Older generations bemoan younger generations and vice-versa. When it comes to growing chargeback risk, merchants today may have some legitimate concerns when it comes to the shopping habits of younger consumers.
At the same time, with Gen Z, or Zoomers as they’re also known, entering the workforce and earning wages, they’re becoming an important shopping demographic, and with the right tactics, they could be a source of success for many merchants. We’ll cover important details of Gen Z shopping habits and also key considerations for engaging with Zoomer shoppers and reducing chargebacks.
The Intricacies of Gen Z Shopping
First, Gen Z shoppers are rather discerning and have high expectations for products. Many Gen Z consumers are dealing with high rent prices, student loans, inflation, and other factors that make discretionary income hard to come by. As a result, many Zoomers spend their funds carefully.
According to Tamara Charm at McKinsey & Company, via the BBC, young shoppers are adept at sourcing information about products from various sources, often bouncing between digital devices, like smartphones, and brick-and-mortar stores to conduct rather extensive research before making a purchase.
Many Gen Z shoppers want products that are closely aligned with their needs and offer good value. If product pages don’t accurately portray a product, including limitations, it could fuel discontent. Unfortunately, high expectations could increase the risk of returns and chargebacks. While older shoppers may be more willing to keep a product they like – but don’t love, young shoppers often need to find true love in every purchase.
At the same time, while Gen Z shoppers are discerning, many still engage in impulse buying. Research has found that more than 40% of Gen Z shoppers are impulse buyers to some extent. Coupled with high standards and financial pressure, it’s possible that these impulse purchases could spur returns, buyer’s remorse, and yes, chargebacks.
Zoomers and Online “Shoplifting” Via Chargebacks
Sadly, one survey found that Gen Z shoppers are more likely than older generations to engage in “digital shoplifting.” Indeed, 4 in 10 Zoomers admitted to having engaged in digital shoplifting, and interestingly enough, among those earning six figures, the number actually tops 50%! Just 3 percent of Boomers earning $100,000 or more per year admitted to digital shoplifting.
So how do you shoplift online? The method is often by abusing the chargeback process. A consumer can order a good online, then claim that it was never delivered. From there, the cardholder can contact their bank and file a chargeback.
The merchant will get hit with chargeback fees and may also lose revenue from the transaction. The digital shoplifter, meanwhile, doesn’t have to sweat fees, and if their chargeback is approved, they’ll get their money back while also keeping the goods they claimed were never delivered.
Some Gen Z Considerations for Merchants
Should merchants simply try to avoid Gen Z shoppers? Already, Gen Z shoppers command over $450 billion globally in spending power, making them an attractive demographic. Skipping them altogether could result in lost revenues right now, and as Zoomers develop relationships with other merchants, it could become more difficult to tap into their spending power later on.
In the future, as Zoomers continue to build up wealth, it’s possible their shopping standards and habits will moderate a bit. Even if not, they already represent a substantial source of potential revenue for businesses, and their purchasing power is likely to grow in the years ahead.
The good news is that there are tactics and tools merchants can use to reduce the risk of fraud and chargebacks. For example, by monitoring transaction data, you can identify cardholders who frequently file chargebacks. In such cases, you may want to cut ties with them, especially if you suspect fraud is at play. Using signed shipping receipts can also make it harder for shoppers to claim the goods were never delivered.
Using chargeback alerts, offering easy frictionless returns, and many other steps could also help merchants ward off chargebacks from Zoomers and every generation for that matter. If you need help with chargebacks, get in touch with our team of chargeback experts today.