Click to enlarge infographic

Tweetables:

• The median page load speed for ecommerce sites is 7.25s (<3s ideal) Tweet this

• The median page load speed for ecommerce sites in 2012 was 22% slower than 2011 Tweet this

• The top 100 ecommerce sites (Alexa) are 14% slower than average, with 9% more resource requests Tweet this

• Only 25% of top 2000 ecommerce sites use CDN (content delivery networks) Tweet this

• 87% of top 2000 ecommerce sites use keep alives to increase page speed Tweet this

• 78% of top 2000 ecommerce sites compress text to increase page load speed Tweet this

State of the Union: Ecommerce Page Speed and Performance [Fall 2012] reveals the load times and page composition of the home pages of the top 2,000 ecommerce websites spanning July and August.

A key finding is, instead of getting faster, the median home page load time is 9% slower than the 2011 study — a drop from 5.94 seconds for first time visitors to 6.5 seconds, and a tumble from 1.86 seconds for returning visitors to 2.16 seconds (a dip of 15%).

Using WebPageTest, Strangeloop concentrated on the following:

• Full page load time – The amount of time it takes for all page objects to fully load in the browser of a typical end user.

• Page resources – The number of elements in each page, from CSS to images to Javascript. Each object represents one server round trip that is needed to pull all the page’s resources to the user’s browser.

• Performance best practices – The letter grades assigned to a site for the site’s implementation of core best practices.

The top 100 sites suffered even more. The median top 100 sites were 10% slower than the 2000 with a load time of 7.14 seconds, up 12% from last year.

Why?

Top 100 sites had 34% more resource requests per page load than the rest of the pack. Images and third-party scripts are the main culprits. The more advanced a site is, the slower it can be. Despite the bloated pages, the performance gap between the top 100 and the rest is smaller than you would expect for the increase in resource requests, suggesting these sites are optimizing using performance best practices.

Another finding is the number of page resources across the board rose 5% over 2011.

Ecommerce sites in particular are prone to slower pages due to the demand for rich imagery, video, customer reviews, recommendation engines, social sharing buttons, virtual fitting rooms, product demos and various analytics and testing tools employed.

Strangeloop also reports the average Internet Retailer 200 site contains 7 third-party scripts, with some containing as many as 25, each pulling resources from different server locations. Each script represents a potential “single point of failure” which can hamper speed or worse, prevent a page load altogether.

12% of the 2000 sites analyzed failed to use keep-alives and 30% did not use compression, the two simplest site-speed optimization tactics out there.

The study also found 67% of ecommerce sites are not using a content delivery network to cache resources geographically closer to users to enable faster speeds in different regions.

Ecommerce sites should be aware that best-of-breed features and functionality can impact page load speed, which can negatively impact conversion. A balance needs to be struck between them and optimal performance. Common techniques like compression, keep-alives and using content delivery networks can help. You an also use Google’s site speed optimization checklist.

View State of the Union: Ecommerce Page Speed and Performance [Fall 2012] in full (including which browsers proved fastest), or check out the companion infographic.

With the holiday season approaching, now is the time to shape up your site speed. Remember, speed is important all the way to the conversion funnel. Don’t just measure your home pages!

Tweetable facts:

Google found slowing search results by 4/10ths of a s reduced the # of searches by 8Mill/day Click to Tweet

1 in 4 web users abandon a page that takes more than 4s to load Click to Tweet

50% of mobile users abandon a page if it doesn’t load in 10s, 60% won’t return to the site Click to Tweet

25% of mobile web users only browse the Web on their phone (NO laptop, tablet or desktop) Click to Tweet

79% of mobile web users use their phones for shopping Click to Tweet

40% of mobile shoppers will ditch an ecommerce site that doesn’t load in 3s Click to Tweet

If Amazon’s site slows by 1s, it will lose up to $1.6Bill/year Click to Tweet

46% of Americans skip the cinema for pirated movies Click to Tweet

20% of consumers admitted to being rude to someone serving them “too slowly” Click to Tweet

NuCaptcha

NuCaptcha combines video-animated CAPTCHAs with behavioral analysis to improve the user experience while making it tougher for OCR (Optical Character Recognition) programs to decipher.

