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The Nexternal Nexus is a monthly newsletter sent by Nexternal Solutions to people serious about online sales. We hope that this information is useful in improving your online business. | | | |
 | | | | Who Are Your Customers? | | | | Recognizing Fraudulent Orders | | | |
Who Are Your Customers?If you're selling online, it is important that you know something about your buyers, such as who shops, what are they looking for, who buys and who isn't. It is important to know the basics before you dig deeper and ask the questions of who, what, where, when and why?
So, let's first start with the basics. E-commerce is the sole bright spot in the otherwise dot-bomb bubble burst. When all the others are dealing with lemons, e-tailers are busy making lemonade. Now, let's sweeten the deal.
Estimates from a variety of sources said that e-commerce sales have increased about 30% last year. The U.S. Department of Commerce's relatively conservative estimates show that e-commerce goods and services sales broke $45 billion in 2002. This does not include online travel sales, which account for roughly 40% of all e-commerce revenues. Furthermore, retailer network association, Shop.org, forecasts that online spending will reach a projected $52 billion in 2003, a gain of 28% over 2002, and reach a whopping $105 billion by 2007. More significantly, by 2007 the Internet will influence 34% of all U.S. retail spending. Now that’s some sweet news!
"How does this affect me as an e-tailer on an everyday basis?" you might be asking.
As an e-tailer, your future couldn't be brighter. You're going to get a lot more customers! Significantly more people are going online. Market experts Jupiter Media Metrix forecast that the number of Americans who are connected to the net will double in the next five years to 132 million. Since about half of all Internet users buy something online at some point in their first year of surfing, that means more money for you.
The stereotype that the typical web surfer is a young, educated, affluent, white male has long been dispelled. More and more women, senior citizens and ethnic groups are surfing and shopping online. These groups represent the fastest growing demographics to be buying online and they are catching up fast. So, if they are looking to buy, you surely should be looking to sell to them.
Here are some generalizations you should know. Consider it your cheat sheet:
Women:
Now make up the largest demographic category
Generally do the most holiday shopping
Tend to buy items that they can't find offline
Tend to be the most loyal customers
Men:
Make most major purchases, especially high tech big-ticket items, such as computers, TV’s and stereos
Aren't as price sensitive as other groups
Aren’t as loyal as other groups
Ethnic groups:
Often buy ethnic products that they can't get elsewhere, like food, clothes and music, usually because they have a hard time finding these items offline
Ethnic immigrants often buy products online and have them shipped to friends or family members back "home"
Hispanics are embracing the net quickly, spending 43 percent more time online at work and 13 percent at home than the overall online population
Senior citizens:
Are growing fast as baby-boomers mature
Are more price-conscious than most and love sales and coupons
Often shop and browse and gather lots of information before buying
Like web sites that are easy to use with larger text
Online buyers, ages 50 and over, will account for almost one-quarter of all online retail spending by 2007
Are more likely to make an Internet purchase due to an online ad, with 30 percent claiming to have done so versus only 19 percent of the overall online adult population
Teens:
Grew up with the internet and will be a huge market
They often don't have credit cards so consider officering alternative methods, like PayPal
Obviously, if you are selling products specifically targeted to one of these groups, you know your market. You know rules. Go get ‘em!
The bottom line is that e-commerce is still in its infancy and provides a tremendous growth opportunity. If you know your target audience, it will do wonders for your growth rate and your wallet.
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Recognizing Fraudulent OrdersIf you have been selling online for sometime, there is a chance that someone; somewhere has placed a fraudulent online order on your web site. If you have shipped one of these orders, you quickly realize that the fraud-related losses add up to more than just the cost of the goods. Administrative costs in dealing with such orders, shipping costs, and charge-back fees that banks ask for can be significant.
How do you deal with this problem? There are two parts to this answer: 1) you can take steps to minimize the number of fraudulent orders being placed on your web site and 2) you can use common sense to recognize such orders if they are placed.
A common practice is to use your credit card company’s centralized address-verification system to enforce that the bill to information specified on an order matches that of the credit card itself. E-commerce systems that allow for credit card authorization at the time the order is placed can often opt to not accept such orders in cases where the two addresses don’t match. You might also setup your e-commerce system to limit orders to specific countries. Depending upon your industry and the type of goods you are selling, it may quickly become apparent that it is simply not worth the risk of shipping goods to specific countries. Another tactic that is becoming more popular is to capture the three or four digit security code, Card Validation Value (CVV), that is printed, but not embossed on the customer’s credit card. Capturing the CVV can help if a credit card number is stolen, but doesn’t help if the credit card itself has been stolen.
With some common sense, you will also find that identifying such orders is not terribly difficult. Following are some things to look for:
Suspect Shipping Addresses – As an example some merchants estimate that 90% of orders to Indonesia are fraudulent. There are some other ship to countries that should make you raise an eyebrow including Belarus, Romania, Ukraine, Yugoslavia, and Pakistan.
High Ticket Orders – With big orders, your risk increases. Spend more time evaluating these orders.
Free E-Mail Addresses – Often times the people placing fraudulent orders prefer to have anonymity. Customer e-mail addresses such as those ending in hotmail.com or yahoo.com are free to use and the end user is hard to trace. If you see another suspicious order trait and the e-mail address is free, a flag should definitely go up.
Multiple items with a High Resale Value – If someone orders 5 of one item, and that item has a good resale value, take a good close look at that order.
Realize that identifying such orders does require human intervention. The merchant should look at every order placed and ask, “Does this look legitimate?” If something doesn’t make sense, call the customer to confirm the order. A quick call can save you money, and in most cases, your customer will appreciate your concern.
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