E-commerce Loss

Invitation to participate in new ecommerce loss research

E-commerce Loss

E-commerce Loss

Professor Adrian Beck
Written by Professor Adrian Beck

Academic Advisor to the Board

About the author

Invitation to participate in new ecommerce loss research

In the video in the link below, Professor Adrian Beck shares the context, objectives and anticipated deliverables from the research. If you are interested in participating in this research please contact Colin Peacock at colin@ecrloss.com

Alternatively, please read on....


While retailing is characterised by the omnipotence of change, the development and growth of E-commerce is perhaps one of the most profound developments in recent times. Prior to its introduction, a fundamental constant of retailing was the retail ‘store’, which for the most part, consumers had to visit to be able to see, interact with, and pay for the products they wished to purchase. For the retailer, this product proximity determinant proffered a high degree of control over the retail experience – most consumers could generally only see and buy the products that their local retail stores made available (or had in stock).

The rise of E-commerce has fundamentally changed the power relationship between retailers and shoppers – the latter is now no longer curtailed by what is physically available nearby. From the comfort of their homes, the E-shopper can ‘visit’ retail stores almost anywhere in the world, taking advantage of better availability and choice, preferential laws on taxation that can drive down prices in some jurisdictions, and retail supply chains increasingly geared towards extraordinarily short delivery windows. It is perhaps not surprising, therefore, that in some countries, E-commerce is now taking an increasingly large proportion of the retail sales pie while traditional ‘bricks and mortar’ retailers struggle to compete and justify their investments in real estate.

For established retailers to compete, the ‘answer’ seems to be in adopting an ‘omni-channel’ approach – evolve their retail offer to give the increasingly savvy and flighty shoppers of today a palette of options to choose from in terms of how they can view, review, engage with, pay for, and ultimately receive the products they wish to purchase. Omni-channel retailing is the melding together of the physical and virtual, where shoppers have ultimate control over how, where and when they consume. This can be seen in developments such as Buy Online and Pick up Instore (BOPIS), Browse and Buy Instore and Deliver to Home (BBIDH) and many other variants in between. Ultimately, the name of the game is giving the consumer flexibility and choice.

For those businesses with a long history of bricks and mortar retailing, adopting an Omni-channel model is potentially fraught with challenges – after following a well-established trajectory of reducing process complexity to drive profitability, this new approach often reverses this trend, requiring significant new layers of operating intricacy, not least levels of inventory accuracy and transparency seldom seen before.

In addition to the operational miasma it can generate, Omni-channel retailing also profoundly affects the look and feel of the associated retail risk landscape. Ever since retailing began, businesses have experienced ‘loss’, mainly but not exclusively in the form of customers and staff stealing products and cash from retail stores. Indeed, a whole industry has evolved to respond to and manage this problem – retail loss prevention. There is now a plethora of approaches, technologies and philosophies that have been developed to try and help retailers keep this problem at a manageable level, most of which, understandably, have been focussed upon the traditional retail store and its associated supply chain. While some of the methods used to understand and measure this risk have been found wanting, not least the propensity to adopt a rather myopic approach to it definition, for the most part, in recent times at least, the retail industry has made good progress in keeping levels of loss at an acceptable level.

However, the onset of Omni-channel/E-commerce represents a significant new challenge to the retail loss prevention industry, not least because it not only reintroduces organisational complexity, which in turn can provide new opportunities for loss to occur, but it also generates new forms of risk in new settings, such as cyber space or even more mundanely, outside a consumer’s house. Whereas ‘traditional’ forms of loss experienced in retail stores have been thoroughly defined and understood, not least in the various iterations of the Total Retail Loss Typology, the same cannot be said for the E-commerce/Omni-channel environment. In some respects, this is understandable; it takes time for new risks to emerge and methods to be established to define and measure them. But, without this taking place, those tasked with responding to and controlling these new risks will remain in the dark – just as traditional loss prevention moved from what was once regarded as a data desert to now overlooking richly abundant data lakes, those tasked with getting to grips with the negative outcomes of Omni-channel/E-commerce retailing now need to go on a similar journey.

Research Objectives

In 2020/21 the ECR Retail Loss Group established a sub-group focussed upon the issue of E-commerce and as part of its work, developed a draft E-commerce loss typology, describing upwards of 32 different types of loss that may be experienced by retailers. In addition, some preliminary work was undertaken to establish the extent to which retailers had the organisational capacity to measure these losses in some form (the draft typology is presented in Appendix I). The purpose of the proposed research is to drive this work forward in three ways:

• Confirm the relevance and representativeness of the E-commerce Typology developed thus far – does is accurately capture all the main ways in which retail organisations experience losses because of their E-commerce-related activities?

• Establish some form of industry consensus/way forward not only on whether these types of losses are measurable, but also how they might be measured – what is manageably measurable and how should retail businesses calculate/quantify these losses?

• Once a better understanding of the quantification framework of E-commerce losses has been identified, can some limited/preliminary benchmarking be done to understand their impact on different types of retail businesses?

Fundamentally, this research can be seen as a further stepping stone in the evolution of Total Retail Loss – providing a more fine-grained and detailed understanding of the myriad ways in which retail businesses are impacted by loss.

Research Outcomes

The research will provide the retail community with a significantly better understanding of not only how E-commerce-related activities can generate retail loss, but also offer a detailed framework for how those losses might be categorised and measured. In addition, the study will move towards giving the retail industry some sense of the scale and extent of these losses and how they may be affecting different parts of the sector.

More specifically, the research will be summarised in an E-report and the key findings presented via an online webinar.

Research Methods

The research will rely upon two main methods: 1) in-depth interviews with retail representatives with responsibility for E-commerce; and 2) retail case studies capturing how E-commerce losses are defined and measured.

In-depth Interviews: To sense check and refine the existing typology and loss definitions, detailed interviews will be carried out with approximately 30 retailers. Where possible, they will be geographically representative of the membership of both RILA and the ECR Retail Loss Group (predominately US, European and Australian retailers) and be drawn from a cross section of types of retail environment operating E-commerce platforms (grocery, apparel, electrical, home improvement etc). In addition, and depending upon willingness to participate in this type of research, it would be desirable to hear from retailers that are both E-commerce only and those that have adopted an Omni-channel business model in order to understand the extent to which they have similar/differing risk profiles. It is envisaged that all these interviews will be conducted online.

Retail Case Studies: Once some form of consensus has been found on the types of loss most associated with E-commerce activities and how they are/should be measured, a small number of retail businesses will be invited to take part in a preliminary benchmarking exercise to ascertain the veracity and capability of the proposed typology. This is likely to be focussed upon collecting company-specific data on all, or more likely, a subgroup of E-commerce losses, to determine their comparative scale and extent. At this stage, it is hard to predict how many retailers will agree to take part in this exercise as historically, obtaining any form of retail loss data is riven with sensitivity/non-disclosure issues.

Limitations: As with all research in this field, the study will be limited by the degree to which retail businesses will be prepared to engage with the subject and share data. It is likely that the first phase of the research (identification and definition of loss types) will be easier to deliver than the latter benchmarking exercise. As such, it is important to recognise that the research as envisaged may not necessarily be fully deliverable, especially the proposed benchmarking exercise.


The interviews will be undertaken from April 2022, with an expected set of deliverables in early 2023.

Mar 20, 2022


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