Video CAPTCHAs show letters moving back and forth, which could be captured as static images by OCR, but overlapping layers are much harder to recognize.

Behavioral analysis takes into account various cues to assess the security risk of a user. Legitimate users are shown easy-to-solve CAPTCHAs, while suspect spammers are given more difficult ones.

NuCaptcha is not free, details on their website.

VouchSafe

VouchSafe uses artificial intelligence to generate challenges based on object associations that humans can recognize but bots can’t. For example, drawing a line between two objects that match each other.

Hey, it’s harder than it looks! I couldn’t figure this one out. Despite the fact I got it wrong, the system could recognize I’m human by the interaction of drawing the line.

Honeypot Buttons

One of the tips from the original post was to use a “honeypot field” — a hidden CSS field invisible to humans, but fed to bots. Anton’s comment described a solution that uses 3 buttons with fake input element labels. For example:

“Don’t post this” | “Post this” | “Cancel”

You can catch robots with server-side validation easily because they tend to just “submit.”

Ask Bots to Play Nice

Finally, a bonus method. I can’t believe I forgot about this one…

Thanks again to our readers! Any more ideas? Please drop us a comment.

Testing title tags: the problems

SERPs (search engine result pages) introduce many uncontrollable variables, such as Google’s penchant for showing different flavors of results, in different areas on the page, for different keyword searches. For example, a search for ‘riding boots’ shows Google Product Search results that can divert a customer from organic listings, star ratings that draw attention to search ads, and brand links to help users narrow their searches.

Notice how the singular “riding boot” and plural “riding boots” show the same page results, but slightly different related Stores results, and omits Product Search results.

If you’re really observant, you’ll notice the related Stores options are different too. Testing is difficult because you have no way of knowing how often these elements are shown or how they may be skewing your results. Not only that, but search positions are always in flux, and vary depending on the exactkeyword phrase queried, the user’s geolocation, whether the user is logged into a Google account (personalized to search history), the “freshness” of results at any given time, and perhaps even involves estimated page load speed and activities of one’s social graph. And did you know that search engines sometimes override your HTML and create their own title for you based on content on your page or what it thinks your page is about? Finally, the biggest hurdle is that even with Google’s own Website Optimizer tool, you cannot tell Google to show one title tag 50% of the time and another the rest. Google will only index your control page. Test versions are served after the referral, if applicable. This makes A/B testing individual pages’ title tags impossible. The only testing you *could* do is in aggregate.

Testing title tags: the workaround

Get Elastic reader Sander Daniels’ team at Thumbtack.com found a workaround to A/B testing title tags in aggregate, described in this case study. Using a home-grown testing platform in its ecommerce back end, the test ran for 7 days, Thumbtack split its URLs into 3 buckets, each containing thousands of URLs. The buckets consisted of a control and 2 challenging formats.

Control: Looking for the best [Service] in [City Name]? Challenger A: Get Free Quotes Today From [Service] In [City Name] Challenger B: [Service] in [City Name] – Get Free Quotes Today

To control for the uncontrollables in search, Thumbtack used the ratio of visits to its experimental titles compared to visits to pages in its control group. Rankings were also monitored, and there was no significant change during the test period. The test ran for 7 days, resulting in a 20-30% drop in traffic to its test groups. Traffic rebounded (for the most part) after reverting to the original title tags.

