Latest / Talk Commerce / Stop Over Declining Good Orders, Chargebacks and Fraud Prevention with Ellie Ronning of Signifyd
Transcript
- Brent Peterson (00:04) Right. Yeah, there we go. Brent Peterson (00:11) Alright, welcome to this episode of Shoptalk Talk Commerce. And I thought about maybe we should call it Talk Shop. Yeah. why don't we start off with tell us your your name, your position and the company. Ellie Ronning (00:20) I know, that's a lot of talks. Ellie Ronning (00:26) Yes, so I'm Ellie Ronning. I am with Signifyd. I'm actually part of the enterprise strategy team. that's a fancy way of saying I get to partner and work with, strategize and advise the some of the largest direct-to-consumer retailers and merchants in the country. So it's a fascinating role. I actually I'm a former merchant myself, so I come from the merchant side fifteen plus years in New York working on the business side and so now that I'm on the vendor side I get to you know consult with with folks that I've either worked with or crossed paths with in the past and it's been a blast. Brent Peterson (00:58) so I we're a former partner of Signifyd so I'm familiar with it. had an agency that did Magento which was an old fashioned e-commerce tool. but give us the third the elevator pitch on what Signifyd is and what you do. Ellie Ronning (01:07) Around yeah, it's like they're still chugging. Ellie Ronning (01:13) Yeah, so Signifyd is a commerce protection platform. we're effectively a decisioning engine, a decisioning layer that spans the customer journey. So when you think about account login, account modification, at checkout and return, you think about that entire 360 customer journey. Signifyd sort of sits at an intelligence layer sort of in the background helping merchants make decisions on whether or not to approve, decline, allow, not allow these consumers to take an action, right, for an event. And so again, we're we're really a decision engine. With that comes what we call a liability shift. So we actually indemnify our retailers and we say, hey, we're gonna give you a decision on whether or not to approve or decline this transaction and we'll we'll back it for you. So it's a really unique business model. Again, the whole goal for us is to help merchants optimize their revenue, right? Get that incremental kind of top line revenue. While also shoring up operational costs and really protecting the customer lifetime value, which is obviously very critical for merchants. Brent Peterson (02:15) one of the things that's been that is concerning in your space is the the false positives. How how do you deal with false positives when it when it comes to a merchant who doesn't want to lose a save? Ellie Ronning (02:26) Yeah, absolutely. false positives, you know, we see that a lot. W one kind of use case just to get sort of crisp on that is oftentimes merchants will come to us and say, you know, we don't have a chargeback problem, right? We our business is healthy, our e commerce business is healthy, we don't have a chargeback problem. We've got, you know, very little chargeback, so we're doing well. What ultimately ends up happening is that when we really pull back the covers and we look at the numbers, they're over declining. probably good customers, in a a trade-off to keep those chargebacks low. And ever I mean, I think your audience probably knows what chargebacks are, right? That comes back to the merchant. It's you know you call in and say, I didn't, you know, do this transaction, I didn't purchase this thing. that hit goes back to the merchant and it's a very, you know, big operational drain of course on their bottom line. But we really are you know there to say let's open up that funnel, allow more good orders through, and we do that by harnessing the power of our what we call our commerce network, and that is really all of the merchants that we work with, right? All that rich transactional data. we allow them to basically open up that funnel wider. and actually accept more good orders because really what they're doing is sort of trading, right? They're saying we're not gonna let all these orders in, we're gonna decline more because we don't want the chargeback. what's really sitting on the top there is that revenue piece that I was talking about, right? They're leaving a lot of money on the table by over declining. and these are likely good customers, right? These are decent shoppers, they're probably not fraudsters, they're probably not, you know, abusers. and so let those good orders through and really drive up that approval rate, right? That approval and authorization rate. So Brent Peterson (04:09) So e f an example for the viewers, if I'm a bad actor and I go to Ellie's cupcakes in downtown Saint Paul and I buy something, but then somebody's also in San Diego buying something with the same profile, you can identify them if they're on the same network, right? Ellie Ronning (04:25) Yeah, so yep, and one qualification is so we really play in the card not present space, so that's again sort of a fancy way to just say, you know, e-commerce, what you know, websites and and D2C retailers. but yes, one one thing that's I think very unique about Signifyd is that we can truly see around corners for retailers, meaning our network is so broad and the attributes that we're able to find across, you know, the entire network, like again through that transactional data. Means that if a customer is new to your website, right, you've never seen them before, they've never transacted, you don't know anything about that consumer. You know zero, right? when you work with a Signifyd, we've probably seen some attribute of that customer, whether it's your email address or your phone number, elsewhere in our network because you're shopping other merchants that we work with, right? So we're able to say, yep, you're a trusted consumer, let this person through. versus a merchant rolling the dice and saying, I think I think they're