As e-commerce companies aim to capitalize on the online spending boom connected to shelter-in-place and keep the party going as physical retailers open back up, more are turning their attention to how they can juice the functionality of their online storefronts and improve experiences for shoppers. Enter Nacelle, a New York startup in the burgeoning “headless” e-commerce space.
The startup bills itself as a JAMstack for e-commerce, offering a developer platform that delivers greater performance and scalability to online storefronts. Nacelle has raised about $4.8 million to date in fundings led by Index Ventures and Accomplice. Some of the company’s other angel investors include Shopify’s Jamie Sutton, Klaviyo CEO Andrew Bialecki and Attentive CEO Brian Long.
Nacelle builds an easier path for e-commerce brands to embrace a headless structure. Headless web apps essentially mean a site’s frontend is decoupled from the backend infrastructure, so it’s leaning fully on dedicated frameworks for each to deliver content to users. There are some notable benefits for sites going headless, including greater performance, better scalability, fewer hosting costs and a more streamlined developer experience. For e-commerce sites, there are also some notable complexities due to how storefronts operate and how headless CMSes need to accommodate dynamic inventories and user shopping carts.
“We asked how do you pair a very dynamic requirement with the generally static system that JAMstack offers, and that’s where Nacelle comes in,” CEO Brian Anderson tells TechCrunch.
Anderson previously operated a technical agency for Shopify Plus customers building custom storefronts, a venture that has led to much of the company’s early customers. Nacelle also recently hired Kelsey Burnes as the startup’s first VP of Marketing; she joins from e-commerce plugin platform Nosto.
Though Anderson described a flurry of benefits regarding Nacelle’s platform, many are the result of reduced latency that he say converts more users and pushes them to spend more. The startup has a particular focus on mobile storefronts, with Anderson noting that most desktop storefronts dramatically outperform mobile counterparts and that the speedier load times Nacelle enables on mobile can do a lot to overcome this.
As more brands embrace headless structures, Nacelle is aiming to manage the experience. Nacelle is optimized for Shopify users to get up-and-running the most quickly. Users can also easily integrate the system with popular CMSs like Contentful and Sanity. All in all, Nacelle sports integrations for more than 30 services including payments platforms, SMS marketing platforms, analytics platforms and more, the goal being to minimize the need for users to migrate data or learn new workflows.
The company is unsurprisingly going after direct-to-consumer brands pretty heavily. Some of Nacelle’s early customers include D2C bedding startup Boll & Branch, cozy things marketplace Barefoot Dreams and fashion brand Something Navy. Most of Nacelle’s rollouts launch later this summer. Last month, Nacelle went live with mens toiletries startup Ballsy, and says that the storefront has already seen conversions increase 28 percent.
Nacelle is far from the only young entrant in this space. Just last month, Commerce Layer announced that it had raised $6 million in funding from Benchmark.
Amazon will pay $135,000 to settle alleged US sanction violations
In a statement issued this week, the U.S. Treasury Department notes that Amazon has agreed to pay $134,523 to settle potential liability over alleged sanctions violations. The charges specifically pertain to goods and services sent to people located in Crimea, Iran and Syria, which are covered by Office of Foreign Assets Control (OFAC) sanctions, between November 2011 and October 2018.
The Treasury Department also states that the retail giant failed to report “several hundred” transactions in a timely manner. The department adds:
Amazon also accepted and processed orders on its websites for persons located in or employed by the foreign missions of Cuba, Iran, North Korea, Sudan, and Syria. Additionally, Amazon accepted and processed orders from persons listed on OFAC’s List of Specially Designated Nationals and Blocked Persons (the “SDN List”) who were blocked pursuant to the Narcotics Trafficking Sanctions Regulations, the Weapons of Mass Destruction Proliferators Sanctions Regulations, the Transnational Criminal Organizations Sanctions Regulations, the Democratic Republic of the Congo Sanctions Regulations, the Venezuela Sanctions Regulations, the Zimbabwe Sanctions Regulations, the Global Terrorism Sanctions Regulations, and the Foreign Narcotics Kingpin Sanctions Regulations.
