January 26, 2025 • 26 mins
Here's What You'll Learn:
❗Delivery fraud is a significant issue for e-commerce businesses.
❗Customer experience is critical; poor service can lead to lost sales.
❗High risk scores can indicate potential fraud but require careful assessment.
❗Signature requirements can help ensure package delivery and reduce theft.
❗Tools like Deliverlytics aim to change consumer behavior regarding fraud.
❗Brand integrity is at risk when companies resort to deep discounts.
❗Chargebacks should not be the primary resolution for disputes.
❗Understanding consumer behavior is essential for preventing fraud.
❗Partnerships with carriers can enhance delivery security.
❗The future of e-commerce will require innovative solutions to combat fraud.
Timestamps:
00:00 Introduction to Deliverlytics and Its Mission
06:10 Customer Experience in E-commerce
12:54 Future of Delivery Fraud Solutions
18:39 Brand Integrity and Pricing Strategies
24:50 Conclusion and Insights on Chargebacks
Bobby MacKinnon:
Linkedin - https://www.linkedin.com/in/bobby-mackinnon/
Deliveritics - https://www.deliverlitics.com/
Brandon Amoroso:
LinkedIn - https://www.linkedin.com/in/brandonamoroso/
Web - https://brandonamoroso.com/
Instagram - https://www.instagram.com/bamoroso11/
X - https://twitter.com/AmorosoBrandon
Scalis.ai - https://scalis.ai/
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
Hey everyone, thanks for tuning in to D2Z, a podcast
about using the Gen Z mindset togrow your business.
I'm Gen Z founder BrandonAmoroso, former founder of
Electric and now the co-founderof Scaless, and today I'm
talking with Bobby McKinnon,who's the co-founder and CEO of
Deliveritics, which is aplatform that helps eliminate
delivery fraud.
Thanks for coming on the showeliminate delivery fraud.
Speaker 2 (00:24):
Thanks for coming on the show, thanks for having me
man Appreciate it, not Gen Zmyself, but fairly close to the
end of the millennial spectrum.
Speaker 1 (00:31):
So not too far off.
So before we dive into thingshere, can you give everybody a
quick background on yourself andhow you got into deliveralitics
?
It's a little bit of a tonguetwister to begin with.
Speaker 2 (00:40):
It is, it is.
It is a bit of a tongue twister.
Um, retrospectively probablyshould have, uh, should have
done something different there.
But um, yeah, so uh, I Istarted my career after college
as a military logistics officerin the army for for five years.
Um had a phenomenal, phenomenalexperience.
Really learned a lot about kindof how to think about problems,
(01:02):
how to think about uniquesolutions to problems.
Um of shaped and formed.
You know the way that.
I approach everything right andgave me a lot of love and
appreciation for the ability ofsmall teams to accomplish a lot
right, which is kind of whatdrove me into the startup
(01:23):
landscape.
After the military, I went tobusiness school at the
University of Virginia.
While I was there, I internedat Nike on their post-purchase
Nikecom's post-purchase consumerexperience and insights team,
so developed like a real goodunderstanding of CX priorities
(01:44):
and kind of everything involvinghow customers interact with
dot-com websites and thechallenges there and fulfillment
and challenges in creatingreally good, meaningful customer
experiences Went from that to asmall blockchain AI startup.
We tore apart the Bitcoinblockchain de-anonymizing a lot
(02:08):
of the transactions, then endedup working for the creditors in
a couple of high-profilebankruptcies surrounding the
collapse of FTX, Decided that Ididn't want to really be a
consultant for the US trustee inthe core system anymore, so I
left to start this company witha group of merchants down in
Atlanta, georgia, that were allstruggling with delivery fraud
(02:31):
issues, and I kind of understooda little bit of it from my time
at Nike and a lot of the skillsand things that we were using
with AI and machine learning onthe on the blockchain side.
We're highly applicable to whatwe needed to do here.
Speaker 1 (02:47):
And so what exactly does you know deliveralytics do
when it comes to you knowdelivery fraud?
Speaker 2 (02:53):
Yeah.
So I think the best way to to Ithink the best way to think
about it is to start with wherewe did, which is, you know, we.
We had a couple of businessesthat were struggling with people
claiming that they hadn'treceived packages.
They would say, hey, I didn'tget this thing, whatever it was
baby stroller case, energydrinks, you name it from $20 all
(03:14):
the way up through $1,200orders, and obviously everybody
knows that porch piracy is areal thing.
It does happen.
Things do occur.
Right, there are things thatget really dinged up and damaged
in shipping.
Um, you know, sometimes youhave box issues where, like, the
packaging is too thin and thenthe item breaks through.
(03:35):
But the frequency with whichsome of these things were
happening, um was was definitelyit was.
It was indicative of more of apattern of fraudulent behavior.
And so we decided like, okay,well, we can take in all of this
data from the merchants, we canoutsource in data from other
(03:56):
merchants, we can write a bunchof predictive models and we can
say like, hey, this is likelyfraud, this is like some of the
indicators, or these are placeswhere you're likely to
experience higher loss rates ofpackages.
Maybe it's due to fraud, maybeit's due to piracy, I don't
really know, but all I do knowis that, like, it's happening at
an outsized frequency, you know, at these three houses versus
(04:17):
the street, right?
So there's something going onthere that you should generally
try to avoid.
The more and more we develop aproduct and work with our
customers and got their feedbackon what was working for them,
we found that most of them werethey were using it proactively,
right?
So, like, if you have a Shopifystore, we have an app there
(04:38):
that you would install.
The risk scores are doneautomatically as orders come
into your store.
It takes a couple of secondsand then we apply tags that you
can then use to action workflowsusing the flow Cancel orders,
add signature requirements ifthere's a high theft risk, so
you can ensure the packageactually gets there, all that
(05:00):
stuff.