What to test in ecommerce title tags

If you’re bold enough to try a similar experiment (and have the technical judo chops), here are a few hypotheses you could explore:

• Keyword vs. store name at the beginning of the title
• Short vs. long, “keyword stuffed” titles
• Value proposition such as “Free shipping” or “largest selection of” at the beginning of the title
• “Shop” at the beginning of the title to differentiate from informational results such as Wikipedia articles and blog posts

Remember, to make it work:

• You need a fairly large sample size of URLs that you can experiment, and a tool to support it the test
• Your treatment versions must be tested against your control concurrently, not sequentially
• Allow enough clicks to accrue to reach a statistically significant result
• Understand what you are measuring – are search positions affected (for example, if your brand name at the beginning of the title affects your keyword relevance across the board)? Is traffic affected (can you estimate you are getting higher click through)? Are conversions affected (are you attracting the same quality of visitor)?
• And finally, revert title tags back to normal after the test is over to validate your results

Looking for help with ecommerce strategy? Contact the Elastic Path Research & Strategy team at consulting@elasticpath.com to learn how our ecommerce strategy services can improve your business results.

But for those who need a little numerical validation, here are a few stats that make it crystal clear why your brand’s online presence is more important than ever:

1. Online sales are growing faster than offline sales

Consulting firm Deloitte forecasts a 14% increase in non-store sales, driven largely by the web. In contrast, overall holiday sales are expected to increase just 2.5 to 3% over last season. According to the National Retail Federation 2011 Holiday Consumer Intentions and Actions Survey, nearly half of consumers (46.7%) will buy online, up from 43.9% last year.

2. The web influences almost half of offline purchases

More shoppers are than ever are checking a store website before heading out to the physical location. Forrester Research predicted in its U.S. Online Retail Forecast, 2009 to 2014 report that the web would influence 48% of 2011 in-store sales.

3. Holiday shoppers research more online in a shaky economy

Consumers use the web to research price and availability of products to purchase both online and in stores. According to the same 2011 NRF holiday survey referenced above, the average holiday shopper plans to do 36% of their shopping online – whether they’re comparing prices, researching products, or actually making a purchase. And data from Experian Hitwise indicates that website traffic increases in a troubled economy because buyers research purchases more carefully online to stretch shopping budgets.

4. Online is a major source of inspiration for gift shoppers

When beginning the hunt for holiday gift ideas this year, our own research – just released Halloween – reveals that 21% of U.S. shoppers browse retailer websites for inspiration while 29% peruse physical stores. And the younger the consumer, the larger the role the web plays. Download a free copy of the full report, Virtual Goods Mean Real Money This Holiday. 5. Consumers planning to spend more on holiday shopping have an affinity for digital channels

Our research also found that shoppers intending to buy digital gifts – ebooks, music downloads, Facebook credits, and the like – are more likely to increase their gift budgets over 2010. While only 15% of all consumers plan to spend more this holiday season, a whopping 30% of digital gift shoppers will do so. Those purchasing digital goods also have bigger budgets—$440 on average, which is 40% more than their non-digital counterparts. The vast majority of digital gift spend will happen online.

And another survey, this time by web marketer Steelhouse, suggests that higher-income consumers are more likely than others to maintain their 2010 levels of holiday shopping, and will do more of it online. While 62% of all consumers plan to spend less this holiday season, 54% of households earning $75,000+ intend to spend as much as last year. 32% of these higher-income consumers say that they will spend more time browsing for gifts online instead of at the mall this year, compared to an average of 28% across all incomes.

Act fast to optimize your ecommerce site

With your site being more important than ever, what’s a multichannel marketer to do as the holiday countdown commences? It’s not too late to act on these tips:

