In early 2022, a top 10 shoe brand launched an exclusive line of sneakers. Traffic to the site exploded. The sneakers are sold out.
On the surface, everything went as planned. But behind the scenes, something was wrong.
Queue-it performed an after-sales audit on this sneaker drop, finding that up to 97% of the activity was inorganic – clicks, visits and requests from bots designed to grab stock to resell it at markups huge.
Of the 1.7 million visitors who attempted to access the drop, less than 100,000 complied with the rules.
Retail bot attacks like this are becoming more and more common. Bot traffic jumped 106% year-over-year in 2021. Nearly 30% of online retail traffic is now bots. In 2021, bot traffic grew 5.5 times more than human traffic for small and medium businesses. And every day it becomes harder and harder for genuine customers to buy in-demand products directly from online retailers.
You might be wondering what the problem is? As long as the bots are paying for my products, a sale is a sale, right?
This is a question that many companies face. While a one-time sale of a product or a flash sale that sells out quickly is generally considered a success, bots pose major risks to several key e-commerce success factors.
Whether it’s negatively affecting customer loyalty, damaging brand reputation, skewing analytics, and increasing ad spend, when you’re selling to bots, a sale isn’t just a sale.
Let’s see why.
1. Bots break customer trust and loyalty.
Every retailer knows that loyal customers are your most valuable asset. Loyal customers interact with your promotions and campaigns, spend more on your products, and are more likely to recommend your brand to friends.
But few retailers realize how important fairness is to loyalty. Several e-commerce studies have shown that customers’ perception of fairness is one of the strongest predictors of trust and loyalty in e-commerce brands.
Bots repeatedly grabbing products from real customers is unequivocally unfair, and customers know it.
When sites are taken down by bots, it’s not the bots that are blamed, it’s you, the retailer. Bots are invisible, scattered, unknown, so customers blame you. They file a complaint on social mediacalling your sales unfair and your brand indifferent.
All of a sudden, declining sales hurt customer satisfaction, trust, and loyalty. Customers don’t just lose hope of getting their hands on products, they lose hope that you’re standing up for their best interests.
1. Bots make you miss relationships with real customers.
Bots break trust between existing loyal customers, but what about new ones?
Product drops, restocks, and flash sales are prime opportunities for customer acquisition. But when your stock is emptied by bots, new customers are prohibited from participating.
Even if customers are persistent and buy your products from resellers in secondary markets, you are still missing out a lot. You lost:
- The ability to put customers into nurturing flows and create lifetime value
- Economic intelligence and crucial sales data
- The chance to deliver a superior customer experience
Worse still, for major negative margin sales where the goal is customer acquisition, bots are guaranteed to lose you money without reaping the benefits.
And as we saw in the example of the top 10 sneaker brands above, bots drive massive traffic to the site. For unprepared sites, this is a recipe for a crash. And if a customer’s first experience with your brand is a down site, you can be sure they’re unlikely to return.
2. Bots jeopardize business contracts.
In the world of ticketing, many artists require ticketing companies to use strong bot mitigation. If the ticketing company doesn’t do this, they simply won’t get the contract.
The retail world is experiencing similar trends. For example, graphics card producer AMD sent a letter to all of its retailers saying they “strongly recommend” retailers take bot mitigations like CAPTCHAs, purchase limits, and manual order fulfillment.
This tendency for product producers to take a stand against bots is one of the many reasons why retailers like Walmart, Foot Locker and Amazon are implementing bot mitigation strategies – to show producers like Sony, Microsoft and Nike they fight for fairness.
3. Bots increase operational and support costs.
As if damaging loyalty, increasing customer acquisition costs, and threatening business contracts weren’t expensive enough, bots increase operational costs in many other areas.
Research estimates that 75% to 80% of e-commerce operational costs are negatively affected by malicious bots. These include:
- Website infrastructure costs
- Advertising and marketing expenses
- Customer support fees
- Checkout fraud fees
The main attack methods of bots are speed and volume. Their speed can lead to inventory database issues, leading to overselling of products. And their sheer volume not only increases your cloud infrastructure bills, but can also easily overwhelm your site, causing slowdowns or even crashes. We saw it when Walmart released the PlayStation 5 on Black Friday. The company claims to have blocked more than 20 million bot attempts in the first 30 minutes of the sale. Every time the retailer updated stock, there were so many bots that the website of America’s largest retailer crashed several times.
4. Bots create flawed analytics for decision making.
Finally, without bot detection and mitigation, bots can severely distort important business intelligence. The following are just three of the many types of bots and how they mess with your data.
Scraping bots – which scour the web for inventory and deals – can give you the wrong idea of your site traffic. As GameStop’s former director of international e-commerce told the BBC“On time, more than 60% of our traffic (out of hundreds of millions of visitors per day) was made up of bots or scrapers.”
Account creation bots – which generate accounts in bulk to execute multiple purchases at once – give the wrong impression of your customer base. Additionally, where customer management and email marketing systems charge based on account volumes, these bots drive up costs.
Inventory denial bots keep items in their shopping carts and list them on secondary markets, only buying the product after making a sale. These bots will only buy items if they are sure they can resell them, so they will often clear unwanted inventory and wreak havoc on your cart abandonment metrics.
Bots create data that you cannot trust. And if you can’t trust your data, you can’t trust your decisions.
Fighting bots is a fight for your customers
Brands that have faced bots for years, such as Nike, Sony, Amazon, and Walmart, know the hidden risks of bots and do everything possible to defeat them. But it’s not just the big sneaker and electronics retailers that are facing the bots anymore. Bot traffic is increasing across e-commerce and impacting both small and large retailers.
The pandemic has seen bots expand their reach, targeting high-demand Christmas gifts, vaccine appointments, limited-edition brand collaborations, influencer product drops, healthcare products and beauty products, NFTs, trendy fashion products and much more.
Resellers and bots are not difficult or loyal customers. Whether or not they buy your products depends on one key question: can they sell them for more than you sell them?
While there is no magic bullet that protects against every bot every time, there are tools available that significantly mitigate the impact of bots.
If you want to prevent bots from buying your products, advanced multi-layered bot mitigation tools are powerful measures in your fight against bots and abuse.
As brands from Nike to Amazon to Sony to Foot Locker recognize, fighting bots is a fight for your customers.
Niels Henrik Sodemann was CEO and co-founder of Waiting line since its inception in 2010. Prior to Queue-it, it had a proven track record in growing software companies from a small team to over 100 employees. Before entering the IT and website performance fields, Sodemann was a professional yachtsman, holding multiple championship titles. In his spare time, he is still a sportsman at heart and enjoys sailing, skiing, ice hockey and running.