But what we found was that mostof our merchants were using it
in their CX applications on thebackend, right.
So we would talk to our usersand they would tell us hey, the
insights up front are reallygood.
Sometimes I use them to executeworkflows, sometimes I don't,
but what I do every time is,whenever I receive a complaint
from a customer or somethinggoes wrong.
(05:21):
The first thing I have myagents do is I have them check
the deliveraletics score and hefelt like and several of our
merchants that go to the samesentiment that it was giving
them a lot of comfort andproviding them, from their
perspective, a sense that thisperson probably did experience a
(05:45):
legitimate issue with the order.
There's nothing that has beenlike identified with that person
or that address in the pastwhere there's like a huge issue.
So I'm just going to go aheadand like refund this thing or
I'm going to go ahead and sendthem another one because I think
it's the right thing to do.
Right and and I think throughthat like we learned that you
it's not, I mean there is like a, there's like a, obviously like
(06:08):
a tangible benefit.
Right, like if you reducelosses, you have less expenses,
you're more Right.
But the bigger piece is youreally want to provide the
highest level of customerservice and experience possible.
Right, especially in-com,because the switching cost for
your consumers is zero.
(06:28):
Right, meaning like if I cometo you and you're selling like
Air Force Ones or something,right, there are 50 other
websites where I can buy AirForce Ones.
So if I were to come to likenikecom, and I would have a
really bad experience buying myAir Force Ones there.
It's not even necessarily thatI'm going to not buy Air Force
Ones anymore, it's they'll justnot buy them from you anymore,
(06:49):
which was the whole point ofsetting up this like big D to C
network for a lot of these bigbrands anyway, right, and for
the smaller brands that maybeyour product isn't sold
everywhere, you know, it's justas easy for somebody, one of
your competitors, to buy aGoogle ad for your product's
name.
So then when I go and I type inwhatever you know, pair of boots
(07:12):
or whatever it is that I'mtrying to order, I'm going to
get 15 different alternativesthat are probably like 80 to 99%
of the same things that I waslooking for with your product.
And if I've had a badexperience with you, I'm just
far, far more likely like fourto five times more likely to go
with an alternative than I am.
(07:32):
To come back to you, right,that's what a lot of the
consumer research shows.
So I think these things have tosit in very good balance, and
so you know we've set out tocreate, you know, products and
services that support havingthat really, really strong
balance and allowing you todeliver the highest quality
customer experience without likegetting taken.
Speaker 1 (07:55):
So what happens when it is a high like risk score and
the order you know isn't theorder doesn't go through?
Does that potentially like?
Are there any like falsepositives?
Like, what if that really is acustomer and they want to get
that order and it is alegitimate order, how does you
(08:15):
know situations like that getaddressed?
Speaker 2 (08:19):
You see.
So there's obviously there's alot of drivers of risk, right.
So it's not necessarily thatever like, a high isn't a high
isn't a high, right.
There's different reasons whywe would say that something has
a high risk associated, right?
So if we said it has a highrisk associated and the model
indicator is that it's becauseof some sort of area risk, that
(08:42):
would be an indicator of theft,I would never tell you or
recommend or set up a workflowfor you to cancel that order.
Right, we're probably going tolook at adding signature
requirements.
You know, if you have thecapability to do a pickup point,
like if you're working with acarrier like UPS or FedEx that
have nationwide pickup points,then we would look to exercise
(09:04):
one of those options as opposedto a cancellation.
Cancellations are reallyreserved for a very, very tiny
percentage.
I mean like less than 0.1% oforders that come through.
So, just generally speaking,there's not a lot of them.
There's not a lot of them.
We also weight our models sothat we will miss, basically,
(09:25):
like we, we, we.
It is incredibly rare to have afalse positive.
It's much more likely thatyou'll have a false negative
with us, which is like,obviously, like, it degrades the
effectiveness right Of the tool.
But I think again like maybeit's because of my background
around CX like to me that's thepreferable trade-off.
In that scenario, the falsepositive is the one that can, to
(09:46):
your point, destroy brandreputation, and to me that's the
thing that I have to safeguardagainst for my customers.
Otherwise I've failed mymission.
Speaker 1 (09:56):
Yeah, do you leverage any partnerships with the
carriers?
Or is there the potential forfor that?
Um, because you mentioned, likesignature required.
You know that would obviouslybe handled out by the, by the
carrier.
It's like that in theory sounds, you know, really really unique
(10:17):
.
Like oh, this is there's a highrisk here, like we're sending
it to you, but it now hassignature required, or something
to that effect.
Yeah, yeah, I mean there are.
Speaker 2 (10:25):
There's actually way more that I want to do with the
carriers, um, and I think Ithink there's a lot of potential
there.
Signature verification is issomething like we built a
proprietary tool.
That is nothing that you'llever interact with as a user of
our software or anyone would.
It's just our way of creatingthat requirement on whatever
(10:47):
software you use to buy thelabel Right.
So let's say you're using likeShip Hero or something, or your
3PL is a Ship Hero Right.
If you install theirapplication, there's like a
there's a part or there's asection where you would put your
, your API key so that we canwrite those instructions to
ShipHero's API for you.
And then when the label ispurchased and created, it
(11:09):
automatically has thatrequirement added to it, which
means you buy it at the maximumdiscount that it's going to be
offered at.
And, critically, that iscommunicated with the consumer.
When they receive the shipmentconfirmation email.
They're going to see that asignature is required on the
tracking page the first day.
So you align the expectationwith the reality day one, as
(11:31):
opposed to if you had UPS orFedEx perform this kind of
service.
It's going to change thecustomer expectation two to
three days into the orderprocess, because UPS and FedEx
will assign this thing many daysafter the label was purchased
and created, which is probablywhy, to be honest with you,
they've never done thisthemselves.
