The holiday season is a golden stretch for grocers. From last-minute must-haves to full pantries, the rush is on. Reports show that groceries are among the top spending priorities for consumers this holiday season. With a noticeable shift toward essential goods over discretionary items, shoppers are focusing their budgets on necessities. This trend suggests that grocery retailers are poised to experience a significant surge in demand, attracting a wave of new customers during this period. 

In a recent survey of 6,000 participants from the U.S. and U.K., over 53% of shoppers indicated plans to buy groceries online this holiday season. Additionally, 40% of respondents reported that they intend to rely on third-party grocery delivery services.

This pattern mirrors last year’s performance, where grocery led the way in ecommerce growth. Online grocery shopping accounted for nearly $21.5 billion — approximately 10% of total consumer spending — marking a 12.9% year-over-year increase. The data underscores the growing consumer preference for the convenience of online grocery shopping, a trend that shows no signs of slowing down.

But with great opportunity comes great complexity. When new accounts start popping up with the surge of demand during holidays, how do businesses distinguish between customers who are here for the holidays and those seeking to exploit the system? This is particularly challenging for grocers, many of whom are still newcomers to the world of ecommerce.

Holiday demand meets fraud risk

Ecommerce fraud thrives in the chaos of the holiday season. The same surge of new customers that promises record revenue also opens the door to significant risks. Fraudsters exploit the noise, blending in with legitimate buyers while businesses focus on speed and volume to approve as many orders as possible.

For grocers available for online ordering, the challenge is clear: deliver goods quickly and delight customers, all while protecting the business from fraudsters.

This influx of orders during the holiday season is a double-edged sword. While it brings new customers and new revenue opportunities, it also creates a blind spot for businesses. Without historical order data, it becomes challenging to verify new shoppers and distinguish genuine customers from bad actors. 

The high cost of false declines

A lack of visibility forces businesses to make decisions with limited information, often leading them to err on the side of caution. But heightened caution comes at a cost. False declines don’t just block fraud; they also turn away legitimate buyers eager to make purchases, eroding trust and harming a brand’s reputation. These missed opportunities are particularly damaging when high-lifetime-value (LTV) customers are denied at checkout.

Moreover, when a new customer places an order, businesses often lack sufficient information about the customer to make an informed decision. Fraudsters intentionally exploit this lack of history by mimicking legitimate buying behavior, forcing businesses into a dilemma of distinguishing between a good, first-time buyer and a sophisticated scammer.

Balancing opportunity and risk

The challenge is amplified with high-value orders. According to Riskified’s analysis of orders in the grocery industry, while a high-value cart over $200 contributes to more than half of the potential revenue for grocers, this segment is also 300% riskier than the rest of the shopping population and represents 80% of potential fraud dollar losses. Similarly, the gift cards segment is riskier than the rest of the population, but it is also expected to be a top-planned purchase for U.S. consumers this holiday season. Hence, it is essential for businesses to identify these frauds and protect their margins, while also approving and retaining high-spending, high-LTV new customers for long-term revenue.

Leveraging data for order approvals

To confidently approve legitimate shoppers while safeguarding revenue and customer loyalty, grocers need data-driven insights and the ability to leverage a network of intelligence. With this, grocery merchants can access valuable positive or negative signals that help create a more complete picture of every online shopper. This provides a broader perspective, enabling businesses to move beyond isolated transactions and make informed decisions that protect both their bottom line and their customer relationships.

Join us at your convenience for a discussion with Riskified experts as we explore the unique challenges facing the grocery delivery industry. In this recorded discussion, Riskified experts cover tackling sophisticated fraud schemes, delivering exceptional customer experiences to genuine shoppers, and implementing strategies that prevent fraud without compromising trust.

Listen to the discussion to gain actionable insights and learn how to strike the perfect balance between security and customer satisfaction in today’s fast-evolving ecommerce landscape.