The best technological practices to help e-commerce companies reduce the cost of user acquisition and data leaks

Reducing the User Acquisition Cost per Client (UAC) by 20% could save fintechs and marketplaces over $120K per month in savings with the correct data security software.

E-commerce has grown considerably in the past years, most likely due to the global pandemic and social distancing requirements. During 2020, Latin America saw the second largest increase in its online market share globally (55%), which has proved extremely beneficial to companies with digital commerce platforms. 

However, these companies have also had to face a considerable hurdle in their business operations: user and client onboarding and the data security and verification challenges this creates. 

Many companies struggle to implement a suitable onboarding tool or that also provides data storage security, either because it is expensive to invest in a digital infrastructure of that calibre, or because they simply haven’t found a provider that meets their needs. 

Truora, a company that provides identity verification and digital onboarding software , estimates that “reducing the UAC cost by 20% would be equivalent to more than $12K per month in savings for most Latin American marketplaces and fintechs.” 

These estimates further confirm the urgent need for Latin America companies to have access to and implement adequate data security tools: technology that can allow them to create a secure digital environment for their users which will protect both customers and merchants from fraud and also protect the business model of e-commerce platforms. 

Data risks of the client onboarding processes

In Latin America, fintech companies and marketplaces lose more than 30% of their new users during the registration process on their platforms. Without a doubt, entrepreneurs are eager to reverse these statistics.

Frequently, it is the complex registration process, a lack of security, and the need to jump through multiple hoops that put customers off joining a platform:

“Our clients tell us that the main reason a customer abandons the registration process is due to the difficult and cumbersome nature of the process which requires printed documents or incur a delay of several business days before registration approval. Similarly, the need to have a strong internet connection and access to different forms of online data remains a major barrier for many merchants and customers,” says Maite Muñiz, co-founder of Truora. 

One solution to these problems are the new digital tools which help to simplify the registration process and decrease the costs of new user onboarding for companies by creating a portal with the correct data security and identity checking resources.

Smart onboarding

Solutions like TruConnect allow fintechs, proptechs, and e-commerce marketplaces to sign new clients via WhatsApp.  

Through a WhatsApp conversation, new users who want to open an account with a  marketplace, either as a customer or a seller, can now complete the full registration, validation, and onboarding process within minutes and without so many obstacles. 

This simplified onboarding process helps catch those users who might otherwise slip through the net during traditional registration processes. 

Digital Compliance

Another digital security tool that is helping to reduce the CAC for companies is digital compliance and identity checks, which reduce the security risks caused by potential hackers on e-commerce sites. The difficulty faced by companies here is finding a tool that performs these functions in the simplest way for businesses. 

Solutions that offer automated background check during the onboarding process help mitigate these risks. Companies that handle highly sensitive data, such as banks and fintechs, can take advantage of these new technological solutions that are now appearing in the market. 

These solutions are also built for simple, no-code integration, so that smaller, developing companies who do not have a development team or robust infrastructure can also implement these tools on their platforms. 

E-commerce is proving to be a great business model for both merchants and buyers in the digital age, but data security is a major concern. It is the responsibility of e-commerce companies to take of care of their customers and provide the necessary security and tools to provide protection to not only their users, but also to their own business infrastructure. 

An awareness of data security risks and the correct implementation of suitable tools and software is a smart investment that can save major costs in the future. Cost of Acquisition of Clients and Users can provide valuable insight into how much a company invests in each new client, but it also provides an important insight into business operations. 

(translated by LatamList)

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