(11:53):
Is it really with the customer?
Speaker 1 (11:57):
experience for one of their you know one of their
vendors and that's, that's it.
Speaker 2 (12:03):
I mean, that's like the soft sensitive spot for them
, right, like if just like me,like if they do something that
degrades this, you know, theoverall customer experience of
their customers and consumer.
They're getting dumped for oneof a million other carriers now,
right, so for them they have tosafeguard against that just as
(12:24):
much as I or Shopify does orreally anyone else.
That's sort of servicingmerchants.
Speaker 1 (12:30):
Where do you think this heads in three to five
years, because it's obviouslybecoming more and more prevalent
?
I've even seen teams of peoplego into neighborhoods and just
clear out every package thatpossibly could be there.
Um, well, you know what do youthink this looks like in in in
three to five years?
Um, from a from a solutionstandpoint.
Speaker 2 (12:54):
I think that I think that there's a two part answer
to this question, right?
So there's.
There's kind of two ways inwhich these issues present
themselves.
One is what we would call likethe third party way, and the
other one is the first party.
So third party way is, you know, I I am pretending to be
somebody else, right?
(13:15):
I'm stealing a credit card.
This is like the fraud thatyou're, like, probably very
familiar with.
You know, those tend to be theschemes for people who are
highly organized, right?
So they're going to try to hackyour UPS account and redirect
the shipment to somewhere wherethey can get it.
Or, you know, they're going tohack a bunch of UPS accounts for
people that are buying AT&Tphones or something, or Apple
(13:38):
devices, and they're just goingto follow the trucks around that
have Apple devices on them.
Maybe they're going to try toexploit the carriers those types
of things.
You'll see companies that arestood up that they'll troll the
dark web, they'll do all sortsof creative reverse engineering
(13:59):
of the playbook, and thenthey'll look for those trends
and patterns.
Then there is the first partyissue, which is I am who I say I
am, but I just happen to know Ican take advantage of you.
There was a Wall Street Journalarticle that came out a couple
of days ago that 41% of Gen Zrespondents said that they
(14:23):
thought it was acceptable toclaim that they had not received
an item when they actually did,and the numbers who said that
they had bracketed or wardrobewere over 50% each amongst the
survey.
And so I think what you'll seein the future is tools like ours
will curb that kind ofbehavioral abuse, because if you
(14:47):
know that you can do that,there's a percentage of the
population that is just going totake advantage of it.
Right, like.
But if you, if you know that itdoesn't really work anymore,
you kind of stop trying, right,so like.
Our role is, you know, shape andchange human behavior Just by
via the presence of us, existingright like.
(15:08):
If you know that, like, thisstore doesn't instantly issue a
refund to you anymore when yougo to return an item, and they
wait until the item has beeninspected in a warehouse again,
if you're doing something firstparty, your name is on it, so
you're much, much less likely tolike, brazenly go out there and
do something, and that in andof itself, I think it's sort of
(15:33):
you sort of spark theself-enforcing change.
Speaker 1 (15:37):
Yeah, I mean I can see consumers where maybe it's a
final sale item or somethingand they don't have the avenues
to do like a normal return.
So instead they'll just say youknow, it never came, or you
know, things like that.
So I wonder how long term thiswill impact.
Uh, you know companies,policies around returns and
(15:58):
exchanges and you know whetherit's even worth selling through
some of these items.
For example, during BlackFriday, cyber Monday and on
these websites that I never evenheard of before, that my
girlfriend shops at and they arefinal selling some stuff at
like $6 for an item.
What is even the point at thatpoint?
(16:23):
If it goes out and then youknow they say they didn't get it
, who the hell cares?
I mean you're not going to goout and try and like figure out
how to recover that, et cetera.
Speaker 2 (16:31):
But you know, maybe stores start to back away from
some of these final sale itemsor stuff like that, because you
know I agree that I think itwill go there and I'm really
hoping that I can help storesavoid it, because one of the
issues that you run into is yourun into brand dilution.
So if you sell a bunch ofproduct for this is why a barber
(16:53):
jacket never goes on sale Likethe classic ones, right, maybe
some of their new stuff does,but like the old stuff that like
prints, you know whoever inEngland is wearing, right, that
thing is what it is you'reeither going to pay for it or
you're not.
Um, I think you know if, if yougive into that temptation, it's
very, very hard to recover thatbrand value.
(17:14):
Once you've taken that step,you've kind of taken that step
permanently, because customersknow that at some point in the
future there is going to be thislike mega sale on this thing
and they just wait to buy that.
That's the entirety of thebehavior around Black Friday.
I did it.
There's a million things that Ineeded.
It was like I need new workoutshoes or whatever, and it's like
, okay, well, I'm not going tobuy them in September, I'm just
(17:36):
going to wait until November andget them for 40% off.
That's really really badcustomer behavior to like opt
yourself into because that meansyou're always selling at your
lowest margin at one of yourhighest costs too, right Cause,
like peak season surcharges likeit's, it's more expensive to
fulfill that thing at a muchlower margin to begin.
(17:57):
Um, great for overall top linerevenues and growth and brand
awareness, but outside of thatit's like it doesn't really do
much for you.
So I think like one of thefeatures that we have, right,
that you know we would tellsomebody is if you have a
customer with a history ofbracketing or committing returns
fraud, the items to them shouldbe final sale, right, like it
(18:19):
doesn't mean you should make allyour items final sale or you
should make items where you'reexperiencing fraudulent it
returns fraud issues final sale.
It just means that because thatcreates a bad experience for
other people, right, for theother 98% of people who don't do
this shit.
Right, and that sucks, andthat's the thing that's going to
drive your consumer basesomewhere else in the long term.
