What is IP Geolocation & Why is it Important for E-commerce?

Melissa Team | Global IP Locator | , , , , ,

Identifying geolocation based on an IP addresses is a boon for any e-retailer. The process is simple yet the benefits are extensive. From fraud prevention to higher conversions and customer loyalty, it’s worth at least being aware of what IP geolocation is and what it is capable of in ecommerce.

Let’s dig in.

IP addresses are what make communication over the Internet possible. It allows the two-way connection between your computer, smart phone, tablet, printer, modem, etc. to the other via the Internet. An IP address is a string of numbers separated by four periods that identifies a device and its connection through the Internet. Now, where this gets interesting for e-retailers is what IP addresses can return. It can include information about your web visitor’s country, region, city, latitude and longitude, ZIP Code™, Internet Service Provider (ISP), and domain name. This information can be leveraged in a multitude of ways for ecommerce, but we will focus on three important uses – fraud prevention, global customer experience and geotargeting.

Fraud Prevention

Fraud is in undeniable abundance throughout the ecommerce industry and is growing nearly 30% each year. Because banks do not absorb the costs of fraud for ecommerce businesses, as they normally would for a brick and mortar location, the financial impact of fraudulent activities is primarily the e-retailer’s responsibility. This costs online merchants nearly $3 for every dollar lost! What does this mean for a business? It means harnessing methods of prevention is the least expensive action in dealing with Internet fraud, password sharing and abuse of service, to protect your business, your customers and inevitably your bottom line.

Using IP location allows you to see where your customer is ordering from and match that to the billing address that they provided. Simply matching this information will give you a better idea as to whether they are a trustworthy client or a fraud. For example, a provided billing address is located in Wisconsin, yet the IP address is located to the Ukraine. This could merit further investigation prior to shipment. If necessary, entire regions may be blocked due to high-risk fraudulent activity sourced from IP locations.

Customer Experience

Web pages have 15 seconds to engage a web visitor. This means, your conversion rate and sale hinges on a 15-second first impression. With ecommerce booming on a global scale, opportunities to engage a worldwide audience is an unavoidable endeavor and should be harnessed to the max.

If a customer comes across a web page while residing in Germany and lands on an offer in English with American currency, they may understand the language and may be able to convert the currency, but they may not feel inclined to stay long. Their impression would be that this site was not intended for them. Matching native language and currency to a customer’s geolocation, empowers your global reach.

Knowing what country or region your customer resides can automatically redirect that customer to a page that literally speaks to them, in their language, in their currency and in their style. Directing to a region-specific web or landing page will make a tremendous difference in customer conversion and their impression of your company. Even a small business can benefit tremendously from IP geolocation by presenting a more globally-aware web experience.


Geotargeting refers to using a person’s location to power marketing initiatives and customer conversion. Geotargeting empowers personalized ads, special location merchandising, and engaging a customer on a local level, whether your business is actually local or not.

With IP geolocation, highlighting the nearest physical retail location to a customer has shown to drive more foot traffic to that brick and mortar store. This can be leveraged further by creating in-store offers through your online store to drive more traffic and higher conversions. For companies that carry multiple product lines, basing promotions off of location can also drive higher ROI and conversions. For instance, if you are running a website for a tire company, you would highlight different terrain tires based on different locations. Someone shopping for tires in Alaska, for example, may not be attracted to the same tires as someone shopping in Arizona. Which web page they land on would then be determined by their IP geolocation.

Merchandise, visuals and promotions all work in the same manner. A web page targeting different audiences speaks volumes to web visitors. Powering local offers and community services or announcements, all work to engage your customers and truly make that first impression stick the landing.

The Bottom Line

IP geolocation technology is an inexpensive and widely beneficial tool. It will help flag suspicious buying patterns with location-matching techniques. It will power your global market initiatives by matching language and currency to your customer’s region. It will allow you to personalize your marketing and promotional offers based on location to drive conversion and create loyal customers. IP location technology powers all these initiatives and many more. Read all about Melissa’s Global IP API and call a Melissa specialist at 1-800-MELISSA (635-4772) for a free quote so you can harness the power of IP Geolocation for your business today!