Sylleptic

This BBC news story makes the point that online fraud is going to be an increasing challenge for retailers this year, as online fraud matures into something serious criminals do. What used to be a hobby for vandals or gifted amateurs is now seen as a legitimate source of income in illegitimate businesses. It’s not just business that’s worried about fraud, of course. Cybersource’s annual fraud report says 41% of consumers are worried about it, and many don’t shop online because of the perceived risk.

Paradoxically, the same consumers who are worried about fraud are worried about sharing their personal data, which many retailers rely on to fight fraud. Cybersource report that high profile news stories about lost personal data are having a serious impact on consumer attitudes. More than half of retailers now see data loss as their most serious eCommerce risk, perhaps in response to the same alarming stories. Without some disclosure of personal data, fraud prevention becomes hard, so retailers have a dilemma: they need to reassure their customers about security, while asking for more information, which shoppers see as increasing risk.

The user experience challenge is formidable. Already, many retailers have seen conversion rates fall as they introduced 3D Secure (aka Verified by Visa or Mastercard Securecode), and everyone in eCommerce knows the impact of big data capture forms with lots of questions on a site’s conversion rates.

So, to fight fraud and re-assure consumers, retailers need to address these issues through a high quality design. Consumers need support and encouragement, they need to feel the website is safe, and they need a flow through the transaction that doesn’t feel like it’s taking forever, or being too intrusive. This becomes one of those fascinating challenges where the technology and the creative have to blend perfectly: something not many eCommerce providers can do, and something that can take a little time to get right.

Throw in the fact that the Internet will be one of the battlegrounds for survival for retailers this year, and the right investment in online success looks doubly important. Most companies don’t have the cash to spend enormous amounts on a new website, but they need great digital marketing, top-notch user experience, great technology and a brilliant service behind the scenes, or their competitors will squeeze them out.

One possible solution to this puzzle lies in the selection of a cheaper software platform, based on open source. The big ticket options, including those from IBM, ATG and Microsoft, all come with six-figure license fees that have to be recouped, typically over a 3 year period. Contrast this with the emerging competitors from the open source world, like Magento, where in all likelihood all you’ll pay for is the professional version of Linux (a very small investment by comparison). This gives you a lot more to spend on the other things you want from your eCommerce investment. Retailers spending significant amounts over a 3 year period could start to see this as a serious economic advantage for open source.