Speaker 1 (18:41):
Well, I mean, that to me is much more appealing, you
know, and especially as you getmore and more storefronts, I
imagine you can see oh, you know, brandon is a serial killer,
did not receive his order guy.
Yeah, you know, you're going tothe sixth store and everything
for me is final sale, but forthe 99 of other customers it's
(19:05):
not final sale, and that'sexactly what we do.
Speaker 2 (19:08):
Right like that.
That is the core functionalityof what we're providing and the
way that we view the world islike because you basically you
you have like I mean everythingin life is trade-offs.
Right like so.
Trade-off one is you live in aworld where everything becomes
more draconian.
Right like so.
World one I like to use thedomino's pizza example from like
(19:28):
the late 80s right so you have30 minutes or it's free.
Right world one is a bunch ofteenagers exploit 30 minutes or
it's free.
They order pieces while theylive 32 minutes away, they get
you to fulfill them and thenthey call in and they get free
pieces every week, and then yourdriver starts speeding up and
getting in more accidents, yourinsurance bill goes through the
roof and you kill the program.
(19:49):
Way two is you know who thesecustomers are that are trying to
effectively like game thesystem and you don't allow them
to game the system and then 30minutes or it's free exists for
the initial reason you createdit, which is you have an edge
case scenario where things gowrong because they always do in
(20:11):
a certain small percentages ofcases and you want to make sure
that you do everything you canto make it right, because you,
as the business who owns thecustomer relationship, have
failed that customerrelationship in the consumer's
eyes.
Right and like.
That's the thing you need toconstantly be obsessing over as
a brand or as a business.
(20:32):
If you want long term, you know, staying power and stability in
the marketplace and profitablegrowth, right.
But if you allow the edge casesto basically nuke the program
for everybody else, then youtend to, you know, bleed the CX
over time.
Speaker 1 (20:53):
Yeah, I mean, you have to not shoot yourself in
the foot tracking down the 1%.
That is a bad actor.
But at the same time, I haveseen some crazy things when it
comes to customers trying theirhand at.
You know, scheming the system inany way, shape or form possible
(21:14):
, and so it is the craziestexample you can think of oh, so
we had a, we had a coffee client, and so it is the credit card
disputes, a lot of credit carddisputes and then a lot of oh I,
(21:47):
you know I didn't get thispackage and they were doing it
over time, so it wasn't like itall hit it once, so like I
forget who was auditing it.
But somebody was going throughit and face, this person got,
like you know, a couple, couplegrand worth of free coffee,
essentially over the course ofyou know, a year and a half or
two years or something, becauseyou know the systems are not
(22:07):
that tight, you know, unlessyou're using third-party
solutions like yours, I mean ashopify, even discount abuse is
easy to do.
I mean open up incognito windows, you know it's, it's not that
complicated, um, no, and so, uh,yeah, I mean that that, that
was, that was definitely uh.
One example.
And then the craziest ones tome are always when customer
(22:29):
signs for it and then they saythey, you know they, they didn't
, but like they definitely, theydefinitely did this, depending
on, like the area.
I think in some cases, you know, you could maybe say oh, they
did or did not get it, but Imean, if you live in like a
gated community and yoursignature is on the FedEx thing
that was given to you for apretty high ticket item too
(22:49):
that's also like large, you knowit'd be pretty damn hard to
move, like you know, a coldplunge tub from from your house
or somebody else's if you'retrying to steal the thing.
That just doesn't make anysense, something's not working
out.
Speaker 2 (23:02):
There you look like Wile E Coyote trying to carry
the thing.
Speaker 1 (23:08):
It would be a little insane, exactly, but we have
seen customers rely upon creditcard disputes as a means to not
have to deal with customerservice, which I actually think
is some brands fault.
I mean, if you go to somecompany websites, you're like
how the hell, how do I even talkto you?
And you can't?
(23:28):
I had furniture deliveredprobably like four months ago.
Something was wrong with onething.
I went through the claimsprocess, I went through
everything, never was able toget to an actual person.
The claims link to go track,the claim 404, is when I try and
go to it, and so there'sliterally no other resolution
for me other than to dispute it.
(23:48):
Even though I technically stillhave the damn thing, it's
broken.
I have no means of returning itor getting it repaired.
And then the credit cardcompany is like well, why
haven't you returned it?
I'm like, well, because I can't.
I literally have no ability toreturn it.
Speaker 2 (24:07):
They provided me.
No like return it to where Imean.
If you can tell me that answer,I'm more than I don't want this
thing in my house.
Speaker 1 (24:10):
Like I'm more than happy to get rid of it, I will
literally light it on fire.
Like I don't.
I can't even use it.
Speaker 2 (24:14):
So um yeah, even use it.
So, um, yeah, I can see wherethat comes into the equation as
well sometimes.
But um, yeah, the other dangerI mean if you're, if you're like
a brand right the other dangerof allowing it to come to credit
card disputes is you compile acertain number of chargebacks
and your processing fee moves up.
Or you, like god forbid, youget like kicked off of whatever
(24:36):
your processing network is right, like you become a high risk
person, you become impossible toof whatever your processing
network is.
You become a high-risk person,you become impossible to service
and your business is gone.
Obviously that's a veryworst-case scenario.
Basically, having chargebacksbe the default resolution
mechanism is probably not asmart idea.
(24:56):
I think it's positive.
Definitely not a smart idea asa strategy.
Speaker 1 (24:58):
I think it's definitely not a sound long-term
business uh plan.
Yeah for sure.
Well, I appreciate you comingon and sharing, uh, these
insights.
It's definitely something wehaven't touched on before and is
becoming more and more of aproblem.
So, um, I think there'sdefinitely a lot of need here
with with merchants to.
I mean, if they had some sortof a credit card chargeback
(25:19):
system in place plus you, you'reabout as buttoned up as you
could be on that post-purchasefraud side of things.
