2021 Holiday Shopping Outlook: 4 Things Merchants Should Be Ready For

Online shopping grew tremendously last holiday season, fueled by consumers seeking digital alternatives to shopping in-store.

But while some consumers may be more willing to venture into physical stores this year, the 2021 holiday shopping season is still likely to drive ecommerce to even greater heights.

While some trends have changed from last year, others have stayed the same. So, what can merchants expect this holiday season? Here are four trends to be ready for:

Trend #1: Ecommerce—and fraud—will continue to grow.

Ecommerce is expected to continue its upward trend this year, with Mastercard’s Spending Pulse anticipating holiday ecommerce sales to grow 7.5% YOY, and 59.3% YO2Y - a record high for the channel.

Many retailers are promoting Black Friday and Cyber Monday deals online vs. in-store, meaning “Doorbusters” aren’t just for brick-and-mortar anymore. And with less incentive to shop in-person, more consumers are likely to head online to do their shopping to avoid the crowds. Some major retailers are also giving ecommerce a boost by deciding to stay closed on American Thanksgiving—to give their employees a break and avoid large in-store crowds that would limit social distancing. 

Another factor: This year’s holiday shopping season is shorter than average—just four weeks long between Thanksgiving and Christmas, and Hanukkah also starts earlier than normal in November this year. This will likely cause people to shop much earlier to avoid buying gifts at the last minute, which often can’t be done as easily online due to shipping times. 
 
As more holiday shopping happens online, there’s likely to be an increase in the amount of card-not-present fraud and related chargebacks. In fact, Juniper Research found that losses from ecommerce fraud globally are likely to surpass $20 billion in 2021, up from $17.5 billion last year.
 
This uptick in card fraud means retailers will need to be more vigilant than ever in trying to stop fraud before it happens and prevent chargebacks. One way to do that is by getting merchant alerts that inform you in real-time when a customer has disputed a card transaction—allowing you to take steps to stem losses from that transaction (such as stopping shipment of the order) and prevent chargebacks.

Trend #2: Consumers will expect much better online-shopping experiences.

Last year’s holiday shopping season was filled with challenges—from supply chain issues to major shipping delays. This caused many gifts to arrive late after the holidays.
 
This year, consumers expect those problems to be ironed out. And because they are turning to ecommerce more for the convenience of it this year, they will be looking for merchants who can deliver a smooth, timely online shopping experience. In fact, several recent surveys have found that the majority of consumers seek out online merchants that provide them with quick delivery of their orders—generally within a few business days—as well as “free” or affordable delivery. Some consumers this year will also likely be shopping early to account for potential shipping delays based on last year’s experience.
 
Since the online customer experience will be paramount this holiday season, merchants will want to focus on enhancing it in ways that are within their control. This might include making product returns and exchanges fast and simple and offering online customers an easy way to reach them in case of questions or issues.
 
Moreover, consumers who are unhappy with an online experience—such as receiving shipments late—are more likely to spark the chargeback process by initiating a customer dispute with their issuer. So, it’s important to take preventative steps to avoid all types of chargebacks, not just ones resulting from fraud—such as having alerts that inform you when a charge has been disputed even if the result of a customer service-related issue.

Trend #3: More mobile transactions could lead to more CNP fraud.

As more merchants move to offer mobile-based purchase options—such as in-store, curbside pickup and in-app mobile payments—they must also recognise that they’re potentially increasing the number of card-not-present (CNP) transactions they’re processing. This is important because of a liability shift that occurs: Merchants aren’t generally required to cover the costs of card-present fraud—which is fraud that occurs when customers’ payment cards are read by an in-store card reader—but they are generally liable for CNP fraud, meaning they bear the cost of those fraudulent orders.  

Offering more flexible mobile payments to your customers can have big rewards— consumers appreciate the flexibility to place their order in multiple ways. But merchants need to make sure they understand the liability risk that comes with accepting more CNP transactions and work to prevent chargebacks resulting from CNP transactions. 

Trend #4: Transaction confusion will lead to more chargebacks.

As people do more of their holiday shopping through ecommerce channels, transaction confusion will continue to be an issue. Transaction confusion, where someone can’t recall purchases made when reviewing their digital bank statement, can lead to more cases of friendly fraud. Simply put, if your customer can’t recognise their purchase after making it, they may mistake it for fraud. 
 
A helpful solution to this is providing customers with more detailed purchase information in trusted channels, like their bank’s digital channels. Not only can this build a better post-transaction experience, it can help reduce cases of friendly fraud that become chargebacks. Simply uploading your company logo through Ethoca is a first step towards providing more clarity.

And it’s a feature customers are after too, with more than 96% of surveyed consumers saying they want more transaction details available to them to improve purchase transaction clarity. Among the features seen as most valuable: a picture of the printed receipt, the date and location of delivery of online purchases and a full list of the products purchased.

Wrapping it together: A multilayered approach to fraud creates a better customer experience

With ecommerce transactions expected to grow again this holiday season, it’s critical that merchants take a multilayered approach to preventing CNP fraud and chargebacks.

What this means: You can’t prevent fraud and chargebacks with one tool or practice alone—you have to tackle it from many different angles and at different points along the customer shopping journey, from when they first get to your ecommerce site through when they enter their payment card details to even after they buy something.

It’s also important to realise that preventing fraud and chargebacks helps provide your customers with the best possible online shopping experience. By preventing transaction confusion and card fraud, your customers will feel even merrier shopping with you this holiday season.