Digital shoplifting is becoming a serious problem for many ecommerce sellers, but few have a viable strategy in place to fight it

April 23, 2014

Ecommerce is changing what shopping means to people all around the world, but unfortunately it is also changing the way a small but growing minority of customers try to steal merchandise. Smaller e-commerce sellers in particular may be vulnerable to this, and should work closely with their logistics partners to prevent it.

So how is digital shoplifting affecting online businesses?

Digital shoplifting is mostly consumers making false claims that their orders have been ‘lost in transit’ or destroyed (GLIT or Goods Lost in Transit claims). This is technically fraud, not theft, but the effect on the merchant is the same. These false claims are made in the hopes of getting free replacement merchandise, or a refund to which they are not entitled. False claims of these kinds are becoming more and more common, both in the UK and around the world. Anyone who sells goods online should be wary of, but not hostile to, claims of undelivered or damaged goods. Most such claims are legitimate, even now.

 In a recent survey, more than 90% of the loss prevention specialists polled agreed that false lost order claims now pose a serious threat to the ecommerce sector. Nonetheless, the majority of online retailers have no specific policies in place to verify these claims, nor to deal with them once they are uncovered.

False GLIT claims cost UK online and mail-order retailers a staggering £405 million every year. As experts estimate that the average false GLIT claim costs the seller around £40, it doesn’t take many to turn a good month into a bad month for most online sellers.

How can you prevent false GLIT claims against your ecommerce business?

E-commerce sellers and their logistics partners need to work together to address these problems. Either the merchant or the 3PL, whichever party handles customer service and response, must implement a comprehensive screening program that will detect false claims. This is often a much more efficient program when enacted company-wide by a 3PL rather than by an individual seller, once again making a good logistics partner like Fairway Fulfilment & Logistics, crucial to the small and medium sized online business.

Retailers or 3PLs with the necessary software and management systems in place can assess claims for fraud risk at the first point of contact, when the least amount of time and effort have been spent on the case, and detection will save the most money. If both the 3pL and the carrier work closely together and keep good records, fraudulent GLIT claims can be challenged quickly and easily.

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