The Importance of Data Quality for International Ecommerce
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In today’s era of online ecommerce, international sales represent a huge potential market for US vendors. According to research firm eMarketer, international sales represent three-quarters of a nearly US $2 trillion retail ecommerce market, nearly half of which comes from China alone. And much of this vast market is only a click away.
On the other hand, cross-border sales remain one of the greatest risks for fraud, with a rate that was more than twice that of domestic fraud through 2012, and despite recent improvements in data quality technology this rate is still 28% higher as of 2015. And one digital commerce site notes that while retailers are making progress at managing fraudulent transaction rates, they are doing so at the expense of turning away good customers – people who, in turn, may never patronize these sites again.
So how do you exploit a rich and growing potential market while mitigating your risk for fraud? The answer might surprise you. While nearly everyone preaches the importance of a fraud protection strategy for ecommerce, and suggestions abound in areas that range from credit card verification to IP geolocation, the head of ecommerce at industry giant LexisNexis points to one area above all: address verification.
In a recent interview with Multichannel Merchant, LexisNexis ecommerce chief Aaron Press points out that the biggest problem with international addresses is a lack of addressing standards between countries. “Postal codes have different formats, where you put the number, how the street is formatted. Normalizing all of that down to a set of parameters that can be published on an API is a huge challenge.”
This means that you need robust capabilities in any third-party solution that you choose to help verify international addresses. Some of the key things to look for include:
- How many countries does the vendor support address formats for, and does this list include all of the countries where you do business?
- Can the application handle multiple or nested municipality formats? For example, a customer may list the same location in Brazil correctly as Rio, Rio de Janeiro, Município do Rio de Janeiro – or even the sub-municipality of Guanabara Bay.
- Will the application handle different spellings or translations for common areas? In the address above, for example, the country may be spelled as Brazil or Brasil. Likewise, the United Kingdom may also be referred to as England, British Isles, Karalyste, Birtaniya, United Kingdom of Great Britain and Northern Ireland, or even 英国 (Chinese for the United Kingdom, literally “England Kingdom”).
- Can these capabilities can be implemented as an API within your ordering application? Or can it process addresses externally through batch processing?
In general, cross-border fraud prevention requires a multi-pronged effort involving all of the potential stress points in an international transaction, including international address verification, email validation, credit card BIN validation, IP address verification – even name validation, so you can flag orders addressed to Vladimir Putin or Homer Simpson. These are clearly capabilities that you outsource to a vendor, unless you happen to be sitting on hundreds of millions of global addresses and their country-specific formats. The good news is that in an era of inexpensive cloud-based applications, strong fraud protection is easily implemented nowadays as part of your normal order processing strategy.