Minimizing Risk in the Ecommerce Industry

(Credit: Mohamed Hassan from Pixabay) Image by mohamed Hassan from Pixabay
November 22
12:47 AM 2022

The growing eCommerce industry has a myriad of benefits including the ability to reach customers across the world and nearly limitless market potential. However, running an online based business also has its risks and drawbacks. Entrepreneurs in the eCommerce space can take the following measures to reduce their risk of common pitfalls.

Security Processes

eCommerce businesses are vulnerable to virtual attacks. The risk can come from outside actors or from errors made by employees. Criminal networks often target eCommerce sites to access sensitive customer data and financial information. 

Businesses can protect themselves by implementing strong security protocols. The website and payment systems should incorporate the latest monitoring software that can detect suspicious activity.

Further, eCommerce merchants should follow strict protocols for password creation and protection. All employees should also undergo basic cybersecurity training and learn to identify common techniques used by hackers to evade security systems.


All eCommerce sites require downtime to perform routine maintenance. However, unanticipated downtime can occur due to malfunctioning servers or a denial of service attack. 

When customers can't access the webpage or complete their transaction, the business loses money. Further, eCommerce shops that frequently go offline can lose the trust of their client base.

Alerting customers well in advance of planned downtimes can mitigate some of the risks. Site owners can also reduce income loss by scheduling maintenance during off-peak hours. 

In the event of unplanned downtime, eCommerce sites should have a recovery plan in place. This could include using a back up system or contracting with a disaster recovery firm. 

Changing Regulations

eCommerce sites generally serve customers across different regions and countries. This means complying with numerous regulations regarding sales tax, customer rights, and data privacy. 

One notable example is the General Data Protection Regulation (GDPR) passed by the European Union in 2018. The rule affects any business with EU clients, no matter where they are based. Violations of GDPR can result in significant fines. 

Small eCommerce companies can limit their risk by only shipping to certain countries. If the business is operating in regions with widely different regulations, adhering to the strictest standard can streamline operations. 

There may also be separate regulations regarding an eCommerce site's products or services. For example, in many countries, product descriptions must be truthful and cannot claim to have curative properties unless approved by a public health body. Likewise, some products that are legal to sell in some jurisdictions are prohibited in others.

eCommerce companies should consider contracting a legal professional specializing in eCommerce and cross-border transactions to ensure all their business practices are meeting all relevant standards. 

Processing Fees

As eCommerce sites cannot accept cash, payment processing fees are a part of doing business. The average processing fee for credit purchases can equal up to 3% of the transaction amount. There are many types of payment processing systems that businesses can incorporate into their webshop. 

In addition to managing several payment methods, including digital wallets, credit cards, and debit cards, many payment processors can also handle transactions in multiple currencies. 

Built-in payment gateways enable customers to complete their transactions on the eCommerce site. Third-party processors move customers to their own sites. There are benefits and considerations for each of these methods.

Some eCommerce sites face additional hurdles due to the nature of their product or customer. Transactions with higher than average rates of chargebacks, customer fraud, or canceled payments are labeled high risk. eCommerce companies selling these types of products can work with a high risk payment processor

Customer Experience

The eCommerce customer experience, or CX, is complex. The customer's first impression of a webshop can directly affect the chances they will complete their transaction. 

Customers can be put off by any number of factors. For example, visually cluttered websites can lower customer trust. The same is true of slow loading sites, broken links, or mobile inaccessibility.

Customers can also lose interest toward the end of their buying journey. If the website's products are consistently sold out, or back ordered, it can drive customers away. Conversely, the presence of security features and customer service options details positively impact the customer experience.

eCommerce firms can improve customer experience by designing an intuitive and functional website. Ideally, the website should display correctly on any smart device or desktop. The color scheme, brand messaging, and visuals should be cohesive and clearly connected to the product or service. 

Customer service features such as chatbots or FAQ ists can provide immediate answers to customer inquiries. However, eCommerce sites should also set up channels where customers can communicate directly with a real agent. 

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