The GDC Blog

Hennes & Mauritz AB (H&M) announced recently, that it would accelerate the pace of its global expansion via its e-commerce channel. Specifically they are expanding into 10 new markets bringing the total number of country distinct e-stores it offers to 13.
Clearly the company is seeing the huge growth potential via its e-commerce channel & rightly so. European clothing sector growth via e-commerce is expected to grow as much as 17% this year alone. Sustained growth is also occurring in Latin America and parts of Asia.
The downside of this growth opportunity is the increased amount of Fraud & Mis-Delivery that will occur in tandem with expansion into new global markets. We identify Fraud as Card Not Present (CNP) transactions that result in charge backs to vendors based on denial of transactions by cardholders. Mis-Delivery is defined as the inability or delayed ability to deliver online purchase items to customers due to low quality or non-existent address validation.
To ensure the successful growth of its cross border commerce efforts, H&M will need to invest in globalized solutions for Identity Management & Address Validation. By properly tying these offerings into their e-commerce process, the number of CNP fraudulent transactions as well as incorrectly addressed transactions can be reduced. Further H&M’s manual review team can reduce the time it takes to review and make decisions on dubious transactions.
Strong international growth markets promise new customers and new revenues, but each new market brings a layer of complexity in making sure that customer expectations are met. Further a company that does not properly prepare itself for the increased costs associated with Fraud and Mis-Delivery may find its profits in the new markets disappear one click at a time.