The settlement is, of course, fairly insubstantial, compared to the massive market cap of the online retail giant. The transactions, were, however, for fairly low-level retail goods and services. In all, the violations only amounted to around double the settlement price of $134,523.
The department doesn’t believe there was anything malicious going on, rather an issue with Amazon’s system, which failed to flag shipments to sanctioned areas. There appear to be a number of reasons this occurred. One example involves the site failing to note when product was shipped to the Iranian embassy in a different country.
Amazon opted not to offer a comment on the story, though the company notably self-disclosed what it believed to be potential violations of the aforementioned laws back in July of 2016. As The Wall Street Journal notes, a number of other tech giants have been hit with similar issues. Last year, Apple agreed to a $467,000 settlement for similar violations.
Digital Fraud Flourishing During Pandemic: Report
By Jack M. Germain
Jul 9, 2020 10:44 AM PT
If you conducted e-commerce transactions since the pandemic struck, you have probably been the target, or even a victim, of online fraud.
Fraud prevention solutions firm Sift yesterday released a report focusing on a 109 percent increase in content abuse and growth of the fraud economy from January through May 2020.
The report, titled “Q2 2020 Digital Trust & Safety Index,” concludes that this increase is likely connected to the global disruption caused by the coronavirus pandemic. The study shows how fraudsters have used content to deceive and exploit consumers on e-commerce sites and within online communities.
Counterfeit content has played a role in e-commerce for as long as digital businesses have existed. Scams, spam, fake reviews, and misinformation have evolved in tandem with online shopping, discussion forums, and social networks, the report acknowledges.
Sift’s analysis of abuse types shows that most of this fraud is financially motivated. Scams make up 46.8 percent of the content abuse that Sift’s technology blocked.
One of the most jarring findings includes the discovery of a fraud ring based in Russia where criminals executed a credit and debit card testing scheme through fake listings on an e-commerce marketplace.
This increase in e-commerce fraud is representative of a concerning upward trend that both e-commerce providers and their customers must navigate, according to Hank Schless, Senior Manager, Security Solutions at Lookout.
“Malicious actors are taking advantage of an increasingly complex risk landscape, and now more than ever it’s important to evaluate and secure every potential risk vector across all channels,” he told the E-Commerce Times.
Pandemic Profitable for Fraudsters
The revelations come from Sift’s global network of 34,000 sites and apps. Researchers also surveyed over 1,000 consumers in June 2020. The report also details how content abuse is a critical part of the fraud supply chain, the interconnected ecosystem of fraud.
Findings show from January to May 2020 digital e-commerce (subscriptions, apps) was hit by fraud at an exceptionally high rate. In the first five months of 2020, fraud — scams, spams, and fake reviews — occurred 123 percent more than in all of 2019.
Coronavirus has affected virtually every business, and cybercrime is no different as it is a business — a big one, according to Brendan O’Connor, CEO and co-founder of AppOmni.
“It is estimated that global cybercrime revenues exceed US$1 trillion annually. In challenging times like these, businesses must adapt,” O’Connor told the E-Commerce Times.
Cybercriminals are capable of adapting quickly, and that is what they have done with coronavirus, he added. With people around the world staying home and maintaining social distance, there has been a huge increase in both remote work and e-commerce.
“It should come as no surprise to see malicious actors investing in attacks that target these trends,” he said.
Since the majority of the population has shifted to working from home, malicious actors have been taking advantage of a massive increase in remote shopping, banking, and work. Their job is to scam unsuspecting victims, O’Connor explained. Looking at e-commerce specifically, fraudsters can take advantage of both mobile and web channels to successfully carry out an attack.
The situation is growing on two fronts. Cloud storage for business and online shopping for consumers.
“As critical business operations and data move to the cloud at record speed, attackers are targeting cloud applications like never before. With consumers everywhere increasing the amount of shopping they do online, attackers have naturally gone after online shoppers with sophisticated fraud campaigns,” noted O’Connor.
These trends are unlikely to slow anytime soon, he observed. He predicts that we will continue to see more attacks targeting cloud applications for businesses and e-commerce sites for consumers.
On mobile, global phishing encounters increased 37 percent during the first quarter of 2020. Many of these were attempts to steal personal data as consumers adjusted to a new normal of shopping exclusively from the web via their mobile devices, added Schless.