But before we hop, can you leteverybody know where they can
find you or connect online, andI'll include it in the show
notes as well, in case there'sany more interest in learning
more about this.
Speaker 2 (25:44):
Yeah, you can find us at deliveralyticscom.
Uh, you can find me on linkedinbobby mckinnon uh, you can also
find me on twitter, bobbymckinnon.
Um, you know, feel free toreach out.
Um you know, love to serve anyof your customers, awesome
listeners or listeners.
Speaker 1 (25:58):
Well, again, thanks for coming on for everybody
listening.
As always, this is BrandonAmoroso and you can find me at
brandonamorosocom or scalistai.
Thanks for listening and we'llsee you next time.
Hey everyone, thanks for tuning in to D2Z, a podcast
about using the Gen Z mindset togrow your business.
I'm Gen Z founder BrandonAmoroso, former founder of
Electric and now the co-founderof Scaless, and today I'm
talking with Bobby McKinnon,who's the co-founder and CEO of
Deliveritics, which is aplatform that helps eliminate
delivery fraud.
Thanks for coming on the showeliminate delivery fraud.
Speaker 2 (00:24):
Thanks for coming on the show, thanks for having me
man Appreciate it, not Gen Zmyself, but fairly close to the
end of the millennial spectrum.
Speaker 1 (00:31):
So not too far off.
So before we dive into thingshere, can you give everybody a
quick background on yourself andhow you got into deliveralitics
?
It's a little bit of a tonguetwister to begin with.
Speaker 2 (00:40):
It is, it is.
It is a bit of a tongue twister.
Um, retrospectively probablyshould have, uh, should have
done something different there.
But um, yeah, so uh, I Istarted my career after college
as a military logistics officerin the army for for five years.
Um had a phenomenal, phenomenalexperience.
Really learned a lot about kindof how to think about problems,
(01:02):
how to think about uniquesolutions to problems.
Um of shaped and formed.
You know the way that.
I approach everything right andgave me a lot of love and
appreciation for the ability ofsmall teams to accomplish a lot
right, which is kind of whatdrove me into the startup
(01:23):
landscape.
After the military, I went tobusiness school at the
University of Virginia.
While I was there, I internedat Nike on their post-purchase
Nikecom's post-purchase consumerexperience and insights team,
so developed like a real goodunderstanding of CX priorities
(01:44):
and kind of everything involvinghow customers interact with
dot-com websites and thechallenges there and fulfillment
and challenges in creatingreally good, meaningful customer
experiences Went from that to asmall blockchain AI startup.
We tore apart the Bitcoinblockchain de-anonymizing a lot
(02:08):
of the transactions, then endedup working for the creditors in
a couple of high-profilebankruptcies surrounding the
collapse of FTX, Decided that Ididn't want to really be a
consultant for the US trustee inthe core system anymore, so I
left to start this company witha group of merchants down in
Atlanta, georgia, that were allstruggling with delivery fraud
(02:31):
issues, and I kind of understooda little bit of it from my time
at Nike and a lot of the skillsand things that we were using
with AI and machine learning onthe on the blockchain side.
We're highly applicable to whatwe needed to do here.
Speaker 1 (02:47):
And so what exactly does you know deliveralytics do
when it comes to you knowdelivery fraud?
Speaker 2 (02:53):
Yeah.
So I think the best way to to Ithink the best way to think
about it is to start with wherewe did, which is, you know, we.
We had a couple of businessesthat were struggling with people
claiming that they hadn'treceived packages.
They would say, hey, I didn'tget this thing, whatever it was
baby stroller case, energydrinks, you name it from $20 all
(03:14):
the way up through $1,200orders, and obviously everybody
knows that porch piracy is areal thing.
It does happen.
Things do occur.
Right, there are things thatget really dinged up and damaged
in shipping.
Um, you know, sometimes youhave box issues where, like, the
packaging is too thin and thenthe item breaks through.
(03:35):
But the frequency with whichsome of these things were
happening, um was was definitelyit was.
It was indicative of more of apattern of fraudulent behavior.
And so we decided like, okay,well, we can take in all of this
data from the merchants, we canoutsource in data from other
(03:56):
merchants, we can write a bunchof predictive models and we can
say like, hey, this is likelyfraud, this is like some of the
indicators, or these are placeswhere you're likely to
experience higher loss rates ofpackages.
Maybe it's due to fraud, maybeit's due to piracy, I don't
really know, but all I do knowis that, like, it's happening at
an outsized frequency, you know, at these three houses versus
(04:17):
the street, right?
So there's something going onthere that you should generally
try to avoid.
The more and more we develop aproduct and work with our
customers and got their feedbackon what was working for them,
we found that most of them werethey were using it proactively,
right?
So, like, if you have a Shopifystore, we have an app there
(04:38):
that you would install.
The risk scores are doneautomatically as orders come
into your store.
It takes a couple of secondsand then we apply tags that you
can then use to action workflowsusing the flow Cancel orders,
add signature requirements ifthere's a high theft risk, so
you can ensure the packageactually gets there, all that
(05:00):
stuff.
But what we found was that mostof our merchants were using it
in their CX applications on thebackend, right.
So we would talk to our usersand they would tell us hey, the
insights up front are reallygood.
Sometimes I use them to executeworkflows, sometimes I don't,
but what I do every time is,whenever I receive a complaint
from a customer or somethinggoes wrong.
(05:21):
The first thing I have myagents do is I have them check
the deliveraletics score and hefelt like and several of our
merchants that go to the samesentiment that it was giving
them a lot of comfort andproviding them, from their
perspective, a sense that thisperson probably did experience a
(05:45):
legitimate issue with the order.
There's nothing that has beenlike identified with that person
or that address in the pastwhere there's like a huge issue.