1. Don’t emulate Target and have your website repeatedly crashed by unexpected traffic. Plan for major traffic spikes to ensure your site can handle the load. Simulate peak loads, monitor site responsiveness, and measure application behavior well in advance of Cyber Monday.
2. Speed up your site. Investigate using a content delivery network (CDN) like Akamai to speed up the delivery of rich content, including images and videos, to shoppers.
3. As many holiday shoppers will be researching online and on their smartphones both before and during their trips to the store, integrate the in-store experience with relevant, timely and personalized website and mobile app info.
4. Maximize the findability of your products online. By submitting a feed to Google Product Search, the Internet giant’s online shopping comparison engine, lesser known websites can improve exposure. Consider trying the Amazon Marketplace too. Or use Amazon Product Ads to place pay-per-click ads on category and product pages. Shoppers will see your ads when looking for similar products.
5. Social media has hit the mainstream and, while not a primary channel for discovery, is gaining in importance, particularly to Gen Y shoppers. Add social sharing to product pages to turn customers into sales channels. Resolve customer service issues on Facebook or Twitter to publicly display your customer service chops.
6. With cash-strapped shoppers carefully researching every purchase online before buying, follow the lead of sites like Amazon-owned toy site yoyo.com in making the shopping experience simple, efficient, and fun through gift finders, well-designed navigation, product filters and comparison tools, curated recommendations, and rich product details. At minimum, spruce up the product copy and images of your most popular holiday products, reinforce your value proposition, and make your shipping and return policies clear.
7. Act fast to plug your leaky conversion funnel with simple and low cost website feedback and usability tools like Crazy Egg.
8. Ask for an email address wherever you can, both online and in-store. Then squeeze as much value as you can from each of those email addresses.
9. Implement remarketing campaigns to target shoppers who browse weeks before they buy.

Looking for help with ecommerce site optimization? Contact the Elastic Path consulting team at consulting@elasticpath.com to learn how our conversion optimization services can improve your business results.

Just type in any URL and Google will return a report with an Overview (complete with a percentage score) and high, medium and low priority action items:

Clicking on any item in the menu takes you to more detail:

For example, Piperlime’s home page has a bit of Javascript to minify. Google lists each instance along with the percentage of load reduction after compression.

Remember, these are suggestions, not absolute rules – you may have perfectly good reasons for setting expiration for cacheable objects at 30 minutes or 6 hours instead of one week as Google recommends. But this tool is a great cheat sheet for finding low hanging fruit in optimizing your site speed, which results in reduced bounce rates (and more opportunity for conversion), more returning visits and better SEO!

*(Cookies that are essential to perform tasks the user has initiated, such as remembering what products have been added to cart in a session, are exceptions.)

Since permission must be obtained by interrupting a web visitor, we can safely expect that this will negatively impact web usability and a business’ ability to personalize their site and collect web analytics data. This is a major blow to European online businesses and consumers alike, reminiscent of mandated 3D Secure protocol for processing certain cards in certain countries.

While only 3 countries met the deadline of May 24, 2011 (Estonia, Denmark and the UK), each state is responsible for developing its own laws in compliance with the Directive. If you need a primer on the issue, Silktide has an entertaining (yes, entertaining!) and informative short video that sums up what the Directive is and what your options are if your business is located in the UK.

As explained in the video, there are 3 4 options for European business:

1. Do nothing (it’s better to ask for forgiveness than permission, except that you may pay dearly)
2. Don’t accept cookies
3. Ask for permission
4. Move

Reasonably, only the 3rd is a viable option for any serious business (though #4 is tempting, I hear Liechtenstein has some fantastic skiing), which means working towards compliance. The problem is, most EU nations have no law in place yet, and there are no clear guidelines for which cookies are acceptable and not.

We do, however, have some fuzzy guidelines from the ICO (Information Commissioner’s Office) – the UK’s information privacy cheerleader.

The ICO has put together a downloadable document that serves as a “starting point for getting compliant,” rather than a definitive guide. There’s some good stuff in there that can be gleaned from by non-UK businesses in the EU. I will summarize the recommended action here:

Step 1: Perform a cookie audit

This could be either a comprehensive website audit, or simply a review of what cookies are used and what for, and removing any non-essential cookies.

Step 2: Decide how evil each cookie is

Plot your cookies on a continuum from non-invasive to privacy to very invasive. Cookies with no privacy impact include cookies that remember items added to cart, or a language/country selection. These are essential to your site functioning as the user wants. The more “evil” end of the scale includes cookies that are used for site personalization, analytics and advertising (e.g. Google Remarketing ads that follow users around the web for weeks).

The ICO suggests offering “more detailed choices” at the more intrusive side of the scale. This means more opportunities to opt out of cookies and essentially turn off features of your site. However, what intrusive means is very subjective. Certainly non-PII (personally identifiable information) used for web analytics can’t be that evil, right?

