Consumers Portray Retailer as Scam, but the Company is the True Victim
As Katie Couric famously put it, “you can’t please everyone or make people like you.”
That’s especially true when it comes to upholding an online presence or growing a brand. No matter who you are, you will always have critics. eCommerce brands don’t have the benefit of being able to reconcile customer matters face-to-face, and in the age of instant gratification, that can be a serious problem.
It’s Not Easy for eCommerce Merchants
eCommerce brands are forced to navigate volatile advertising landscapes, decipher non-human activity, and suffer constant criticism online.
Social media and other digital channels make up eCommerce brands’ entire identity, shaped by customer reputation and loyalty. Customer dissatisfaction online can go viral and spread around the world in a matter of hours. Despite the stakes being much higher, there’s no avoiding the fact that merchants are still people, and from time to time they will make mistakes just like anyone else.
For example, a consumer might complain about a call center agent who refused to give them a refund. The next thing they know, the entire world brands that merchant as a scam artist. As a rule of thumb, only one out of 20 happy customers will tell another customer. At the same time, ten dissatisfied customers will tell as many as five people about a negative experience.
A Case in Point—Kate Hudson’s Fabletics
To demonstrate, I read a story recently on the latest so-called “scam artist,” Kate Hudson, and her athletic wear company Fabletics. Apparently, a number of customers are up-in-arms about Fabletics’ “VIP membership,” with which customers receive heavy discounts on merchandise in exchange for a monthly fee of around $60.
These customers claim they were never made aware that they would be subject to monthly fees, and now allege that the company uses deceptive marketing to take advantage of customers. Of course, we hear plenty from the customers who believe they are being deceived. However, who we don’t hear from is the many customers who did know, are satisfied, and have chosen to say nothing (as the majority do).
This is the case all too often—a vocal minority can easily destroy a brand’s reputation in a matter of hours, doing critical damage to the merchant’s business. No one took into account the fact that there may be millions of happy Fabletics customers, with fewer than one-tenth of one percent of the merchant’s total customers upset by the policy.
Going Far Beyond Consumer Protection
In Fabletics’ case, the offer was compliant with the terms and conditions agreed to prior to the customer checking out. Not only that, but regular customers really got a pretty good deal—a shopper could have more than $100 in merchandise for hardly the cost of shipping and handling.
Defending consumers against online scams is not a bad thing; however, this goes far beyond consumer protection. Overreactions of this sort are, in fact, merchant abuse.
Anyone who purchases from PayPal or Stripe agrees to terms and conditions which should be linked on the checkout page. If you buy an app for your phone, you agree to a no-refund policy because you have parental controls. Even despite these facts, consumers still file chargebacks claiming they weren’t made aware of the terms before purchasing.
Taking the (Undeserved) Heat
Another downside for eCommerce merchants is that, from time to time, you will take the blame for things that are not your fault.
In the case of affiliate fraud, you have criminals who claim undeserved commissions off of merchants, then leave those merchants to answer to cardholders. The merchant loses revenue from the sale as well as the commission, and is also framed for abusing consumers when they were victims of the same fraudster.
Or, let’s say that the post office delivers a shipment late, despite the customer and merchant paying for rushed delivery. The first customers leave scathing reviews, and those reviews are validated by successive customers who flood the merchant with questions and demands they weren’t prepared to handle.
The Rise of Reputation Management
The lack of transparency on the internet cultivated a new breed of business called “reputation management.” This is a strategy by which you pay a fee to help set the record straight—or at least help others try to notice your good attributes in hopes that it will overshadow past mistakes.
With the growth of eCommerce, reputation management and online brand protection is big business. Reputation management is now an essential mitigation strategy to deal with inevitable backlash, as just one transaction might result in a PR disaster.
Generally, the businesses who tend to be hit worst those who sell recurring subscriptions, high ticket items, or cosmetics. These industries also tend to see the highest numbers of friendly fraud.
What Merchants Should Do
The best way for Fabletics and other eCommerce merchants to avoid friendly fraud and other disputes and controversies involving consumers is to act according to business-best policies. This means providing excellent service at all times—but what does that entail?
Business-Best Policies:
- Operate a call center 24/7. Customers don’t want to talk to a machine. They want live service, and if they can’t find someone to help them on their schedule, they will turn to their bank in order to recover their funds.
- Answer the phone in 3 rings or less. Each successive ring increases the likelihood that the customer will hang up.
- Ship products quickly. As soon as payment clears, have the customer’s goods on their way.
- Predict trends and keep stock up-to-date. Make sure that products available online are available in your warehouse to avoid delays and cancellations.
- Apply fraud detection technology. There are a number of tools at merchants’ disposal—address verification, CVV/CVC, 3D Secure, affiliate fraud alerts—take advantage of them!
The Era of Consumer Entitlement
The current eCommerce climate programs consumers to expect service on their terms. Unfortunately for eCommerce merchants, they have little choice but to abide by those terms. Otherwise, customers will find a competitor who can.
eCommerce offers the potential for tremendous profits, but at the same time, it places new, highly-strenuous demands on merchants. I don’t believe for a second that Kate Hudson set out to steal money from customers and destroy her brand. Like many online merchants, she is a victim of fast growth fueled by demand.
Entrepreneurs become successful through trial and error and no business owner finds success by repeating errors. Merchants who thrive in the eCommerce environment are the ones in the business of fixing, learning, and continuing to innovate and improve.
