Commentators on the retail sector were writing as recently as 2011 that a major advantage of ecommerce was that the financial drain of shoplifting would be alleviated by the shift to direct home deliveries. What they didn't see coming was the fact that 'digital shoplifting' – making fraudulent claims about missing deliveries, short dispatches, and lost or incomplete returns – would turn into a mounting burden on retailers and a growing drag on profits in their own right. The cost of digital shoplifting has been estimated to be £405 million a year by the Interactive Media in Retail Group (IMRG) and 93% of retail loss prevention professionals see it as a serious threat to online and multichannel players, research from Transactis and Retail Knowledge shows.
The trouble is digital shoplifting is being fed by the tendency of a large proportion of consumers, not just professional scam artists, to take advantage of mistakes by a retailer or gaps in its procedures – especially processes for handling goods lost in transit. Research by Transactis reveals that when a company appears to be failing to use customer data to track consumers' needs, behaviour, entitlements and experience, they are more likely to take advantage of undeserved opportunities:
- 49% would keep an extra item if a retailer delivered two instead of one;
- 61% would use a discount voucher they were not actually entitled to;
- 64% would keep a loyalty reward bonus they had not earned.
In this article, Transactis' commercial director John Sharman looks at the causes and specific costs of digital shoplifting – and what retailers can do about it. Sharman examines evidence that the vast majority of retailers still lack adequate processes to track goods lost in transit. But by putting the right processes in place and tapping into available customer data, retailers can screen claims for missing deliveries and lost returns so they can differentiate between honest customers and fraudsters. Sharman discusses how retailers can then take action to deter fraudsters while expediting the claims – and preserving a positive customer experience – for legitimate claimants.