Image Source – Max Pixel
A lot of people assume that starting up an e-commerce business isn’t that risky a venture. They assume that the startup costs, as well as the running costs, are pretty minimal. They think that there are very few, if any, financial complications that come with the territory. After all, isn’t it just as easy as starting a website?
But e-commerce can be a risky and expensive venture, much more so than even the budding e-commerce entrepreneurs think. (In fact, a lot of people seem to want to get into this business because they’ve fallen for the precise misconceptions listed in the previous paragraph!) We’re going to take a quick look at some of the financial and legal risks that come with e-commerce businesses. If you’re about to start such a business, this guide will be essential when it comes to protecting yourself and your business’s longevity.
Image Source – Wikimedia
Fraud
Fraud is a lot more common in e-commerce than you may think. It’s a massive concern for both businesses and consumers, but people usually only think about the kind of fraud that consumers suffer. But many businesses are at risk of “return fraud”. Many e-commerce businesses use a “no questions asked” returns policy (their sales seem to suffer otherwise), which a consumer may take advantage of by returning a counterfeit version of the item. Some may claim that they never received the item and request another – something you can protect against by working with the right courier.
Another problem to consider, especially if your business also deals in marketplace transactions, is liability if consumers are defrauded on your website. Make sure you’re insured appropriately, and that there are strict measures that ensure only trustworthy sellers can sell wares on your website.
Image Source – Flickr
Non-payment
A problem for many businesses, but non-payment from customers is particularly high in the e-commerce industry because cash is never used. All transactions take place digitally, and there are always ways to cancel payments after having received an item. This will end up affecting your bottom line in big ways unless you take action.
Many businesses that offer larger, more expensive items may offer finance plans that end up not being paid in full. (The practice of offering finance is popular with businesses selling musical instruments and expensive electrical items.) You can’t always prevent these things happening in the first place, but by working with a debt collection attorney you can resolve the issues after the fact.
Image Source – Pixabay
Data security
The security of your data should be paramount. Consumers are giving you a lot of intimate knowledge. They’re giving you bank and card details, their full names, addresses, phone numbers. And, as I’m sure you must be aware, there are many unsavory characters out there who are eager to get their hands on such information, often using illegal means.
If cybercriminals manage to get into your system at all, then that data will be at risk – and that could end with you being sued by any consumers who find themselves affected. The information security of your business should be impeccable.