So I'm just going to go aheadand like refund this thing or
I'm going to go ahead and sendthem another one because I think
it's the right thing to do.
Right and and I think throughthat like we learned that you
it's not, I mean there is like a, there's like a, obviously like
(06:08):
a tangible benefit.
Right, like if you reducelosses, you have less expenses,
you're more Right.
But the bigger piece is youreally want to provide the
highest level of customerservice and experience possible.
Right, especially in-com,because the switching cost for
your consumers is zero.
(06:28):
Right, meaning like if I cometo you and you're selling like
Air Force Ones or something,right, there are 50 other
websites where I can buy AirForce Ones.
So if I were to come to likenikecom, and I would have a
really bad experience buying myAir Force Ones there.
It's not even necessarily thatI'm going to not buy Air Force
Ones anymore, it's they'll justnot buy them from you anymore,
(06:49):
which was the whole point ofsetting up this like big D to C
network for a lot of these bigbrands anyway, right, and for
the smaller brands that maybeyour product isn't sold
everywhere, you know, it's justas easy for somebody, one of
your competitors, to buy aGoogle ad for your product's
name.
So then when I go and I type inwhatever you know, pair of boots
(07:12):
or whatever it is that I'mtrying to order, I'm going to
get 15 different alternativesthat are probably like 80 to 99%
of the same things that I waslooking for with your product.
And if I've had a badexperience with you, I'm just
far, far more likely like fourto five times more likely to go
with an alternative than I am.
(07:32):
To come back to you, right,that's what a lot of the
consumer research shows.
So I think these things have tosit in very good balance, and
so you know we've set out tocreate, you know, products and
services that support havingthat really, really strong
balance and allowing you todeliver the highest quality
customer experience without likegetting taken.
Speaker 1 (07:55):
So what happens when it is a high like risk score and
the order you know isn't theorder doesn't go through?
Does that potentially like?
Are there any like falsepositives?
Like, what if that really is acustomer and they want to get
that order and it is alegitimate order, how does you
(08:15):
know situations like that getaddressed?
Speaker 2 (08:19):
You see.
So there's obviously there's alot of drivers of risk, right.
So it's not necessarily thatever like, a high isn't a high
isn't a high, right.
There's different reasons whywe would say that something has
a high risk associated, right?
So if we said it has a highrisk associated and the model
indicator is that it's becauseof some sort of area risk, that
(08:42):
would be an indicator of theft,I would never tell you or
recommend or set up a workflowfor you to cancel that order.
Right, we're probably going tolook at adding signature
requirements.
You know, if you have thecapability to do a pickup point,
like if you're working with acarrier like UPS or FedEx that
have nationwide pickup points,then we would look to exercise
(09:04):
one of those options as opposedto a cancellation.
Cancellations are reallyreserved for a very, very tiny
percentage.
I mean like less than 0.1% oforders that come through.
So, just generally speaking,there's not a lot of them.
There's not a lot of them.
We also weight our models sothat we will miss, basically,
(09:25):
like we, we, we.
It is incredibly rare to have afalse positive.
It's much more likely thatyou'll have a false negative
with us, which is like,obviously, like, it degrades the
effectiveness right Of the tool.
But I think again like maybeit's because of my background
around CX like to me that's thepreferable trade-off.
In that scenario, the falsepositive is the one that can, to
(09:46):
your point, destroy brandreputation, and to me that's the
thing that I have to safeguardagainst for my customers.
Otherwise I've failed mymission.
Speaker 1 (09:56):
Yeah, do you leverage any partnerships with the
carriers?
Or is there the potential forfor that?
Um, because you mentioned, likesignature required.
You know that would obviouslybe handled out by the, by the
carrier.
It's like that in theory sounds, you know, really really unique
(10:17):
.
Like oh, this is there's a highrisk here, like we're sending
it to you, but it now hassignature required, or something
to that effect.
Yeah, yeah, I mean there are.
Speaker 2 (10:25):
There's actually way more that I want to do with the
carriers, um, and I think Ithink there's a lot of potential
there.
Signature verification is issomething like we built a
proprietary tool.
That is nothing that you'llever interact with as a user of
our software or anyone would.
It's just our way of creatingthat requirement on whatever
(10:47):
software you use to buy thelabel Right.
So let's say you're using likeShip Hero or something, or your
3PL is a Ship Hero Right.
If you install theirapplication, there's like a
there's a part or there's asection where you would put your
, your API key so that we canwrite those instructions to
ShipHero's API for you.
And then when the label ispurchased and created, it
(11:09):
automatically has thatrequirement added to it, which
means you buy it at the maximumdiscount that it's going to be
offered at.
And, critically, that iscommunicated with the consumer.
When they receive the shipmentconfirmation email.
They're going to see that asignature is required on the
tracking page the first day.
So you align the expectationwith the reality day one, as
(11:31):
opposed to if you had UPS orFedEx perform this kind of
service.
It's going to change thecustomer expectation two to
three days into the orderprocess, because UPS and FedEx
will assign this thing many daysafter the label was purchased
and created, which is probablywhy, to be honest with you,
they've never done thisthemselves.
(11:53):
Is it really with the customer?
Speaker 1 (11:57):
experience for one of their you know one of their
vendors and that's, that's it.
Speaker 2 (12:03):
I mean, that's like the soft sensitive spot for them
, right, like if just like me,like if they do something that
degrades this, you know, theoverall customer experience of
their customers and consumer.
They're getting dumped for oneof a million other carriers now,
right, so for them they have tosafeguard against that just as
(12:24):
much as I or Shopify does orreally anyone else.
That's sort of servicingmerchants.
Speaker 1 (12:30):
Where do you think this heads in three to five
years, because it's obviouslybecoming more and more prevalent
?