Since there is no rule for how to handle each type of cookie, and how intrusive a cookie is is subjective, the main point is that you’ve done something. From the document: “If the ICO were to receive a complaint about a website, we would expect an organisation’s response to set out how they have considered the points above and that they have a realistic plan to achieve compliance. We would handle this sort of response very differently to one from an organisation which decides to avoid making any change to current practice.”

You have heard it said of old “it is better to ask for forgiveness than for permission.” (No, that’s not from the Bible, I checked). Seems in this case, you may be forgiven for not going far enough so long as you have put your shoes on, or at least bought a pair of shoes in preparation for the journey.

Step 3: Figure out how to get consent

You have flexibility on how to gain permission, both through request format (e.g. through pop-up or accordion slider at the top of a page) and the wording of the prompt.

Note that you must ask for permission and explain the nature of each type of cookie, including disclosure when information may be shared with third parties. An example is when a user wishes to view an embedded product information video hosted on YouTube where YouTube sets a cookie to track engagement with the video, length of view, etc.

This means you will likely be asking for permission multiple times in one session, and that you must craft several prompt messages, depending on the cookie type and intended use.

While wordsmithing is important both for clarity and to reduce anxiety (and to keep visitors on board), never misrepresent the nature of your cookie in order to gain consent. “Any attempt to gain consent that relies on the users’ ignorance about what they are agreeing to is unlikely to be compliant.”

When do you need to be compliant?

If you’re in the UK, you have a grace period of one year to “get your house in order” before the ICO begins to lay the smackdown on infringing sites. Of course, non-compliance is an option, albeit a risky one. But if you plan on playing by the rules, I suggest you take advantage of the grace period in order to A/B test methods and messaging to minimize site abandonment once the requirements are set in stone. Next post we’ll explore techniques to do just that.

Looking for help with ecommerce? Contact the Elastic Path consulting team at consulting@elasticpath.com to learn how our ecommerce strategy and conversion optimization services can improve your business results.

Video previews in search results with previews

Google somewhat-recently launched Instant Previews in its SERPs (search engine results pages), where you can hover over a magnifying glass to preview a landing page before committing to a click. It now supports previews for video content, showing not only a few thumbnail images but also very short clips of the video, with or without sound.

Hat tip to Xavier Casanova from VideoRetailer.org for the screenshot.

This means video SEO is all the more important, to ensure your video assets have the best chance of appearing in blended search results. Check out the 7 Deadly Sins of Video SEO and 5 Heavenly Acts of Righteousness for tips.

Google Adwords’ appended URLs

Adwords announced a global change to the way your text ads are displayed. Ads are now appended with the display URL automatically.

My observation – this only happens when the ad is in the magic blue purple green yellow box and when there’s enough room.

My concern with this tactic is stuffed headlines are actually harder to read and scan. While I suppose they can give a branding boost by showing the URL, they may make the headlines ignored altogether. Making some brands more prominent than others also seems a bit unfair. If it does impact click through positively, the “rich get richer” (the highest CTR ads that win the top spots will stay there).

Nevertheless, it’s important that you understand your headlines have been changed without your consent, and this change can impact your campaign performance for the good or the bad. It’s a good idea to annotate the date of this change so you can see the changes in your web analytics. Ideally, Adwords would have provided advertisers with the ability to split-test with and without the display URL in the headline, and an option to turn the feature off.

Google Analytics Site Speed Report

While there’s been a whole whack of adjustments in the new Google Analytics (version 5), perhaps the most exciting is the site speed report.

This report will tell you which landing pages load the slowest, which campaigns correspond to faster page loads and how geography and browser type differ in performance.