“On web platforms, there’s been an increase in activities like Magecart that skim customers’ credit card data from the checkout page of a website by injecting malicious code into the page,” he offered as another form of online fraud separate from the Sift research.
Content Abuse Leads to Fraud Supply Chain
Content abuse is not merely a standalone threat but a type of cybercriminal behavior that acts as a springboard for, and a bridge between, account takeover and payment fraud, contributing to what Sift calls the “Fraud Supply Chain” in its report.
“Fraud doesn’t happen in a vacuum,” said Jason Tan, CEO of Sift. “Our latest report illustrates how cybercriminals use different attack vectors to steal from consumers and businesses, often through more complex ways than merely buying stolen credit cards to make large purchases.”
Merchants must adopt a digital trust and safety strategy to protect across the entire user journey. That will combat the fraud supply chain. In turn, it will also help them protect and grow revenue, Tan explained.
The fraud network involves three action patterns: Payment Fraud, Content Abuse, and Account Takeover.
Content abuse is a means to an end. Fraudsters use it to commit payment fraud.
They create a post, comment, email, or text message to disguise a malicious link or drive consumers to unsecured sites and media. The attack only works when people engage with that content and link by sharing it or by clicking on it themselves, the Sift report detailed.
That produces two calculated results. The first action widens the pool of potential victims. The other action directly impacts the person who clicked.
Cybercriminals make money by selling the data they steal on the Dark Web. The report describes this market as a “fraudster flea market” which is essentially an illicit mirror image of digital e-commerce.
Card-Testing Fraud Ring Uncovered
Sift’s Data Science team identified a key card-testing scheme in early June 2020. It’s one of the more covert ways content abuse fits back into the fraud supply chain. It occurs after login information, gift card details, or payment data has been stolen or bought.
A group of 15 fraudsters in Russia with identical IP addresses (a fraud ring), who Sift named “Bargain Bear,” worked together to test dozens of credit cards and digital wallets by posting fraudulent content listings on an e-commerce marketplace.
Sift’s Data Science team uncovered sinister behavior on an e-commerce marketplace: a fraud ring using fake content listings to execute a classic card-testing scheme.
Using these fake listings, they sold items to each other in order to vet stolen data, “negotiating” the costs of those items down so that the exchanges appeared more legitimate. This allowed Bargain Bear to test payment information in order to make much larger purchases thereafter.
The attempted scam also sought to bolster the fraud ring’s legitimacy on the marketplace by having the “buyer” post positive, yet fake, reviews.
Brand Loyalty Threatened
The Digital Trust & Safety Index reveals the true cost of content fraud as brand abandonment.
Content fraud decimates brand loyalty. Content abuse is typically financially motivated. The content is designed to facilitate scams making up nearly half of the attacks that were blocked.
Slightly more than half (56 percent) of consumers surveyed reported that if they discovered that their personal information had been exposed as a result of a scam on a website, they would stop using the site or service and choose a different provider.
Using the pandemic as cover, content scammers focused on ticketing sites. The ticketing and events space was hit the hardest by attempted content abuse since the start of 2020.
Those sites also experienced record drops in event volume (down 84 percent from April 2019) as large gatherings of any kind became impossible. Research shows that fraudsters have maintained their focus on businesses struggling amid the pandemic.
Caught in the Act
Sift’s research showed that a significant percentage of consumers recognized fake content and its consequences. Sift’s survey showed that 67 percent of those polled believe they come across some type of fraudulent content or false information on a daily, weekly, or monthly basis.
That survey also showed that 94 percent of the responding consumers deem content to be suspicious based on conspicuous factors. These include pie-in-the-sky promises, multiple typos or grammatical errors, outlandish claims, or a lack of identity information from the person posting it.
The Sift Digital Trust & Safety Index gives online merchants visibility into the covert economics that injure businesses. It also provides merchants with industry expertise to help businesses protect their customers without losing money or momentum.
More COVID-19 Fraud Tactics
Sift has tracked how fraud rates and event volumes are changing each week across multiple e-commerce verticals in response to the pandemic since March of 2020. The pandemic is causing acute effects within the economy that fraudsters are monetizing, according to Sift’s research. These ploys directly victimize merchants as well as consumers.
