Fraud Alert: Amazon Free One-Day Shipping Offer Changes the Rules for eCommerce

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Amazon will invest $800 million in its new U.S. service offering. As other eCommerce vendors scramble to compete, loss prevention specialist Chargebacks911 warns of heightened need to guard against fraud.

Chargebacks911 | a Leading Dispute Mitigation and Loss Prevention Firm

Monica Eaton-Cardone, COO of Chargebacks911, notes that competing eCommerce vendors should maintain sound online security and payment security measures.

“Competition from the giants will force smaller retailers to invest outside their annual budgets to provide faster delivery. These merchants may be tempted to relax their online security and payment security measures somewhat to retain as many customers as possible.”

In late April, Amazon announced plans to offer free one-day shipping to all Amazon Prime customers nationwide.[1] Shortly afterward, Walmart announced the availability of free one-day shipping of orders totaling $35 or more.[2] Chargebacks911,a leading dispute mitigation and loss prevention firm, cautions competing eCommerce vendors to maintain sound online security and payment security measures as they focus on shortening their fulfillment schedules.

“This is the new normal in eCommerce,” noted Monica Eaton-Cardone, co-founder and Chief Operating Officer (COO) of Chargebacks911. “Competition from the giants will force smaller retailers to invest outside their annual budgets to provide faster delivery. These merchants may be tempted to relax their online security and payment security measures somewhat to retain as many customers as possible.”

At a time when so-called ‘friendly fraud’ chargebacks are increasing at a rate of 20% per year[5], however, it is essential that eCommerce merchants maintain payment security in order to protect business growth and cash flow.

In announcing its shift to free one-day delivery for Prime customers, Amazon also announced plans to spend $800 million in Q2 of 2019 to beef up its infrastructure and warehouses to make the change happen. Walmart is estimated to be spending as much as $215 million in support of its own accelerated delivery schedule.[2] Target, meanwhile, already offers one-day free shipping to holders of its no-fee loyalty REDcard. The benefit is for orders of at least $35 that are placed by 7 p.m. on a weekday. Target also offers a premium ($99/year) service providing what is widely expected to be the next competitive eCommerce battleground: same-day delivery.[3]

The growing importance of faster delivery as a competitive advantage in eCommerce is illustrated by a recent survey of 3,000 U.S. adults, conducted by the National Retail Federation. In response to the survey, 40% of people said they wanted their orders delivered for free and within two days. Nearly a third of respondents—29%—said they had decided against making a purchase after realizing it was not eligible for two-day shipping.[4]

Recognizing that online retailers have no choice but to adapt to a changing competitive environment, Eaton-Cardone suggests top five measures to protect online security and payment security that eCommerce merchants can build into their processes while adjusting their operations to an accelerated fulfillment schedule.

1. Gather information. At the time of order, gather the information that would be needed to build a case when representing a chargeback.

2. Improve customer service. Make it easier for customers to contact your company. You might consider extending hours of service and make it easier for customers to reach a live person rather than dealing with extensive hold times and automated menu options.

3. Institute internal fraud monitoring. Have a built-in process to monitor out-of-pattern IP addresses and/or high-value transactions, to prevent fraudulent chargebacks before they occur.

4. Use chargeback notifications. Make certain you are informed quickly and automatically when a customer is disputing a charge. This enables you to address chargebacks proactively without tightening fraud control so much that you endanger relationships with good customers.

5. Seek professional help. Fighting chargebacks is time-consuming and can divert resources from a merchant’s core business. Many merchants find that the best solution is to outsource the problem to an expert third party.

Chargebacks911 is committed to educating and supporting eCommerce merchants with services designed to increase profitability, mitigate chargebacks and fight fraud. To that end, Monica Eaton-Cardone and her team will be participating in a number of upcoming industry events, including CNP Expo in San Francisco, SubSummit 2019 in New Orleans, and Money 20/20 Europe in Amsterdam. For details on Chargebacks911’s comprehensive risk management solutions, informative articles and other merchant resources, visit https://chargebacks911.com.

About Chargebacks911/The Chargebacks Company
Chargebacks911 empowers businesses to combat constantly evolving fraud tactics and mounting customer disputes that directly threaten profitability. Operating as The Chargeback Company in Europe, Chargebacks911 has pioneered effective, industry-leading solutions designed to reduce chargeback fraud, alleviate processing costs, mitigate risk and recover revenues.

The company’s unparalleled expertise and proprietary technology have earned three consecutive CNP Customer Choice Awards for Best Chargeback Management Solution, three successive AI Lions’ Den Awards for Best Airline Industry Solution, and Gold and Silver Stevie Awards from the American Business Awards (ABA). With innovative and highly scalable services ranging from Intelligence Source Detection™ (ISD) to Tactical Representment, Chargebacks911 uncovers the true source of chargebacks, battles unjustified disputes, rescues lost revenue, safeguards reputations, and defends against relentless, ever-changing cyberthreats.

1.    Miranda, Leticia, “Amazon Will Make One-Day Shipping Free For All Prime Members,” BuzzFeed News, April 25, 2019.
2.    Porter, Jon, “Walmart offers free delivery in attempt to catch up with Amazon,” The Verge, May 14, 2019.
3.    Stampler, Laura, “It’s Not Just Amazon: Free One-Day Delivery Is The New Normal,” FORTUNE, April 30, 2019.
4.    “Amazon’s One-Day Shipping Sends Target, Walmart Shares Toppling,” PYMNTS, April 26, 2019.
5.    “The Rise of Chargebacks,” Digital Transactions, February 28, 2018.

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