trusted. If we let them through and it comes back as a chargeback, that's on us, right? So we're really again sort of helping merchants make a more informed decision on that consumer by harnessing again like all the attributes, all the data that we know about these consumers that merchants just really don't have, right? They they just don't know these new customers. So Brent Peterson (05:46) things have changed a lot in the last three, four years with AI. huh keeping up with AI, but still I mean I think a lot of your items are if-thens, but there's a lot of gray in there. How are you utilizing AI to help you? Ellie Ronning (06:02) Yeah, so we are a machine learning company. We've I joke with people, we've been a machine learning company since before it was cool. you know, we've been around for about fifteen years. And like I was saying sort of at the top of our conversation, we're effectively a a decisioning engine, right? And what that really means is we aren't inferring and s you know, guessing and saying probability of, you know, this happening is X. We are truly saying we're doing, you know, the obviously the analysis and we've got, you know, very robust data science and risk intelligence teams that are you know constantly refining our models that are making these decisions. But what comes with that decision is us putting our own kind of money on the line, right? Again, that that liability shift. That's really what sh changes it from being an inference to an actual decision where we've got skin in the game and we're saying, you know what, we take it off your plate, we say let this consumer through. so that's really how we're harnessing AI in general and I I think, you know without getting into too many details, you know, we've s again all sort of always lived in that space. So it's not it's not as if it's a new technology for us. Now where we're really going is you know obviously agentic commerce is a huge topic for all of our merchants. one of the things we're really leading with in the market is not just talking about it in the kind of abstract but really starting to define what it means. Like what does an agentic transaction mean? how is that actually changing the way our models work, right? Because a a transaction that is, you know, executed by an agent with a real person behind it is gonna be looks different, right, than you as a consumer being on the website, you know, doing the transaction yourself. And so we're taking that into account and we're really starting to look at the definitions of you know these agentic transactions and making sure that our models know when it's an agent versus when it's a human, right? Cause we can still make a decision on that, right? Yeah. Brent Peterson (08:01) Yeah and you you've kind of you you've led me to the next topic would be agentic, which has been such a buzzword. We haven't seen a we've maybe seen it in the B2B space, but we haven't seen a lot of retail deployments of agentic where you're going out and shopping on somebody else's Ellie Ronning (08:28) Like autonomous shopping. Brent Peterson (08:29) Autonomous shopping, which I think is gonna be a thing, especially I think in the subscription space especially. Absolutely. Where you don't have to be subscribed to one particular brand. You could you could like shop around then. Mm-hmm. how i i are you are you kind of now kinda leaning into with everybody else and waiting for it to happen? Or are you kind of trying to stay Ellie Ronning (08:49) We're definitely leaning into it and I think that's really where it's important for for merchants to think about the the vendors and the partners that they work with for future proofing and longevity, right? So you know, not to your point it it's a quite a buzzword right now, like agentic commerce is everyone's talking about it. I do think there's a bit of hype around just how much that adoption curve has you know, it's we're not fully there yet. I think the maturity curve is starting. The adoption curve, right? The the trust with an autonomous purchase is is still I think being discovered by people. Where I've seen in in my conversations with merchants, I think the first place they're really going in terms of getting their heads around what agentic commerce is is actually in the search and discovery piece, right? So the up upstream, right? So you and I are having highly contextual conversations with our agents, right? Find me these shoes for a marathon in this city during this month and it's gotta be, you know, and I have a whatever thing with my phone, right? So these highly, highly contextual conversations are obviously so different than like the old SEO days, right? So it's not enough really for merchants to simply just put their catalog, you know, out there. They've gotta start to refine their item data, the attributes, like the the brand sentiment, the brand voice, right? So that these large language models and these agents can start to pick those up. because it's a it's a different search experience. So that's that's first, where I I've definitely seen merchants leaning in and we certainly are too as well. the second piece is the transactional piece, which to your point, like it's not fully adopted yet. I know I, you know, full disclosure, I haven't made a transaction, an agentic transaction yet. you know, I'll probably start dabbling, but I certainly am not there yet either. I think what I sort of predict is gonna happen is the categories, you know, within which merchants are selling will probably naturally start to bifurcate, like to your point, a a subscription model business may have a much higher adoption curve than maybe a traditional apparel soft lines, right? Because that's more tactile, the touch and feel, there's a lot of emotional sort of element of shopping versus stuff that's utility, right? Like I do sort of feel like that's gonna naturally start to those paths are gonna part. And I think the higher adoption may come with these sort of