By Sara Costantini, Regional Director for the UK & Ireland at European open banking fintech CRIF.
From construction to hospitality, to healthcare to leisure, major advances in technology are helping to redefine industries as we know. And as we continue to head towards the fourth industrial revolution- or Industry 4.0 – the impact of technology on world of online shopping this has been no exception.
Ecommerce flourished during and following the pandemic. Now, thanks to hundreds of online resources and tools, it has become relatively simple to create and develop an ecommerce business. There are currently more ‘new’ companies that have an online presence than ever before, with 580,000 of them in the UK.
However, this rapid growth has brought with it fresh challenges. With so many online shopping businesses, it has become increasingly difficult for consumers to separate the wheat from the chaff. Trust is perhaps the most important factor for any ecommerce business if they are to grow their customer base and ensure repeat business.
While it has indeed become easier to establish an ecommerce business, ensuring it gets off the ground and succeeds poses much more of a challenge. Alarmingly, 90% of ecommerce start-ups end up failing within their first 120 days of operating. This is unsurprising considering that 81% of customers, according to a buySafe survey, feel worried when shopping on a website with which they are unfamiliar.
Customers fear that sharing their personal data with an unfamiliar ecommerce business could leave them open to fraud. And their concerns shouldn’t be shunned – losses to online payment fraud is set to exceed $48 billion globally in 2023.
According to the same buySafe survey, prior to the pandemic, 70% of virtual shopping carts were abandoned. The high number of customers leaving their shopping carts not only showcases the impact of distrust, but it also demonstrates the importance of legitimacy. With minimal brand recognition, consumers will of course feel unsure whether to trust an ecommerce website taken out of the thousands available on the world wide web.
So, to fix this and cement brand recognition and trust, ecommerce businesses must work to convince both existing, or new potential customers, that they are legitimate, reliable, and trustworthy. Without this reassurance, revenue, and by extension the future viability of the business, will be impacted.
An effective way to instil customer confidence is by utilising trust marks. Trust marks are used to prove that a business is a legitimate provider – for example of specific goods, services, or confirming their financial health – and are verified by a trusted third party. Usually, third party providers of financial trust marks will utilise open banking technology to take an all-encompassing 360-degree audit of a business’ current financial situation, for example.
From this view, they can allocate a trust mark to a said business and allow that business to easily showcase their financial health and reassure customers that they are a legitimate and stable business which they can buy from with confidence.
Trust marks can be displayed as an SSL certificate on the website, or as quality certification marks such as the ISO or BSI Kitemark, and other grades from review websites, meaning they’re a simple and effective way for an ecommerce business to prove that they are trustworthy on their website.
The power that trust marks have in cementing consumer trust was demonstrated in a recent eConsultancy survey, whereby 48% of the respondents said, when online shopping from an unrecognised website, they would decide to trust the website if it had a trust mark.
This is something that small businesses must overcome. Utilising open banking technology can help businesses understand their creditworthiness and own financial health. Products and services, such as the Credit Passport Financial Health Badge, help SMEs communicate their financial health to customers, suppliers and partners. Due to the real-time nature of open banking credit scoring services, the badge is updated automatically each day, helping businesses to better demonstrate their creditworthiness during uncertain economic times.
Ecommerce businesses depend on consumer trust and, subsequently, it’s vital that they take measures to cement it. Adding trust marks onto their websites can be a quick and straightforward way for ecommerce businesses to enhance their reputation and boost consumer confidence. This will improve revenue for ecommerce businesses and help drive sales by reducing cart abandonment.