Once you identify where the issues are, you can take measures to optimize these pages. Here’s a tip – pay the most attention to the pages in your checkout, not just “landing pages.” Many carts are not abandoned because a button was the wrong color, but because tables, graphics and other objects were…taking…too…long…to…load…

The expense of chargebacks, unrecoverable transfers, unnecessary shipping costs and human resources to investigate disputes add up, and a company’s goodwill can be damaged with banks when fraud rates are higher than average. Chargeback rates higher than your merchant bank’s acceptable threshold may cause you to lose your merchant account, and make it more difficult for you to open one with another bank. And processing fraudulent transactions that a cardholder must dispute tarnishes your brand name in their eyes, and could spark negative word of mouth.

Fraud management systems, both manual and automated, aim to curb fraud losses and protect cardholders from unauthorized use of their accounts. Last post we covered 3D Secure cardholder authentication (e.g. Verified by Visa, MasterCard Secure Code), which is only one tool in your fraud management arsenal, and should not be relied upon alone. Today we examine these tools, and what you should consider when developing your fraud management solution.

Basic automated fraud management tools

AVS

Address Verification Service, or AVS, is a tool that checks a customer’s input name, address and card number details against a database of addresses on file with card issuing banks. AVS is not available for all countries, issuing banks and card types. For example, American Express only supports AVS in the US.

While AVS is effective at preventing fraudsters, it’s also prone to reject good orders, as it requires an exact match of the customer’s billing address. For example, an address #33-1234 Suchandsuch Road may be rejected if the on-file address is 1234 Suchandsuch Rd Apt. 33. If a bona fide customer attempts the address multiple times “incorrectly,” her card may be locked out of use temporarily.

Another problem is an AVS mismatch may not prevent the authorization from appearing on the cardholder’s statement. The issuing bank can hold the authorized amount for 3 to 7 days unless contacted by the customer. But confused and irate customers who find the charges may complain to your customer service.

It’s a good idea to provide error messaging when a mismatch occurs that explains the address must be exactly as on the cardholder’s statements. (Test it in different browsers to make sure it’s readable!)

Because it’s easy to reject good orders and accept fraudulent ones, you don’t want to rely on AVS alone. Mismatches and partial matches do not have to be rejected, they may be flagged for manual review.

CVV

I’ve written about the perils of and workarounds for CVV (aka CSC, CVN, CVC and CVV2) on Get Elastic before. To recap, CVV (card verification value) can create 2 conversion problems. Some customers will not know what CVV is or where to find it. Others fear handing over their security code means it may fall into the wrong hands. Address both these FUDs (fears, uncertainties and doubts) by showing visually where to find the code, and explaining the number will not be stored in your database.

3D Secure

As discussed in detail last post, Verified by Visa, MasterCard Secure Code and their cousins add an extra layer of authentication to the checkout process by means of a personal password/PIN. The main benefit for retailers is the liability shift from the merchant to the issuing bank should the customer file a chargeback. Merchants may also enjoy lower interchange fees for participating in the scheme. However, the extra step in checkout is not always appreciated by customers. Many merchants report a drop in conversion when using 3D Secure.

Again, 3D Secure is not the silver bullet to prevent fraud. Not all card issuing banks participate with Verified by Visa, and not all cardholders have enrolled. Unenrolled cardholders are allowed to opt-out a number of times (variable) before being required to join the program, and identity thieves who are first to use a new card online can set their own passwords.

The decision whether to use 3D Secure depends on a number of things explained last post.

Automated Transactional Risk Scoring

ATRS solutions enable ecommerce systems to identify suspicious behavior, assign a “risk factor” and reject or flag a risky order for manual review. The logic and settings are custom to the online retailer based on past experience and other industry factors. They may be home-grown or third-party (e.g. Cybersource, Ethoca, Accertify). The downside of home-grown solutions is they depend heavily on the trial-and-error experience of your own business. Third-party services that pull data from a large user base are more nimble in detecting fraud trends and can have higher accuracy, but may also come at a much higher cost.

