How Customers Fall Through The Cracks Of Digital Platforms
“Whose customer am I? And who’s going to take care me?”
Those are the questions I asked myself last week when trying to resolve an online order gone astray.
In my case, the answers were “I don’t really know” and “no one,” as far as I could tell.
As digital platforms decide what to do themselves, what to delegate to others and what businesses to fold in, they should make sure they can give their customers the right answers – which are: “you are my customer” and “I’ll look out for you.”
Won’t You Please, Please Help Me?
I recently made an online purchase from a merchant I shop with infrequently, and used a payments intermediary to complete the transaction. The merchant processed the order efficiently, and within 48 hours I received a notice that the package was on its way. The merchant used a third-party delivery company, and I was provided with a tracking number to keep tabs on its progress.
I received a notice that the package was delivered last Wednesday afternoon – the driver signed for it since the merchant didn’t require a customer signature. Later that evening, when I went to retrieve the package from where this delivery company typically leaves them, it wasn’t there. I thought at the time that someone else in my household had beaten me to it and brought it inside.
Long story short, no one had – and after a thorough search, there was no package to be found anywhere.
The following morning, when I called the delivery company to explain the package was missing, they told me their records showed that the driver had delivered the package, so I should look harder for it. After checking my eyesight, it took three calls and an escalation to a supervisor to initiate a claim that the package wasn’t delivered to my home and was obviously lost somewhere. I hung up feeling unsure about a satisfactory resolution, as I failed to receive an email confirmation of the claim as they had promised.
I then contacted the payments provider I used to make the purchase for help. I was told there was no valid dispute since the merchant’s records showed – and the merchant verified based on information provided to them by the delivery company – that the package had been delivered to me.
So there I was, in the words of one of the Rolling Stone’s greatest classic hits, stuck between a rock and a hard place: one thousand dollars in purchases unaccounted for and no clear path to getting either the package or a refund from the payments provider I used to make the purchase.
Stuck Between A Rock And A Hard Place
As someone in the business, I understood what was at play here.
As more commerce moves online, so does the incidence of friendly fraud – people claiming that packages were never delivered even though they were. PYMNTS reports on this issue frequently, and it is a real and unfortunate consequence of the world in which we now live.
But as someone in the business, I also understood the power of data to help, in this case, both the delivery company and the payments provider parse the noise to determine that I was not a fraudster.
Even though in this situation, I rather felt that I was being treated like one.
For the delivery company, looking at their data on the history of package deliveries (there are many), the fact that drivers consistently know where to leave packages, as well as the absence of disputes claiming non-delivery over many years should have made the process of initiating an investigation less friction-filled than three phone calls and 15 minutes spent online completing a claims form.
For the payments provider, as a longstanding customer with many purchases and zero disputes claiming lost packages, the data should have immediately suggested a different path than “best of luck sorting this out on your own.”
After nearly two days spent messing around with this, I decided to chalk up the experience to a thousand-dollar lesson in two things: the value of dealing with a marketplace that controls the end-to-end process of order, payment, fulfillment and delivery, and the value of having a customer relationship that is clear, direct, data-driven, unambiguous – and customer-centric.
The Customer Is In The Eye Of The Beholder
Putting the customer first, and making her the focal point of innovation, is how every company describes its vision and determines its product/market fit. For platforms with complex business models where multiple intermediaries serve end consumers, innovating with those multiple stakeholders in mind also becomes more complex, since all customers must derive value from it in order to keep the platform dynamics in check.
Over the last decade, platforms that serve the consumer have focused on ways to simplify and streamline customer interactions, largely by integrating more services and capabilities into those platforms – giving consumers more options within that ecosystem, and giving third parties more opportunities to reach them.
The world’s abrupt, pandemic-driven shift to digital in 2020 has both amplified the potential of these platforms to create value for all customer groups and accelerated consumers’ and businesses’ embrace of them. It has also surfaced the challenges associated with satisfying multiple stakeholders, including payment intermediaries, each of whom may perceive its relationship with that platform and its stakeholders through a different lens.
Who’s Paying Who?
In the ordinary course of doing business online, the relationship between the consumer, the merchant, the issuer of the payment credential used to make the purchase, and the company delivering the last mile of service is relatively straightforward.
Consumers don’t consider themselves customers of delivery companies since they don’t pay them, nor do they get to decide who delivers the purchases they make with merchants.
The delivery company’s customer is the merchant, who decides to use them and is the entity that pays them. If there are too many claims by delivery companies against merchants, those lucrative delivery contracts could be at risk. It’s costless for delivery companies to point the finger at the consumer, as they won’t lose the consumer’s business – but they could lose the merchant’s business if they file too many claims for mistakes made. Who’s to know? But I also wonder if delivery companies are wise to the fact that once confirmation of a delivery has been submitted, even if a consumer’s signature is not required, it’s nearly impossible for the consumer to win a dispute made with their issuer.
