safely. We are consistently able to reduce chargebacks for our customers through effective merchant management, continuous testing, data analytics, best practices, and using our subject matter experts to drive customer engagement.”
About ePlanet Communications:
ePlanet Communications is a global business process outsourcing provider with extensive experience in call center operations, digital media solutions, and direct response solutions. By using its integrated channel management capabilities and highly-trained staff, ePlanet develops and deploys inbound and outbound customer support fully integrated with its clients’ marketing campaigns. Digital media solutions include website design, digital franchising, fully functioning eCommerce operations, and the creation of interactive, immersive and responsive social media campaigns across different platforms. ePlanet is also highly experienced in the area of direct response trial, consistently delivering improved customer satisfaction, increased customer retention, and better order value. To learn more about ePlanet and its capabilities, please visit http://www.eplanetcom.com.
1. Lindner, Matt. "Online Sales Will Reach $523 Billion by 2020 in the U.S." Online Sales Will Reach $523 Billion by 2020 in the U.S. N.p., 26 Jan. 2016. Web. 25 Aug. 2016.
2. "Ecommerce in Europe to Reach €509.9 Billion in 2016." ECommerce News. N.p., 31 May 2016. Web. 29 Aug. 2016.
3. LexisNexis. 2015 LexisNexis True Cost of Fraud Study; 2016. lexisnexis.com/risk/insights/true-cost-fraud.aspx.