‘The COVID effect’: how the online explosion has left fast-growth e-tailers vulnerable to financial crime and fraud


The pandemic has seen certain consumer retail sectors forced to rapidly transform their operations to accommodate a surge in demand online. For some, it’s meant their business model and customer revenue streams will never be the same again.

Michael Hughes, Business Development Director at TruNarrative, looks at online growth during the pandemic, and examines the operational challenges, risk and cost of the customer onboarding and verification checks required.

It’s not hard to see why certain sectors expanded so rapidly during lockdown and beyond. With shoppers unable or unwilling to venture out into physical stores, e-tailers who could fulfil services remotely or deliver goods to the door saw a stratospheric increase in online traffic. McKinsey estimates Covid-19 has accelerated the number of digitally available products by 7 years.

Some Interesting Stats

Double and triple-digit rises

Latest data from Adobe indicates that, as we begin to emerge from the pandemic, UK online spending for July 2021 reached £10bn – a rise of 18% totalling £64bn in the year to date. That’s an increase of 56% compared to the same period back in 2019.

Meanwhile, the Office for National Statistics estimates that online sales currently account for 27.9% of all retail spending in the UK, compared to just 19.8% in February 2020 before the pandemic.

As Covid restrictions kept people at home, demand for takeaway food delivery surged. For example, the Guardian reports Just Eat saw its UK orders grow by nearly 400% in the fourth quarter of 2020 compared with the same period in 2019. For competitor Deliveroo, UK and Ireland order numbers in the first quarter of 2021 rose by 121% to 34 million whilst gross transaction value increased 142% to £852m.

In parallel, home subscription services such as gin and wine clubs have flourished. According to The Royal Mail, consumers spent almost £1.4 billion on subscription box purchases in 2020, resulting in just under 88 million deliveries across the UK5. A recent report by IBISWorld concludes the online industry for alcohol alone in the UK is now expected to grow by 39.3% in 2020-21.

Lockdown and furlough also fuelled a huge rise in sellers using online marketplaces such as Etsy and Not On The High Street Market, leaving platform providers struggling to individually vet and verify thousands of new vendors daily.

Even buying emotive, big-ticket items like new and used cars remotely online became the norm, not the exception, with disruptive contactless platform players such as Cinch and Cazoo benefiting from Covid safety concerns and the temporary closure of dealership forecourts and showrooms.

Manual triage can’t cope

Whilst each of these sectors is very different, servicing high volume, high demand scenarios online poses some common challenges. Most significantly, many fast-growth businesses we talk to simply haven’t had the time to adequately manage their exponential increase in customer traffic, with outdated manual onboarding processes exposing big e-tailers to costly financial crime.

Where critical processes such as age verification, identity and credit checks are still executed manually by customer services teams, waiting time increases, the customer experience suffers, and operating costs rise. With manual workflows under stress triaging unprecedented customer volumes, the risk of retail fraud such as account takeover and chargebacks increases, along with the potential for Anti-Money Laundering oversights, compliance failures, reputational damage, and fines.

It’s blatantly clear that for businesses dealing with a significant rise in demand, manual onboarding checks cannot cope. An automated approach to workflow is needed. Businesses must act now to meet customer demand, tackle financial crime, fulfil orders, and keep lead times to a minimum.

AI-based automation: fast, robust onboarding

Providing a fully automated orchestrated digital workflow, the TruNarrative Platform unifies the management of compliance, risk, and fraud in a single, agile, scalable solution.

By seamlessly integrating into, or entirely replacing, an organisation’s existing system, we make it quick and easy to configure automated customer journeys, including tailored decisioning rule sets, without writing code. Onboarding becomes fast and frictionless with fully automated solutions for Application Fraud Prevention, Identity Verification (eIDV), ID Document Authentication, Know Your Customer checks (eKYC) and more. Crucially, by using a single API, the TruNarrative Platform provides instant drag-and-drop access to 50+ multiple data and services providers to support robust, real-time decisioning.

If your sales volumes have grown dramatically during the pandemic, now is the time to investigate the efficiencies and financial crime safeguards available with AI-based digital onboarding, transaction monitoring and decisioning. To learn more about faster, safer ecommerce, simply call our team or visit trunarrative.com

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