Each new year brings challenges new and old for merchants. It’s smart to start the year with a proactive approach and an eye on the potential challenges. The right steps now could mitigate risks or at least leave merchants in a better position to respond. Setting up tools to monitor for fraud, positioning your company to succeed in an era of high inflation and a tight labor market, and using dispute management platforms to address chargebacks, among other things, could go a long way.
Inflation May Continue to Press Consumers
Inflation has cooled off, however, prices remain high and they may continue to rise albeit at a slower rate. Will inflation be a risk to your business? In some cases, that may depend on a company’s market position. In the summer of 2023, the Washington Post reported that Americans were cutting back on restaurants, flights, and hotels. CNBC likewise reports that consumers have cut back on spending on entertainment and other non-essentials.
Owing to high prices, people are more likely to cook at home or take less extravagant vacations. Grocery stores and affordable bed and breakfasts, among other businesses, may be able to tap into this shift by offering affordable alternatives. Businesses that figure out how to maximize value and offer customers a good deal may likewise do better in an era of high inflation. Of course, this means keeping costs low.
Crime and Chargebacks May Rise
Shoplifting has surged in many areas and some merchants have been closing down stores, citing safety issues and other challenges. The shoplifting epidemic may be fueled in part by high inflation and stagnating wages in some industries and areas. Some folks may feel compelled to steal just to drum up cash. Unfortunately, shoplifting is on the rise, gaining nearly twenty percent in 2022 compared to 2021. In 2023, total losses in the United States are projected to hit $140 billion.
Online fraud and cybersecurity are also major threats for businesses big and small. Here are the five most common types of fraud businesses should watch out for. Data breaches could land companies in hot water with authorities and can leave patients exposed. If stolen data, such as credit card numbers, is used to make purchases, merchants may end up dealing with a lot of chargebacks. Should merchants end up in dispute, they risk losing not only the revenue and inventory from the transaction but may also have to pay chargeback fees, which can cost $25 to $100 or more.
Use Tools to Make Labor Go Farther
The unemployment rate remained historically low throughout 2023. While plenty of economists have been worried about a recession for many months now, markets have remained buoyant. As a result, labor will likely remain in short supply and wages may continue to go up. This could help bolster consumer spending, but it may also raise costs for businesses.
The good news is that there are now a variety of tools available to keep costs more manageable. Artificial Intelligence can be used to handle customer inquiries, for example. Various software platforms make it easier to manage inventory, financials, and more. Dispute management platforms, meanwhile, can be used to handle chargeback disputes. You can also use fraud detection systems to raise red flags on suspicious transactions.
Managing chargebacks, in particular, is time-consuming if you fail to implement the right tools. Fortunately, with dispute management platforms and chargeback deflection services such as Chargeback Help, you can relieve many burdens and ultimately boost your bottom line. Whenever feasible, merchants should work to minimize chargebacks, cybersecurity threats, and fraud.
The New Year Brings Challenges and Opportunities
For merchants, the new year will present many challenges. However, 2024 will also present opportunities. Amid high prices and a tight labor market, it’s important to focus on crafting competitive advantages. Offering exceptional value to customers and using tools to cut costs, including AI and dispute management platforms, could go a long way.