I've even seen teams of peoplego into neighborhoods and just
clear out every package thatpossibly could be there.
Um, well, you know what do youthink this looks like in in in
three to five years?
Um, from a from a solutionstandpoint.
Speaker 2 (12:54):
I think that I think that there's a two part answer
to this question, right?
So there's.
There's kind of two ways inwhich these issues present
themselves.
One is what we would call likethe third party way, and the
other one is the first party.
So third party way is, you know, I I am pretending to be
somebody else, right?
(13:15):
I'm stealing a credit card.
This is like the fraud thatyou're, like, probably very
familiar with.
You know, those tend to be theschemes for people who are
highly organized, right?
So they're going to try to hackyour UPS account and redirect
the shipment to somewhere wherethey can get it.
Or, you know, they're going tohack a bunch of UPS accounts for
people that are buying AT&Tphones or something, or Apple
(13:38):
devices, and they're just goingto follow the trucks around that
have Apple devices on them.
Maybe they're going to try toexploit the carriers those types
of things.
You'll see companies that arestood up that they'll troll the
dark web, they'll do all sortsof creative reverse engineering
(13:59):
of the playbook, and thenthey'll look for those trends
and patterns.
Then there is the first partyissue, which is I am who I say I
am, but I just happen to know Ican take advantage of you.
There was a Wall Street Journalarticle that came out a couple
of days ago that 41% of Gen Zrespondents said that they
(14:23):
thought it was acceptable toclaim that they had not received
an item when they actually did,and the numbers who said that
they had bracketed or wardrobewere over 50% each amongst the
survey.
And so I think what you'll seein the future is tools like ours
will curb that kind ofbehavioral abuse, because if you
(14:47):
know that you can do that,there's a percentage of the
population that is just going totake advantage of it.
Right, like.
But if you, if you know that itdoesn't really work anymore,
you kind of stop trying, right,so like.
Our role is, you know, shape andchange human behavior Just by
via the presence of us, existingright like.
(15:08):
If you know that, like, thisstore doesn't instantly issue a
refund to you anymore when yougo to return an item, and they
wait until the item has beeninspected in a warehouse again,
if you're doing something firstparty, your name is on it, so
you're much, much less likely tolike, brazenly go out there and
do something, and that in andof itself, I think it's sort of
(15:33):
you sort of spark theself-enforcing change.
Speaker 1 (15:37):
Yeah, I mean I can see consumers where maybe it's a
final sale item or somethingand they don't have the avenues
to do like a normal return.
So instead they'll just say youknow, it never came, or you
know, things like that.
So I wonder how long term thiswill impact.
Uh, you know companies,policies around returns and
(15:58):
exchanges and you know whetherit's even worth selling through
some of these items.
For example, during BlackFriday, cyber Monday and on
these websites that I never evenheard of before, that my
girlfriend shops at and they arefinal selling some stuff at
like $6 for an item.
What is even the point at thatpoint?
(16:23):
If it goes out and then youknow they say they didn't get it
, who the hell cares?
I mean you're not going to goout and try and like figure out
how to recover that, et cetera.
Speaker 2 (16:31):
But you know, maybe stores start to back away from
some of these final sale itemsor stuff like that, because you
know I agree that I think itwill go there and I'm really
hoping that I can help storesavoid it, because one of the
issues that you run into is yourun into brand dilution.
So if you sell a bunch ofproduct for this is why a barber
(16:53):
jacket never goes on sale Likethe classic ones, right, maybe
some of their new stuff does,but like the old stuff that like
prints, you know whoever inEngland is wearing, right, that
thing is what it is you'reeither going to pay for it or
you're not.
Um, I think you know if, if yougive into that temptation, it's
very, very hard to recover thatbrand value.
(17:14):
Once you've taken that step,you've kind of taken that step
permanently, because customersknow that at some point in the
future there is going to be thislike mega sale on this thing
and they just wait to buy that.
That's the entirety of thebehavior around Black Friday.
I did it.
There's a million things that Ineeded.
It was like I need new workoutshoes or whatever, and it's like
, okay, well, I'm not going tobuy them in September, I'm just
(17:36):
going to wait until November andget them for 40% off.
That's really really badcustomer behavior to like opt
yourself into because that meansyou're always selling at your
lowest margin at one of yourhighest costs too, right Cause,
like peak season surcharges likeit's, it's more expensive to
fulfill that thing at a muchlower margin to begin.
(17:57):
Um, great for overall top linerevenues and growth and brand
awareness, but outside of thatit's like it doesn't really do
much for you.
So I think like one of thefeatures that we have, right,
that you know we would tellsomebody is if you have a
customer with a history ofbracketing or committing returns
fraud, the items to them shouldbe final sale, right, like it
(18:19):
doesn't mean you should make allyour items final sale or you
should make items where you'reexperiencing fraudulent it
returns fraud issues final sale.
It just means that because thatcreates a bad experience for
other people, right, for theother 98% of people who don't do
this shit.
Right, and that sucks, andthat's the thing that's going to
drive your consumer basesomewhere else in the long term.
Speaker 1 (18:41):
Well, I mean, that to me is much more appealing, you
know, and especially as you getmore and more storefronts, I
imagine you can see oh, you know, brandon is a serial killer,
did not receive his order guy.
Yeah, you know, you're going tothe sixth store and everything
for me is final sale, but forthe 99 of other customers it's
(19:05):
not final sale, and that'sexactly what we do.
Speaker 2 (19:08):
Right like that.
That is the core functionalityof what we're providing and the
way that we view the world islike because you basically you
you have like I mean everythingin life is trade-offs.
Right like so.
Trade-off one is you live in aworld where everything becomes
more draconian.
Right like so.
World one I like to use thedomino's pizza example from like
(19:28):
the late 80s right so you have30 minutes or it's free.
