How to Solve 'Botting' Problems in Retail and E-Commerce If you're selling a hot product, chances are you are the target of automated checkout bots, which can cost you serious money. Here's what to do to stop the bots from taking over your business.
By Kurt Ivy Edited by Kara McIntyre
Opinions expressed by Entrepreneur contributors are their own.
"Botting" is one of the biggest problems in retail and e-commerce today, and it is a problem that often goes unnoticed. The consequences, however, do not go unnoticed. CAPTCHA and other increasingly difficult human verification methods are proof that there is a rampant problem that not many of us are aware of. Worse than the CAPTCHA are the high prices that consumers pay for highly-desired products.
What does "botting" mean?
In the context of retail and e-commerce, botting is when people create programs, or bots (robots), that buy product inventory before real people can buy it. You may have heard the term "automated checkout bot." The main targets of bots are popular product launches and inventory restockings. When those popular products hit the market, these people use bots to buy them first and resell them for a profit. The process is fairly sophisticated. Several different types of bots are used to ensure that the inventory does not make it to the consumer until the bad actor takes their cut.
According to a report by Imperva, "bad bots" represented about 25% of traffic online in 2020. To put that in perspective, about 4.5 billion people were using the internet in that same year. That's a billion users' worth of bots. It's clear that this is not a fringe issue. It's one of the primary matters of discussion among the brands and retailers who deal with its effects first-hand.
According to this report, some bots are used to create new user accounts and some are used to steal user accounts. Some are used to simply buy the inventory when it becomes available. More sophisticated ones hold the inventory in the shopping cart to prevent others from buying it, and then when the others go to buy it on the secondary market, the product in the cart is purchased and sent to the buyer. They should call this "the devil's dropshipping."
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There are existing methods to identify and solve this problem, but it all comes down to noticing traffic spikes when they happen and putting up a CAPTCHA. That's a bit like saying that if it's raining, use an umbrella. How can you tell if it's raining? Look outside. This isn't very helpful. The problem here is that brands and retailers already know that bots are a problem and already use these solutions to try and stop them.
But they still get wet.
Knowing rain is coming is not helpful if there is no practical solution to stay dry. Luckily, new technologies are emerging that can help end botting for good.
What does "token-gating" mean?
"Token-gating" means you need a "token" to pass through a "gate." It's like a secret password or a key. Many new communities are using token gates to prevent unwelcome guests from entering their spaces. These tokens are created and stored with blockchain technology. This prevents fakes or duplicates from being created. It also promotes transparency around the tokens and the actions taken by the token holder. Requiring a token to enter is the best way to protect, and likewise build, your community. Unique tokens stored on the blockchain are also known as "NFTs," or non-fungible (unique) tokens.
SHOPX, a suite of tools used to enhance online shopping, recently introduced a new concept and that is token-gated products. So what does this mean exactly?
If a brand distributes tokens to its customers, it creates a community of token holders. Then, when they release their product, only their community members will be able to make a purchase. The thousands of hungry bots waiting at the gate will be powerless to snatch up any inventory unless they each hold their own individual token and are allowed entry. SHOPX, for example, accomplishes this by integrating the tokens into Shopify. At checkout, the "buy" button is unable to be clicked unless the user owns a token.
Related: Why Chatbots Failed and the Future of Conversational AI
What are the benefits of token-gating?
There are a few obvious benefits.
- Preventing botting. The token is a simple, no-nonsense way to stop bots from buying inventory. This is the primary benefit and alone would be incentive enough to use tokens.
- Rewarding customer loyalty. The token can be considered a customer loyalty program. Not only do loyal customers get preferred access to hot product releases, but the token can also be programmed to give other special perks as well. This includes discounts and members-only access to certain types of products.
- Building a community. Tokens are already a great way to build community. Distributing tokens to customers automatically creates a community that can be interacted with in several ways. Members can be given access to secret content, members-only chat rooms, or even real-life events.
- Marketing. The very act of releasing tokens to customers can be turned into a promotional event. Certain products can be released in tandem with tokens, and new tokens can be released over time to create more promotions and keep customers engaged.
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Do I even need tokens?
Chances are, your business does not need tokens. If your inventory does not run out, or if there isn't enough demand, you probably aren't going to come under attack from bots. Tokens protect your inventory from scammers who want to buy it and resell it before others have a chance. This puts a barrier between you and your customer. It's disappointing and prevents true fans from enjoying the product they love — and the extra money they spend purchasing from the secondary market could instead be used to buy more of your products.
But even if your business doesn't necessarily need botting protection to shield your inventory, the other three benefits listed above are still convenient utilities that tokens provide. Start building a community now that will endure through every stage of your business's growth.
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