Criminal tactics include using text messages to encourage stockpiling of products and sowing fear about quarantine restrictions. Other tactics include emails sent to consumers to trick them into believing a vaccine exists and is being withheld, proffering fake treatments, and offering refunds to people whose plans were disrupted by travel bans.
The fraud does not end there. Fraudsters manipulate social media posts to pose as medical representatives with access to tests and antiviral medications for a fee.
3 Ways to Scale Ecommerce with Data
Scaling an ecommerce business requires insights into the market, consumers, and products. In this post, I’ll address each aspect and how data can help.
An understanding of selling platforms, consumer trends, and competition is critical.
For platforms, can you expand your products and brand by selling on marketplaces such as Amazon, Walmart, or Etsy? An easy way to test is by searching for products that are similar to yours on those marketplaces to understand the competition and the potential profit margin. Another key data point is the size of the marketplace. Larger sites such as Amazon may provide more traffic but with a smaller profit margin. Also, foreign marketplaces can open new geographic regions.
Consumer trends can identify new products for your existing clients as well as new marketing opportunities. To generate new ideas, consider Google Trends. For example, “home office” is a popular term worldwide. Merchants could offer products related to a home office. Social media posts, product reviews, and competitor’s initiatives can also identify trends.
For new marketing, conduct a small test on promising channels.
Finally, competitive analysis quarterly or even monthly can help you scale and save on marketing costs. Large competitors with huge marketing and store-optimization budgets are sources of inspiration. Marketing channels, creative, calls-to-action, personalization ideas — all have been tested by these competitors. Use those tests for your own purposes. Monitoring competitors’ product changes and discounts can indicate what is selling.
Key competitive metrics to track include marketing strategy, the number of times a company posts on Facebook, the number of emails deployed, a welcome promotion, discounted products, and site traffic. Competitor tools such as SimilarWeb (website stats), Google’s Ads for impression share of your competitors, and SpyFu for organic search rankings and ad spend. There are many such tools, but none are perfect in my experience.
Understanding your target audience’s demographics, psychographics (opinions, values), and preferences is critical in finding new customers and expanding your product line. Obtain demographic and psychographic info from (i) third-party providers such as Experian and Melissa, (ii) marketing channels such as Google Ads or Facebook, (iii) Google Analytics, and (iv) qualitative analyses from social media or surveys. For data on preferences, customer-service interactions and reviews are a gold mine. Larger sites may require automated text mining for this.
Identifying high-value customers can help scale, too. Customer scoring — assigning a value to each buyer — can help. Examples are Recency, Frequency, and Monetary model or, also, lifetime value. Identifying even a few high-value customers can help define a perfect prospect for product testing or for lookalike marketing on Facebook and other platforms.
To expand geographically, consider Google Ads’ Keyword Planner to identify your products’ potential in new locations. This may require using Google Translate for keywords in non-English-speaking regions. Remember, too, that Google is not the primary search engine in all countries. For example, Yandex and Baidu are dominant in Russia and China, respectively.
Acquiring new customers may require a different marketing strategy. Online promotions may perform for consumers under age 45. But traditional channels, such as direct mail, could be better for the 65-plus age group. Prominently displaying a phone number and using larger text could help with older shoppers, too.
Offering more products can help scale a business. Product ideas can be challenging as trends change and competitors surface. However, data can help.
First, look at Google’s auto-suggest options when searching for a category or item. The drop-down menu in Google’s search box contains the most common related phrases.
Another source of product ideas is your own site search. Look for items that visitors have searched for that you don’t carry. Reviews and customer support calls can also generate new-product ideas. Other sources include social media, trade magazines, feedback from suppliers, competitors’ products, and customer surveys.
Once you’ve listed product ideas, the next step is to understand the potential. Google’s Keyword Planner can indicate the competition (and cost) for keywords. Amazon, Walmart, and other marketplaces can show existing availability. Finally, understanding a potential selling price and profit margin is essential.
Finally, test new products before rolling them out across all channels. Test them on your site and on marketplaces. Test unique goods on Etsy. Offering pre-orders can generate capital and provide a test of an item’s viability.
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