The mere mention of Black Friday calls to mind images of frantic shoppers hoping to secure the best deals on the year’s hottest goods. However, sales figures for the past few years reveal a drastic shift in consumer preferences—online holiday shopping has gradually replaced traditional brick-and-mortar experiences.
While merchants operating in the brick-and-mortar environment might have been disappointed this Black Friday, eCommerce merchants saw better sales figures than anyone had anticipated. Despite concerns that economic uncertainty tied to the US elections and the Brexit vote earlier this year, sales over the Black Friday weekend were impressive.
This year, US online consumer spending on Black Friday was $3.34 billion, a 21.6% rise on the previous year. In the UK, the holiday shopping experience is slightly different. Because Black Friday was originally tied to the US holiday of Thanksgiving, Black ‘Friday’ in the UK has turned into more of a Black ‘Fiveday’ holiday shopping period over five days from Thanksgiving to Cyber Monday, rather than a single frenzied day. This year, Black Friday grew 12.2% to £1.23billion in the UK.
UK analysts claim the Black Friday and Cyber Monday sales extravaganza does little to improve a business’s bottom line; consumers are simply doing their holiday shopping earlier, not necessarily buying more. Rather than generate new shopping experiences, UK consumers simply compress their holiday shopping into a more condensed timeline.
Increase in 2016 Holiday Sales Leads to Higher Fraud Predictions
Higher Black Friday and Cyber Monday sales volumes have led to an increase in projected fraud attempts. Global fraud attacks were projected to rise 12% YoY alongside the 13% increase in holiday sales. However, US retailers can expect a 43% increase over last year’s holiday fraud exposure.
In Europe, 3.6% of all transactions are expected to be fraudulent during the holiday season. In North America, 1.6% of transactions are found to be fraud. However, this rate will increase significantly to 2.5% on Christmas Eve.
Fraudsters are making a more concerted effort to proceed without detection. Items that can be purchased without detection and easily resold—such as cosmetics, headphones, and trainers—are heavily targeted.
Merchants have already been exposed to a greater likelihood of fraudulent transactions during the Black Friday weekend, but the risk will remain for the duration of the holiday shopping season.
Friendly fraud will also be a significant risk factor in the coming months. JP Morgan Chase revealed sales volume increased 7% last year, but chargeback issuances increased by 20%.
As consumers begin to analyse the debt they’ve incurred during the holidays, buyer’s remorse and the resulting friendly fraud is expected to transpire. Merchants should anticipate that consumers will dispute their purchases 45 to 60 days after the transaction, meaning chargeback rates will spike drastically in the coming months.
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