utility products, right? and that'll be interesting to track, right? But now we're sort of at the point where it's like Ellie Ronning (11:13) Okay, you had one an agentic transaction last year and you have three, so my gosh, it's two hundred percent growth. It's like we've gotta you know, I think temper expectations a bit. But I I do think merchants are already thinking about it. I mean I've had even this week at Shoptalk had conversations with folks. Yeah. Brent Peterson (11:28) Yeah. First I think that you're looking at my search history because I was literally just looking at what are the clichest shoes. Ellie Ronning (11:35) I know I just had the like I just had the ESP. Brent Peterson (11:39) Yeah, and I'm switching from Hoka to going to Adidas by the way. Full disclosure Ellie Ronning (11:44) I was like that's like news right there, Adidas if you're listening. Brent Peterson (11:47) so b just kinda going down that whole content space, we've been asking this question about AI slop. Yeah. What do you think about AI slop and what's your opinion? Ellie Ronning (11:58) Just talking with an old colleague of mine actually on this. and s she works for a footwear company in New York and she's on sort of the brand marketing side, so she leads brand marketing there. and we literally just had this conversation where she's like, We've gotta be r as brands, you've gotta be really careful about towing the line between, you know, what you think your consumers know and what they'll sort of like the authenticity piece of it. And so they did. And know, they had some talent that they were working with, like s it was someone I think somewhat famous, and they did a campaign and it was you know, a real person, but then it was obviously augmented by AI. And the consumers kind of back like they they knew, they called it out right away. And she was like, It was such a learning for us because it felt like we were putting AI slop out into the world. She's like, But we were merely testing, right? She's like, But we very quickly clawed it back. And so she's like, We don't regret doing any of that. But she's like, but we it was a huge learning to for us to be very, very careful about swinging the pendulum too far because consumers again, like we we're all sort of discovering this together, right? And so maybe in five years or three years or even two years, it'll be a different story where that level of trust will be different. But she's like, right now, consumers are very highly aware that like what you're s you know, putting out in the world is like doesn't look doesn't look right. That looks like AI. And they're gonna call brands out on it. So it's very interesting. Yeah. Brent Peterson (13:22) latest thing I've seen is the AI in between. and it I've been called on because I use Claude to do research. Yep. And they're like I c you know, it's a well written article, but I can see that you've kind of sunk into some middle. w what what's your hot take? Ellie Ronning (13:35) Exactly. Ellie Ronning (13:40) I mean I think yeah, hot takes just in general I mean we can stick with agentic 'cause I I think that's sort of the most top of mind topic. I think back to sort of the where merchants are really getting involved and sort of again preparing. And I I think holiday peak will be a very good proving ground for a lot of this. But I think, yeah, that highly contextual search and discovery piece is mostly I think where they're they're trying to figure that piece out first. Because I think what many merchants have said is like the transactional piece will sort of happen, meaning like there's a lot of platforms already w ready and waiting for us to engage with them, us meaning like the merchants, right? Like who you gonna pick, right, to power your agentic transactions. So I think they're a little less worried about 'cause you know, it's it's a payment and it's tr transaction, it it'll happen and you know the mechanisms are sort of already in place with the big players. It's more of I think the again that search and discovery piece and making sure that your brand is being seen and picked up in the way that you want it to in the brand voice. there's a bit of disintermediation happening, right? And figuring that piece out of the right. So the the data itself about the consumer is sort of there's a little bit of a a gate now between a merchant and like, you know, the platform, whether I'm on Gemini or ChatGPT or whatever. And so they're sort of figuring that piece out too, right? Like how much of this information is mine versus another third party. Now I gotta share, right? so I I think yeah that from an operational perspective that's been my big hot take is like I I think people are r merchants are really in that sort of upstream search and discovery world, cleaning up their item data. I think the other forcing function that's sort of happening that I think is swirling around in the industry too is it's naturally gonna lead into merchants really thinking about a true unified commerce strategy, which w has also been a a little bit of a buzzword. I think like the last couple of years people have been dipping their toe. Not a lot of merchants have Ellie Ronning (15:38) solve that equation, right? It's very similar to omnichannel fulfillment was you know, like people still can't get it right. and unified commerce, while it's super beneficial because everything would be all systems talking to each other, real time, same data set, right? You're not siloing all your data. I do think moving into this agentic space will sort of be a forcing function for merchants to actually roll out a unified commerce strategy, right? You really can't have siloed data in an agentic world. Brent Peterson (16:07) Yeah, that's perfect. Ellie this has been a great conversation. thank you so much and I I look forward to coffee at Ellie Ronning (16:13) I know in Minneapolis. I know. It's such a small world. Yeah, this was a blast. Thank you. Thank you for having me.