X-Rayted Files: E-Commerce Boom Fraught With Risk—X-Rays to the Rescue

It’s not news that online sales are increasing dramatically during this global pandemic. Consumers who were already comfortable with e-commerce transactions have shifted even more of their purchases online, and those who had been resistant to the transition are finding themselves pushed into it. However, with increased sales comes the increased risk of return fraud and abuse, which was already too common with e-commerce.

Cardoso_filler0620.jpg

According to Forbes [1], year-over-year e-commerce revenue is up 64%, with online retail orders up a whopping 164%. Consumer electronics have seen a particularly steep gain of 50% to nearly 300%, depending on the subcategory.

This rapid growth has made online retailers the target of fraudsters of all degrees of sophistication. From low-tech brick-in-box to carefully crafted counterfeits, online sellers are being inundated with fraudulent returns. Processing centers are accepting returns and issuing refunds, only to find upon a later inspection that the package was merely filled with dirt to match the expected weight. Such plots often succeed in an environment in which systems are overburdened with the volume of returns and the expectations of prompt resolutions and refunds.

Even more challenging for those engaged in e-commerce is the detection of dummy and counterfeit merchandise. Should it be decided to open every returned package to visually inspect the contents for bricks and dirt, the next level of fraudster is already ahead of you. Can you tell these three phones apart (Figure 1)?

 Cardoso Fig1.JPG

Figure 1: An authentic Apple iPhone, a knock-off, and a dummy phone.

You can see an authentic Apple iPhone, a knock-off, and a dummy phone. Both fakes are exceedingly hard to differentiate from the real McCoy, even under visual inspection. Again, because of the pressure to compete on great customer service, the volume of returns can make it difficult to evaluate returns before refunds are issued. The ability of return logistics infrastructure to quickly and accurately segregate legitimate from suspect returns is quickly becoming an important factor influencing an enterprise’s bottom line.

As online retailers grapple with developing their return logistics strategies, they are confronted with competing forces of providing consumer-facing return policies that don’t hamper conversion rates while establishing internal return-processing protocols that limit inventory losses and restocking expenses. These internal processes can rely heavily on experienced, well-trained staff who are experts in the organization’s product mix. Even with such a dedicated team processing returns, opening boxes and performing visual inspections is not only inefficient, but it still risks missing the most sophisticated counterfeits. Enter X-ray, but not just any X-ray—high-resolution automated X-ray inspection.

Electronics manufacturers have long known the value of utilizing high-resolution X-ray inspection for validating components and interdicting counterfeits. The non-destructive nature of X-ray its relatively low- cost and the speed with which it can accurately examine high volumes of samples have made it an invaluable tool. Leaders in e-commerce are beginning to integrate X-ray inspection into their return logistics infrastructure to quickly and accurately verify contents and validate the authenticity of returns.

X-ray inspection is particularly adept at validating electronics, from chips to boards to finished product, so the leap to implementing it into the returns process for online retailers of consumer electronics seems somewhat obvious. Let’s take another look at those same three phones under X-ray in their boxes (Figure 2).

Cardoso Fig2.JPG Figure 2: X-rays of the three phones from Figure 1 in their boxes.

As you can see, the differences are clear. If you haven’t seen an X-ray of an authentic iPhone, you probably don’t know which one is real and which is the knock-off, but the dummy phone with a weight in it is abundantly clear. A bag of dirt would be even more obvious. With a little bit of training, an operator can spot the difference in the less than 30 seconds it would take for the system to process the next item. Beyond electronics, X-ray inspection is valuable in evaluating just about any product worth counterfeiting, from luxury handbags to high-end watches. Online premium retailers, where return rates can be as high as 50%, will find the cost-to-benefit ratio of X-ray inspection especially appealing.

Lost or decreased revenue from returns hurts the entire ecosystem. Even returns that don’t involve fraud or abuse can soften market value for products that inadvertently flood open-box sales channels. Manufacturers may even see some of these returns trickle back to them in the form of RTVs. Supporting retailers in their efforts to mitigate risk is in everyone’s interest. Put your thinking caps on and get to work developing ways to the support return management efforts of your retail partners.

