Forter, a provider of e-commerce fraud prevention, announced the release of its Annual eCommerce Revenue Optimization (AERO) report for the food and beverage industry, which showcases the opportunity cost of falsely declining eCommerce transactions from new customers.
In 2020, eCommerce exceeded $4.3 trillion, a volume originally forecasted for 2025. Due to the rapid growth, businesses are increasingly interacting with first-time customers. Unfortunately, businesses are 5-7x more likely to decline transactions from new customers as compared to returning consumers. These false declines represent millions of dollars of lost revenue for food and beverage retailers.
When a business falsely declines a new customer, 40% of those customers state they will never shop at that particular business again. Inaccurate decisions can come with a high cost; Forter has termed this challenge New User Missed Opportunity (NUMO).
The research highlights that new users represent 6% of gross merchandise revenue for the Food & Beverage industry. Given that these new users have transactions declined at a greater rate, Forter’s calculations show a direct loss of $750,000 in revenue for every $500 million in transactions processed. That may seem like a small number, but Forter’s report notes these customers would complete nine more transactions within 12 months and remain loyal customers for an average of four years. Thus, the total impact is up to $6.75 million in lost revenue per year at this transaction volume.
“With the rise in delivery apps such as DoorDash, GrubHub and Favor creating increasing competition between food and beverage retailers, it is critical for these organizations to make sure they are doing everything in their power to attract and retain new customers,” said Michael Reitblat, CEO and co-founder, Forter. “We hope that by sharing the results of the AERO report, these retailers gain insight into the importance of preventing false declines while also protecting against fraud.”
There are ways to more accurately assess the trustworthiness of a new customer—when an individual food and beverage retailer lacks historical context. For example, Forter has amassed a Persona Graph that includes more than 1 billion online personas. That way, when a Forter customer in the food and beverage industry interacts with a persona for the first time, Forter can determine whether they have seen that persona elsewhere across its global network.
All that history and context informs a decision on whether to accept or reject the transaction in a fraction of a second. And if Forter hasn’t seen that exact persona, it can use probabilistic linking, as pattern-matching a means to make decisions based on similar personas. This is faster and more accurate than rules-based solutions or transaction scores and scales without a dependency on manual reviews.
A complete version of the AERO report for the food and beverage industry is available here. To view AERO reports for the apparel and accessories, beauty and health and home and garden industries, click here.