Can Multichannel Retailers be Successful without an IdAM Solution?

Identity management is so much more than just controlling and storing usernames and passwords.

There are many compelling roles that customer identity plays in any business, not least of all the omnichannel retailer. The way identity is handled underpins customer expectations for a seamless, inspiring, and personalised experience across all channels; user and business needs for the highest level of security; and the opportunity for retailers to better understand customers and maximise returns. With widespread digital transformation shifting retail businesses to microservices based architecture the need for retailers to adopt Identity Access Management (IdAM or IAM) solutions that capture, manage, and maintain identity securely across an evolving digital ecosystem is greater now than it has ever been.

Consulting Practice Director, Chris Priest, looks at the role that identity has in building and sustaining a successful eCommerce business and asks, is success even achievable without a modern IdAM solution at its heart?

Why is IdAM important?

As retailers undergo digital transformation IdAM stands as a cornerstone for the microservices architecture that defines the composition of any modern eCommerce platform. Microservices provide flexibility and scalability for retailers looking to keep up with the fast pace of technological change, growing user demands, external market forces, shifting organisational priorities, and business opportunities. As such IdAM implementations also must be as flexible, as scalable and, essentially, as secure as possible. The way people shop also dictates this level of flexibility and security. ‘Connect anywhere’ shopping drives the need for smarter access control as customers demand higher levels of personalisation, speed through checkout, and security around their identity and information.

As Gartner says – “Organisations must evolve their identity and access management (IAM) infrastructure to be more secure, resilient, composable and distributed and keep up with ever-changing demands.”

What’s the challenge for the retailer?

There are several problems that arise from not having an appropriate IdAM solution in place. Single Sign On – a basic expectation for your online customers – can be challenging to deliver in a microservices world without an appropriate IdAM solution, and inflexible, single-point identity control makes it far harder for retailers to stay in touch with changes to user profiles. The more data sources the higher the risk to accuracy, secure storage and maintenance which can lead to problematic data security and complex data audits. The most obvious impact is cart abandonment; a significant issue in eCommerce – where customers are not only failing to complete a qualified purchase but could also be losing engagement with your brand.

How IdAM can help

In the first quarter of 2022 the average cart abandonment was over 70% for desktop users, and a colossal 82% on mobile orders. Although a certain degree of this will be down to other factors – delivery costs and lead-times, inadequate returns policies, or limited payment methods, for example – three of the top four reasons cited by Shopify are: being forced to create an account; a complex checkout process; and concerns over security. Research by Auth0 suggests that as many as 83% of carts are abandoned due to a complex login process. That’s not registration, but login. These are existing customers so frustrated by the process of identifying themselves that they are walking out of your store. Customer IdAM underpins the solutions for all these issues.  

Your IdAM will allow your customers to create an identity with you once, and then – by identifying themselves across your brand’s digital locations – access the benefits you have built into your UX of them being ‘known’, with personalised service, content, and offers and, of course, a frictionless journey through checkout. Sign in will be easier for them, details they share with you can be pre-populated (such as address and payment information) and – with the support of a well thought out UX – they will experience an intuitive, guided shopping journey.

Although the most common method for creating an identity is for the customer to register directly with your brand, social sign-in (a form of federated login) is becoming increasingly popular. Federated login allows customers to use a single registration (such as social sign-in) to access multiple sites or brands. Once the customer is authenticated with the original identity provider, they will have access to the other federated domains. ASOS, for example, have deployed federated login and new customers can choose to register using their Apple, Google, Facebook, or Twitter accounts – a simple two-step process that feels familiar and secure for the user, and gives the business access to at least part of the user’s profile on their chosen account. As well as making the customer far less likely to abandon, this comes with the added benefit of access to a profile that a user is far more likely to keep up to date.  

However you chose to bring customers into your IdAM solution you will have a vehicle for holding rich information about each user and, by integrating this into your insights and analytics data, be able to build a 360 degree view across brands, platforms, and channels. In turn, this level of knowledge can help you build a user experience that is tailored, relevant, engaging and – ultimately – profitable.

Security and trust

According to latest reports (as of June 2022) the average cost of a data breach is US$4.24 million, a 10% rise from the previous year. Although customer data is an incredible asset to a retailer, it brings with it risks of fraud, hacks, and misuse. On top of the potentially enormous costs, the brand damage can be long term. A robust and appropriate Customer IdAM will have layered security features to guard against these risks and significantly reduce any retailer’s exposure. A Customer IdAM solution with Multi-Factor Authentication (MFA), for example, is low friction defence against credential stuffing – where hackers steal user credentials from one site and use them to break into other sites. MFA will ensure that stolen details won’t give hackers access to customer accounts, but it needs to be deployed sensitively. Disney+ was victim to this type of attack within a week of its launch in 2019, with millions of users’ being locked out of their accounts and their credentials offered up for sale on the dark web. As Disney found no breach it was clear that credential stuffing had occurred. Disney didn’t have MFA in place. With a thorough understanding of your customer underpinned by your IdAM you can assess where MFA is best triggered to hold the balance between high level security and ensuring a frictionless journey.

Essentially without an IdAM solution in place retailers are running the risk of losing customers through the checkout process, missing out on business opportunities to grow basket value and brand engagement with personalised experiences, and leaving themselves exposed to potential fraud, hacking and the cost associated with data loss. Modernising your Customer IdAM – whether as part of a wider Digital Transformation programme, or as a stand-alone initiative – brings the benefits of flexibility and confidence that you can move quickly to augment, upgrade and swap-out capabilities and services without compromising your customer security or experience.

About the author

Chris Priest is a Consulting Practice Director at Ensono Digital. An experienced architect, leader and technology consultant, Chris leads and shapes technical teams across a wide range of clients, guides client technical strategy, and architects hyper-scale cloud-based software solutions.