As X-ray begins to play a greater role in risk mitigation within e-commerce return logistics protocols, watermarks in packaging that are visible only under X-ray inspection, and image libraries of both genuine product and known counterfeits, for example, may be ways to contribute to their efforts at curbing the flood of counterfeit goods. Let’s put the bad guys back on their heels.

Reference

  1. L. Columbus, “How COVID-19 Is Transforming E-Commerce,” Forbes, April 28, 2020.

Dr. Bill Cardoso is CEO of Creative Electron.

Back

2020

X-Rayted Files: E-Commerce Boom Fraught With Risk—X-Rays to the Rescue

06-17-2020

It’s not news that online sales are increasing dramatically during this global pandemic. However, with increased sales comes the increased risk of return fraud and abuse. Dr. Bill Cardoso explains how X-ray can help detect dummy and counterfeit merchandise.

View Story

X-Rayted Files: Why Do We Break Stuff? Intelligence From Teardowns

05-20-2020

The impulse to break a new gadget to "see what's inside" and to “learn how it works” is often the first sign someone will become an engineer. We’ve learned a lot in over a decade of teardowns, which have helped us to understand how the SMT industry has changed over these years. Bill Cardoso investigates.

View Story

X-Rayted Inspection: Manufacturing in the Eye of a Pandemic

04-08-2020

Dr. Bill Cardoso usually writes about X-ray inspection, artificial intelligence, machine learning, and how it all connects to Industry 4.0. This month, however, he shifts gears and shares some of the things Creative Electron has been doing during the COVID-19 outbreak.

View Story

X-rayted Files: X-ray and AI—A Match Made In Heaven, Part 2

03-18-2020

In Part 1, Dr. Bill Cardoso covered the basics of the relationship between X-ray inspection and artificial intelligence (AI). In Part 2, Cardoso takes a step forward to cover some of the practical ways we use AI to improve the efficiency of our X-ray inspections.

View Story

X-Rayted Files: X-Ray and AI—A Match Made In Heaven, Part 1

02-05-2020

Dr. Bill Cardoso has been working with AI for a while now and seen real application and success in X-ray inspection, as well as failures. In Part 1 of this column series, he shares how AI is changing the way we think about X-ray inspection.

View Story

X-Rayted Files: When SMT Lines Develop Line Conscience

01-22-2020

Bill Cardoso explores the history of Henry Ford's assembly line, how this may be the end of the automation era, and the future of autonomous systems, AI, machine learning, etc.

View Story
Back

2019

X-Rayted Files: Will Radiation Damage My Electronic Component?

12-17-2019

Before I start talking about radiation damage on electronic components, let me warn you: if you are looking for a simple “yes” or “no” answer to the question, "Will radiation damage my electronic component?" stop reading now. Things will get complicated. You may feel like I did not answer the question at all, and you would be correct. There are whole conferences dedicated to this question (check IEEE’s Nuclear and Space Radiation Effects Conference), so the goal of this column is to give you some background to guide you to the right answer for your specific situation. Ultimately, the best way is to ask an expert.

View Story

X-Rayted Files: The Currency of Technology

11-11-2019

In the ever-moving tide of technology, the need to innovate requires a constant shift in vision, and this need has never been more evident than in PCB manufacturing. In fact, innovation has become so valuable that PCBs are quickly becoming the currency of technology. Dr. Bill Cardoso explains.

View Story

X-Rayted Files: The Risk of Installing Counterfeit Parts

10-02-2019

In high-tech manufacturing, the use of sub-standard components can be catastrophic. There is no greater need for quality control than in PCBs, as they are only as good as the components installed on them; therein lies the problem. Some components shipped to manufacturers are counterfeit!

View Story

X-Rayted Files: Just Because You Can't See the Problem Doesn't Mean It's Not There!

08-20-2019

In this new column, Dr. Bill Cardoso will cover everything related to X-rays from cool historical facts to the latest in technological advancements, starting with the discovery of X-rays in 1895.

View Story
Copyright © 2020 I-Connect007. All rights reserved.