This is a guest blog post by Riskified, a Demandware Certified LINK technology partner. 

It is estimated that one-third of online shoppers in China, one of the world’s largest economies, made an ecommerce purchase from a foreign website last year. That’s great news for non-China merchants, but this huge market is only available to merchants willing to sell into it. Data from Demandware partner Riskified shows that many legitimate Chinese orders placed with US luxury fashion retailers result in false positive declines. Fear of fraud is being allowed to color their perception of the Chinese luxury fashion market, which means that merchants are leaving a lot of money on the table.

The data comes from luxury fashion retailers that send Riskified only those orders that their own internal fraud review teams have already flagged as fraud. Riskified then re-evaluates these declined orders with its own blend of machine learning and elastic linking technologies.

The results blow up the commonly held belief that China is a market racked by fraud. Riskified is able to safely approve 81.71% of online luxury fashion orders placed with Chinese credit cards, that US retailers had planned to decline. That suggests that 4 out of 5 legitimate online Chinese luxury fashion orders are currently being rejected.

That conclusion is further reinforced by data about fraud rates from fashion retailers who outsource their fraud prevention to Riskified. For these companies, over 95% of online fashion purchases made with Chinese credit cards for shipment outside of China are approved. When looking at online luxury fashion purchases placed with Chinese credit cards for shipment within the United States, that approval rate rises to nearly 99%.

Using data science to evaluate fraud is much more effective than relying on old methods. In China, this means letting go of outdated ideas about “risky” markets in favor of new realities founded on sound statistical analysis.

For example, Riskified’s ability to approve 99% of luxury fashion orders paid for with Chinese credit cards and shipped to the United States makes sense when you consider that many members of the growing Chinese consumer class either work or attend schools in the US. The high approval rate reflects these well-heeled individuals making purchases with credit cards issued from Chinese banks, and then shipping them to their temporary residence.

Having the data and expertise to recognize these behavioral shifts, and connect the dots on buying patterns, is an essential component in supporting online retailers in their fight against fraud.

A recently published report by Riskified covers fraud rates on peak shopping days, examples of the ways fashion trends impact fraudster behavior, and insights into the differences in fraud patterns prevalent in luxury fashion versus mainstream fashion purchases.

Or, for a visual breakdown of fraud in online fashion, check out this infographic