Right world one is a bunch ofteenagers exploit 30 minutes or
it's free.
They order pieces while theylive 32 minutes away, they get
you to fulfill them and thenthey call in and they get free
pieces every week, and then yourdriver starts speeding up and
getting in more accidents, yourinsurance bill goes through the
roof and you kill the program.
(19:49):
Way two is you know who thesecustomers are that are trying to
effectively like game thesystem and you don't allow them
to game the system and then 30minutes or it's free exists for
the initial reason you createdit, which is you have an edge
case scenario where things gowrong because they always do in
(20:11):
a certain small percentages ofcases and you want to make sure
that you do everything you canto make it right, because you,
as the business who owns thecustomer relationship, have
failed that customerrelationship in the consumer's
eyes.
Right and like.
That's the thing you need toconstantly be obsessing over as
a brand or as a business.
(20:32):
If you want long term, you know, staying power and stability in
the marketplace and profitablegrowth, right.
But if you allow the edge casesto basically nuke the program
for everybody else, then youtend to, you know, bleed the CX
over time.
Speaker 1 (20:53):
Yeah, I mean, you have to not shoot yourself in
the foot tracking down the 1%.
That is a bad actor.
But at the same time, I haveseen some crazy things when it
comes to customers trying theirhand at.
You know, scheming the system inany way, shape or form possible
(21:14):
, and so it is the craziestexample you can think of oh, so
we had a, we had a coffee client, and so it is the credit card
disputes, a lot of credit carddisputes and then a lot of oh I,
(21:47):
you know I didn't get thispackage and they were doing it
over time, so it wasn't like itall hit it once, so like I
forget who was auditing it.
But somebody was going throughit and face, this person got,
like you know, a couple, couplegrand worth of free coffee,
essentially over the course ofyou know, a year and a half or
two years or something, becauseyou know the systems are not
(22:07):
that tight, you know, unlessyou're using third-party
solutions like yours, I mean ashopify, even discount abuse is
easy to do.
I mean open up incognito windows, you know it's, it's not that
complicated, um, no, and so, uh,yeah, I mean that that, that
was, that was definitely uh.
One example.
And then the craziest ones tome are always when customer
(22:29):
signs for it and then they saythey, you know they, they didn't
, but like they definitely, theydefinitely did this, depending
on, like the area.
I think in some cases, you know, you could maybe say oh, they
did or did not get it, but Imean, if you live in like a
gated community and yoursignature is on the FedEx thing
that was given to you for apretty high ticket item too
(22:49):
that's also like large, you knowit'd be pretty damn hard to
move, like you know, a coldplunge tub from from your house
or somebody else's if you'retrying to steal the thing.
That just doesn't make anysense, something's not working
out.
Speaker 2 (23:02):
There you look like Wile E Coyote trying to carry
the thing.
Speaker 1 (23:08):
It would be a little insane, exactly, but we have
seen customers rely upon creditcard disputes as a means to not
have to deal with customerservice, which I actually think
is some brands fault.
I mean, if you go to somecompany websites, you're like
how the hell, how do I even talkto you?
And you can't?
(23:28):
I had furniture deliveredprobably like four months ago.
Something was wrong with onething.
I went through the claimsprocess, I went through
everything, never was able toget to an actual person.
The claims link to go track,the claim 404, is when I try and
go to it, and so there'sliterally no other resolution
for me other than to dispute it.
(23:48):
Even though I technically stillhave the damn thing, it's
broken.
I have no means of returning itor getting it repaired.
And then the credit cardcompany is like well, why
haven't you returned it?
I'm like, well, because I can't.
I literally have no ability toreturn it.
Speaker 2 (24:07):
They provided me.
No like return it to where Imean.
If you can tell me that answer,I'm more than I don't want this
thing in my house.
Speaker 1 (24:10):
Like I'm more than happy to get rid of it, I will
literally light it on fire.
Like I don't.
I can't even use it.
Speaker 2 (24:14):
So um yeah, even use it.
So, um, yeah, I can see wherethat comes into the equation as
well sometimes.
But um, yeah, the other dangerI mean if you're, if you're like
a brand right the other dangerof allowing it to come to credit
card disputes is you compile acertain number of chargebacks
and your processing fee moves up.
Or you, like god forbid, youget like kicked off of whatever
(24:36):
your processing network is right, like you become a high risk
person, you become impossible toof whatever your processing
network is.
You become a high-risk person,you become impossible to service
and your business is gone.
Obviously that's a veryworst-case scenario.
Basically, having chargebacksbe the default resolution
mechanism is probably not asmart idea.
(24:56):
I think it's positive.
Definitely not a smart idea asa strategy.
Speaker 1 (24:58):
I think it's definitely not a sound long-term
business uh plan.
Yeah for sure.
Well, I appreciate you comingon and sharing, uh, these
insights.
It's definitely something wehaven't touched on before and is
becoming more and more of aproblem.
So, um, I think there'sdefinitely a lot of need here
with with merchants to.
I mean, if they had some sortof a credit card chargeback
(25:19):
system in place plus you, you'reabout as buttoned up as you
could be on that post-purchasefraud side of things.
But before we hop, can you leteverybody know where they can
find you or connect online, andI'll include it in the show
notes as well, in case there'sany more interest in learning
more about this.
Speaker 2 (25:44):
Yeah, you can find us at deliveralyticscom.
Uh, you can find me on linkedinbobby mckinnon uh, you can also
find me on twitter, bobbymckinnon.
Um, you know, feel free toreach out.
Um you know, love to serve anyof your customers, awesome
listeners or listeners.
Speaker 1 (25:58):
Well, again, thanks for coming on for everybody
listening.
As always, this is BrandonAmoroso and you can find me at
brandonamorosocom or scalistai.
Thanks for listening and we'llsee you next time.
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