Faced with high inflation and soaring energy prices, consumers are turning to their darker sides and scamming e-commerce retailers in order to get free products, according to an analysis published by Signifyd.
European consumers are cutting back on spending — shifting to bargain brands, trying lower-priced stores and worrying about high prices, according to a recent McKinsey & Company report. As of the summer, in fact, inflation was the region’s No. 1 worry for those living in Europe’s largest economies, considerably outpacing the war in Ukraine.
Nearly 60% of Europeans say their country’s economy is in bad shape and more Europeans (36%) expressed doubts in June about a successful economic recovery than did at the height of the pandemic.
The result: An overwhelming majority of consumers surveyed by Signifyd say rising prices have caused them to reduce their spending this year.
The consequences for retailers are clear in declining e-commerce sales. And the picture is not likely to get any prettier as the year runs out of months and the holiday shopping season begins.
During the closely watched Cyber Week, with its mythical Black Friday, consumers will be spending more online than last year to buy less. And they won’t be spending much more, according to projections.
Consumers are also struggling with the shopping experience created by SCA regulations. The requirement that consumers authenticate themselves with two out of three of the following
— something they know, something they have or something they are — has soured some online shoppers on digital buying.
Half of Italian consumers, 45% of consumers in France and 36% of consumers in the UK have had to abandon purchases because of trouble with SCA, according to the survey of 2,000 shoppers in each country.
UK focus on fraud
UK consumers surveyed for “The State of Commerce in Europe 2023” showed little compunction about admitting to cheating on returns and claims of poor service while they shopped online. In fact:
- 32% admitted to falsely claiming an ecommerce order was not satisfactory when delivered in an attempt to get a refund and keep the product.
- 26% said they had claimed that an ecommerce order that did arrive did not arrive in order to keep the item for free.
- 4% said they sent back an empty box or a box containing something other than the original product in order to keep an online purchase and receive a refund.
The responses serve as a warning to British merchants as they head into the festive season – the stretch that defines the year for most retailers – that rising prices may be shifting Britons’ moral compasses out of kilter.
The survey also found that 55% of UK consumers are spending less in inflationary times. Now, the question becomes whether they will turn to false claims of fraud and return abuse in order to cut back while keeping up.
“The State of Commerce report makes clear that after several challenging years, neither the economy nor the rising levels of fraud and abuse are getting any easier for retailers,” says Ed Whitehead, Signifyd managing director, EMEA.
The report, which provides a deep dive into the state of e-commerce across Europe and in the UK, found challenges ahead based on the industry’s current state and projections of what’s to come.
Report Highlights
- Online sales in Europe overall were down 16.6% mid-way through 2022, compared to last year. That compares to H1 2021, when e-commerce sales rose 10.6% in Europe.
- Online sales in the UK bucked that trend with sales finishing higher than the year-ago figure during every month of 2022, fuelled by dramatic increases in sales of electronics and business supplies and solid gains in luxury goods.
- Cyber Week online sales across Europe will be up 3% this year, but higher spending won’t last.
- For the overall festive season (November and December), sales across Europe will fall 4% below last year’s lacklustre performance.
- The hoped-for television boost, prompted by football fans craving a top World Cup viewing experience, won’t be coming. Average TV prices are up 48% over two years ago and trending higher.
Apparently, even the harmonic convergence of festive shopping and a festive-season World Cup will fail to ignite spending in November and December, according to analysis. One key reason, according to the report: Inflation has pushed the price of a new television, which was once a World Cup must-have, out of reach for many.
The post E-commerce falling and fraud among consumers rising as buyers tighten belts appeared first on Payments Cards & Mobile.