Consumers do consider themselves customers of the merchants, since they order from them and expect merchants to process, fulfill and arrange for the expedient delivery of their orders. It’s the merchant who they pay on their website using their payment credentials of choice, and who they blame when things go wrong, even if it isn’t their fault.
Like when their packages aren’t delivered.
A recent PYMNTS study done in collaboration with PAAY suggests that 41 percent of consumer disputes with merchants are over packages that aren’t delivered. Consumers attribute these disputes to mistakes for which the merchant is to blame, even if their payment issuer ultimately denies their dispute and the merchant did their job by fulfilling the order and sending it on its way.
That puts issuers in the tough position of deciding what’s fair for all parties, and in the absence of the right data and a clear path, a lot of the time, they decide those disputes in the favor of the cardholder — as this same study shows, something like 60 percent of the time. The issuer’s customer is their cardholder, even though they receive interchange from the merchants their cardholders transact with and care a lot about keeping their relationships with merchants strong. But issuers also worry a lot about keeping their cards top of wallet across all of the merchants that their cardholders shop — the same consumer they’ve spent decades training they’ll protect when interactions using their payments credentials with merchants go wrong.
Being caught in the middle of the merchant and delivery company whipsaw is why consumers get frustrated enough to file disputes with their issuers — their relationship with the merchant is also why they blame them, many times unfairly so.
It’s also why FinTechs are now at the forefront of helping issuers and merchants improve the dispute process, including using technology to provide access to the data necessary to manage them in a more efficient way. The goal is to isolate real fraud (friendly or otherwise) from the instances where merchants must take responsibility on behalf of their customers and remedy a service lapse somewhere along their value chain.
Like too many bad delivery experiences from the same provider, for example.
Things can get a bit more complicated when consumers use third-party payment providers to make purchases from merchants.
Like any other merchant/consumer/payments relationship, consumers perceive their relationship to be with both the merchant and the payments provider used to make the purchase.
But here’s what’s different.
Payments intermediaries have two sets of customers: the consumer and the merchant, both of whom are essential to keeping their platform dynamics in balance. Consumers have the option of what credentials they register to fund the purchase that also has the potential to make settling consumer disputes that much more complicated for the merchant, for the payments provider and for the consumer.
Answering The Question
Two days post-delivery saga, my package turned up at my house, exactly where the delivery company said they delivered it – unopened and intact. No explanation, no note, no call from the delivery company, no update to the claims process online. I probably won’t ever know what really happened.
Thankfully, my merchandise and I will now live happily ever after.
But based on my recent experience, it’s easy for me to answer the “whose customer is it?” question. No one’s, really, since no one was willing to step in and help resolve my problem.
The “whose customer is it” question is now central to many of the platform dynamics at play today and the experiences that consumers and merchants have with those platforms. Delivery aggregators, for example, have the customer relationship — but when the order arrives mangled or cold, consumers blame the restaurant that prepared the order and not the aggregator who took the order and delivered it. It’s one of the reasons why innovators are helping restaurant operators enable their own online delivery capabilities, and why restaurant operators are eager to sign on and control, manage and take responsibility for order to eat experience.
It’s also one of the reasons why retailers are investing heavily in curbside pickup, even though their customers would prefer delivery to their homes. Ordering and fulfilling within their own ecosystem gives retailers more control of the end-to-end experience (not to mention better economics), eliminating one source of uncertainty and potential consumer disappointment.
Back in the good old days of a year ago, it was fun to speculate how much of a gamechanger it might be for retail and commerce if Google bought a logistics and delivery provider like UPS or Fed Ex to integrate delivery into their shopping, payments and commerce experience.
With all of the wrangling over Big Tech now, we can probably kiss that idea goodbye.
But it was Amazon’s decision to invest in logistics – to own that first and last mile, rather than to forever outsource it to third parties – that has helped mitigate their risk of a degraded customer experience. Owning this end-to-end experience also helped to simplify and clarify who the consumer needs to contact if things go haywire. For consumers ordering from Amazon, the customer relationship is clear: it is Amazon they order from, Amazon they pay and Amazon who owns the last mile. It is Amazon they contact if problems arise. Amazon and their consumers know the answer to the question “whose customer am I?”
For consumers ordering from Amazon, the customer relationship is clear: It is Amazon the consumer orders from, it is Amazon they pay and it is Amazon they contact if problems arise. It’s a big part of the reason consumers trust and use them: Amazon knows the answer to the question “whose customer am I?”
The “whose customer am I” and “who’s going to take care of me?” questions are particularly relevant as Congress circles the wagons on Big Tech and threatens, among other things, to force them to divest businesses or make it harder for them to obtain new ones.
Integrating different businesses can provide predictability to consumers – not to mention give them a single point of contact to resolve any problems when they inevitably arise.
In the meantime, as innovators continue to use technology to create entirely new ecosystems and the dust settles on how regulators will respond, hopefully what won’t get lost is making sure that the customer knows, without question, whose customer they are.