Beyond AVS, CVV, 3D Secure, a variety of other tools may be used by the ATRS including:

• IP detection Identifies user’s location and checks against known high risk IP and email addresses
• Device fingerprinting Reads data from and about a device and browser session including true IP address and location (can identify proxies), and whether the device has been involved in previous fraudulent activities. (More features than simple IP detection)
• Order velocity monitoring Flags orders that have been submitted within a specific time period from one card or IP address
• Positive lists Records of “good” customers, based on order history
• Negative lists Known “bad” IPs, card numbers, device IDs, name/address combos, etc. Some banks end up on black lists if they are known to have higher rates of fraud among cards they have issued
• Shared lists Positive/negative lists shared across companies

Systems are typically tuned to detect suspicious behavior like high dollar value baskets, unusual product mixes (random selection of clothing sizes, for example), large quantities of a single item (especially electronics) and rapid additions to cart.

What one e-tailer considers abnormal may be the norm for other businesses, so automated systems allow rules-based tweaking. For example, a $1,000 order may be suspicious for an electronics store but very common for a furniture shop that sells $5,000 living room sets. A billing and shipping address mismatch is common with gifts and flower delivery sites, but may be more suspicious for others. Some businesses may want to reject orders from certain regions, or flag orders shipping to P.O. boxes, prisons, hotels, schools and hospitals.

Manual Reviews

Despite automation’s virtues, some orders call for manual review. This may involve calling the customer or the customer’s bank, using reverse lookup tools, checking customer records or even using Google Maps and social media to track down a name/address. (Some automated tools have the ability to check email addresses across social networks).

Manual review by humans is obviously more costly and time consuming than automated tools, and using a number of different automated tools *should* reduce costs. However, the more automated tools you use (the average is 7.4 for large ecommerce companies), the more likely an order will be flagged for manual review! Companies that seem to squeak by with a low percentage of manual reviews are likely rejecting good orders, and should understand where the sweet spot lies between resource savings and sales and profits. Ideally, manual reviews should be reserved for orders you want to keep, rather than as a fraud detection method.

What system is right for you?

There’s no one-size-fits-all fraud management solution. Your needs will vary based on your transaction volume, industry, geographic market(s) and rate of fraud, and your options may be limited by staffing or budget (smaller merchants tend to rely solely on manual reviews and the “basic” automated services). The rules you apply to your system will also vary based on the nuances of your individual business. Keep the following in mind when choosing / using a fraud management system:

1. Order rejection rates

Merchants with slimmer margins have more to lose when orders are fraudulent, and tend to have higher order rejection rates. Those with higher margins can absorb more fraud, accepting a higher risk in exchange for faster order processing and shipment, and less false-positives.

2. False-positives

A continual challenge with automated tools is the rejection of legitimate orders (false-positives). Tools should be continually tweaked when false positives are identified. Julie Fergerson of Ethoca recommends you monitor your “order resuscitation” rate, along with customer complaints to your call center on rejected orders. “It should be very low.”

3. System maintenance

In addition to false-positive feedback, tools require continual updating, both with new technologies to combat fraud and with information you gather from day-to-day operations. For example, daily review of declines (both internal rejections and those declined by issuing banks) can help you discover authorization problems that may exist, or commonalities among purchase behavior or other characteristics of declined orders. Fergerson says “even a purchased risk engine needs to be constantly analyzed. Otherwise, they can be worse than just guessing.”

4. Staffing

Insufficient staffing can delay orders, leading to unhappy customers and more WISMO (where is my order) calls to your customer service team. Ill-trained staff can also reject good orders and let bad ones slip through. Some fraud management vendors offer outsourced manual review staff, which may have some efficiencies (scale up and down as needed), and in some cases, better trained staff.

The takeaway

There are many weapons available to help your quest for fighting fraud, but there’s a fine balance between stopping bad orders and preserving good ones. No matter what your fraud management system looks like, it requires continual maintenance to be effective. You should be continually adjusting rules and processes based on the overall online fraud environment and your own learnings to ensure you’re maximizing profits and minimizing losses.

Looking for help with your ecommerce strategy and site optimization? The Elastic Path research and consulting division is available to enterprises selling digital goods and services. For more information, visit us at http://elasticpath.com/ecommerce-consulting/ or contact us at consulting@elasticpath.com.