Oscar Lozano

Design Leadership

Oscar Lozano

Design Leadership

Oscar Lozano

Design Leadership

Work

Shopify

Improving the claim and dispute experience between merchants and their customers

Role

Product Design

Year

2021

As part of the Payments and Risk team, I was responsible for working with merchants to prevent, manage, and dispute chargebacks. A chargeback occurs when a customer disputes a transaction with their bank, resulting in a refund to the customer and an additional fee for the merchant. While chargebacks can happen for various reasons, this project focused solely on product-related disputes. Examples of product-related disputes include receiving damaged or defective items, incorrect orders, or products that do not meet customer expectations.

01

The research

One of Shopify's great strengths is the empowerment given to its employees through access to data. With basic SQL knowledge, any team member, regardless of role or seniority, could extract key metrics, allowing for data-driven decision-making at any point. Using Mode, I delved into data to better understand how chargebacks were impacting merchants on the platform. However, fully grasping the complexities of chargebacks required months of mapping out the entire process. The chargeback process are a highly opaque process, involving multiple parties and scenarios, which made it particularly challenging to navigate. However, this was essential to uncover the deeper issues merchants were facing.

In addition to the data analysis, I conducted five in-depth, semi-structured interviews with Shopify merchants. These interviews helped us gain direct insights into their frustrations with chargebacks, particularly how the lack of clear communication between merchants and customers exacerbated product-related disputes. With the support of Shopify’s user research team, I transcribed and analysed these interviews using Dovetail, ensuring both quantitative and qualitative insights drove our understanding of the problem space.

✦ Research Objective ✦

Asses the issues that merchants are facing when managing and responding to chargebacks. Identify areas in the current chargeback process that require improvement in order to provide a better experience for our users.

✦ Research Objective ✦

Asses the issues that merchants are facing when managing and responding to chargebacks. Identify areas in the current chargeback process that require improvement in order to provide a better experience for our users.

✦ Research Objective ✦

Asses the issues that merchants are facing when managing and responding to chargebacks. Identify areas in the current chargeback process that require improvement in order to provide a better experience for our users.

02

The findings

Based on our research, we identified the following as the main issues:

  • In 2020, the average number of monthly chargebacks per shop (for shops that have chargebacks) was 3.89

  • Shopify's chargeback win rate is just below 20%, way below industry-standard

  • Merchants are more likely to win a chargeback when they manually supplied supporting evidence rather than relying on Shopify’s automated responses

  • Product-related disputes made up for 41.8% of all chargebacks

  • The existing customer-merchant communication tools being overly generic further exacerbates the chargeback issue.

03

The hypothesis

We hypothesised that improving the communication between merchants and customers, especially around product-related disputes, could reduce the number of chargebacks. Often, chargebacks happen because customers feel their issues aren't addressed quickly or effectively. By the time they contact their bank, the opportunity for the merchant to resolve the issue is lost.

By focusing on direct communication, we believed merchants would be able to prevent many disputes from turning into chargebacks, ultimately fostering stronger customer relationships and reducing costs associated with chargeback fees.

We hypothesised that improving the communication between merchants and customers, especially around product-related disputes, could reduce the number of chargebacks. Often, chargebacks happen because customers feel their issues aren't addressed quickly or effectively. By the time they contact their bank, the opportunity for the merchant to resolve the issue is lost.
By focusing on direct communication, we believed merchants would be able to prevent many disputes from turning into chargebacks, ultimately fostering stronger customer relationships and reducing costs associated with chargeback fees.
We hypothesised that improving the communication between merchants and customers, especially around product-related disputes, could reduce the number of chargebacks. Often, chargebacks happen because customers feel their issues aren't addressed quickly or effectively. By the time they contact their bank, the opportunity for the merchant to resolve the issue is lost.
By focusing on direct communication, we believed merchants would be able to prevent many disputes from turning into chargebacks, ultimately fostering stronger customer relationships and reducing costs associated with chargeback fees.

✦ Key Insight ✦

A tailored solution focused specifically on resolving common merchant-customer disputes, such as return processes, product misunderstandings, or delivery issues, could significantly reduce the volume of chargebacks by addressing issues early on.

✦ Key Insight ✦

A tailored solution focused specifically on resolving common merchant-customer disputes, such as return processes, product misunderstandings, or delivery issues, could significantly reduce the volume of chargebacks by addressing issues early on.

