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A new report by Signifyd shows a drop in online shopping in Europe with the risk of return fraud and false refund requests on the rise for e-commerce merchants.
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In the first half of 2022, online sales in Europe decreased by 16.6%
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One out of two Italians did not complete online purchases due to problems with strong customer authentication (SCA)
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Free returns are the option most appreciated by Italian consumers (72%)
Inflation and the surge in energy prices will lead Italian consumers to spend less this holiday season as nearly 8 out of 10 Italians (77%) will reduce their Christmas purchases for 2022.
The finding was one conclusion that emerges from a new report, “The State of Commerce in Europe 2023,” by Signifyd, the leader in protection for digital commerce. The report offers an in-depth analysis of e-commerce in Italy and in Europe, highlighting what challenges lie ahead for the sector in the midst of the Christmas shopping season.
The combination of strained household budgets and the annual desire to enjoy the holidays to the fullest are fueling a rise in fraudulent behavior.
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That said, Italians appear to be more honest than consumers in other European countries — at least according to self-reporting. For example, Britons did not hesitate to admit that they have cheated on product returns and complaints related to online purchases: 32% (compared to 11% of Italians) and they confirmed that they have falsely stated that an order was not satisfactory upon delivery in an attempt to get a refund and keep the product. Also, 26% of consumers surveyed by Signifyd and OnePoll in the UK (compared to 12% in Italy) admitted to falsely claiming that a package never arrived, so they could keep the article for free.
Among the report’s highlights that are of special interest to retail brands:
- During the first half of 2022, online sales in Europe decreased by 16.6% compared to the same period of 2021 (when they increased by 10.6%).
- During the months of November and December, it is estimated that overall sales in Europe will drop by 4% compared to last year.
- Those who choose online shopping in the UK, France and Italy will also buy from merchants outside their own country. In fact, 87% of British consumers and 90% of French and Italian consumers declared that they shop outside the national borders.
The customer experience is the key to success, starting with return policies
Online purchases remain extremely popular with consumers, therefore offering a good customer experience is essential: As many as one Italian out of two (50%) was discouraged and did not complete their purchase due to problems with strong customer authentication (SCA).
In general, Italians proved to be the most likely to abandon brands after a negative experience: More than three out of four (76%) would switch to another website, while 58% would completely abandon a merchant who did not meet expectations. The figure was similar in France but far lower in the UK (37%).
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If a good customer experience is a key element in promoting brand loyalty, what Italian consumers appreciate most is the ability to return a product for free (72%), far outweighing the desire for an immediate refund, which topped the list of 14% of Italians. In fact, more than seven out of 10 Italians (77%) would hesitate to buy from a brand that charges for returns.
The key for retailers navigating the new era of online returns is to maintain favorable return policies for top customers while putting restrictions in place to stymie those who want to cheat or take advantage of the system. A good return experience was a key feature for 79% of Italians. In fact, 61% of them would stop turning to a brand due to a bad return experience.
“The State of Commerce in Europe 2023 report highlights that, after several difficult years, online retailers now face increasing fraud risks,” explained Davide Antonelli, enterprise account executive for Italy at Signifyd. “We are happy to have created an analysis that not only indicates the obstacles merchants face, but also offers concrete strategies to overcome them.”
Methodology
The State of Commerce in Europe 2023 report is based on Signifyd e-commerce sales data, predictive analytics and surveys conducted for Signifyd by research firm OnePoll. Six thousand consumers across Europe were interviewed, 2,000 consumers each in the UK, France and Italy.
In addition to providing an overview of commerce in Europe and Italy, The State of Commerce 2023 analyzes the challenges retailers face in order to better support discerning and cost-conscious consumers. The report provides insights and guidance on four key areas where retailers need to excel in order to thrive:
- The processing of online payments
- The management of returns, which are reducing the profit margins of the retail trade
- International expansion into untapped markets
- The new landscape of strong customer authentication and its effects