✦ Key Insight ✦

A tailored solution focused specifically on resolving common merchant-customer disputes, such as return processes, product misunderstandings, or delivery issues, could significantly reduce the volume of chargebacks by addressing issues early on.

04

Design approach

Our long-term vision was to integrate a comprehensive dispute resolution centre directly within Shopify's admin platform, allowing merchants to manage conflicts with customers seamlessly. This feature would enable dispute resolution to be handled entirely within the same ecosystem, improving efficiency and trust. However, given the complexity and resources required to build such a feature, we needed an immediate, interim solution to address the growing need for better customer support tools.

One key advantage of Shopify Inbox was that it allowed us to avoid the time and resource investment required to build a custom communication system from scratch. This enabled us to quickly deploy a solution that kept merchants within the Shopify ecosystem and facilitated smoother communication flows.

Additionally, Shopify Inbox was only available to a selected number of customers at this stage, providing us with a unique opportunity to test new features in a closed environment. This limited deployment allowed us to gather valuable feedback, iterate on the app’s functionality, and fine-tune the dispute resolution process based on real-world merchant and customer interactions. By working within this controlled group, we could explore the effectiveness of manual evidence submission, better tailor communication templates, and identify the types of disputes that were most effectively resolved through direct conversations, all without the risk of a broader release.

This phased, controlled testing approach proved invaluable in shaping our longer-term strategy for improving customer-merchant communication and reducing chargeback frequency.

The initial goal of this project was to redesign the web checkout. To gain insight into the issues and pain points of our current checkout, we conducted 4 months of user research. Our research findings supported the insights we had previously gathered from data analysis. This provided us with a unique opportunity to completely revamp the checkout experience for our users. However, after this research, it was decided that we would shift our focus to building an iOS app. This change in direction allowed us to apply our research findings and utilise native features to deliver a modern checkout experience for our users.

Customers use the Shopify Inbox chatbot to file in a complaint regarding an order. The process is designed to capture all the information a merchant might requires to take action.

We quickly developed a prototype that integrated dispute resolution features into Shopify Inbox, allowing existing Inbox users to manage disputes seamlessly within their customer interactions. This prototype added built-in functionality to the Inbox chatbot, enabling disgruntled customers to easily file complaints regarding their orders. By capturing all necessary information up front, merchants could take immediate action, avoiding lengthy back-and-forth exchanges and resolving issues more efficiently.

Not only did this solution provide immediate relief for merchants, but it also allowed us to validate the concept with actual users. By testing the prototype with a select group of merchants, we gathered valuable insights into how the tool could be refined to better meet their needs.

Furthermore, this prototype played a pivotal role in securing leadership approval. It demonstrated that, even in its early form, the integration of Shopify Inbox into dispute resolution workflows could significantly improve operational efficiency and customer satisfaction. The added chatbot feature streamlined the complaint process, which reduced friction for both merchants and customers. By presenting the prototype, we were able to articulate the long-term benefits of creating a dedicated dispute resolution centre within Shopify’s admin platform, while showcasing the immediate value of the interim solution.

The initial goal of this project was to redesign the web checkout. To gain insight into the issues and pain points of our current checkout, we conducted 4 months of user research. Our research findings supported the insights we had previously gathered from data analysis. This provided us with a unique opportunity to completely revamp the checkout experience for our users. However, after this research, it was decided that we would shift our focus to building an iOS app. This change in direction allowed us to apply our research findings and utilise native features to deliver a modern checkout experience for our users.

The claim appears as a new conversation in Shopify Inbox

The dispute has effects throughout the merchant's dashboard.

However, shortly after this phase, I made the decision to leave Shopify, and as a result, was not directly involved in the full delivery or rollout of the final feature. While I did not see the completion of the project, I remain proud of the groundwork laid through research and user testing, which helped inform key product and design decisions. The experience was invaluable in showcasing how quick prototyping, combined with user feedback, can drive decision-making and leadership buy-in for future product development.

The initial goal of this project was to redesign the web checkout. To gain insight into the issues and pain points of our current checkout, we conducted 4 months of user research. Our research findings supported the insights we had previously gathered from data analysis. This provided us with a unique opportunity to completely revamp the checkout experience for our users. However, after this research, it was decided that we would shift our focus to building an iOS app. This change in direction allowed us to apply our research findings and utilise native features to deliver a modern checkout experience for our users.

Oscar Lozano

©2023

Oscar Lozano

©2023

Oscar Lozano

©2023