When you first made the decision to become a business owner, you knew that it was going to come with risks… that wasn’t going to deter you from accomplishing your goal of becoming a business owner. The thing about risks is that they’re just things that come with the territory of owning a business. You can’t dodge or avoid them but you can lessen your likelihood of experiencing them or have a system in place to cover damages from them.
Whether you have an e-commerce business or a brick-and-mortar business, both business types are going to face similar business risks but there are also certain risks that one business type will experience while the other can operate worry-free. However you choose to look at it, both business types face risks on a daily basis but if we’re going to compare apples to oranges here, e-commerce businesses face the biggest risks.
The real question is why are e-commerce businesses such a hot commodity for damages and destruction? Well, it’s because more and more people are shopping online now, more than ever. Think of it like this… A city can grow in population and cause car insurance prices to go up. Why? Because more people are on the road driving, putting more people at risk of getting into a car accident.
That same logic applies to the increase in online shopping… the more people that shop online, the higher the chance your e-commerce business has of being at risk for fraud or cybersecurity threats. Now, can those risks ruin your business? Yes. But are those risks not worth starting your business? Absolutely not.
As mentioned earlier, as a business owner, your business is going to face risks every day but that shouldn’t deter you from accomplishing your goal. Being informed and educated about these risks will definitely give you a little more peace of mind and assurance about starting your e-commerce business.
Take a look at some of the most common risks your e-commerce business will face on a daily basis.
1. Defamation: Libel and Slander
Defamation is when someone’s words end up doing serious damage to your name, business name, or reputation. Libel is the written and/or published version of defamation while slander is the verbal form of defamation, but both can cause serious damage to your business.
That’s not saying that your business can’t handle negative feedback… there’s a way that businesses can positively deal with negative feedback without needing to “lawyer up,” so to say. But the thing about libel and slander is that a person can simply type one disparaging comment against your business online and it can do a world of damage to your company’s entire reputation, regardless of how long it’s been in business.
Libel and slander is a risk to any business type but your e-commerce business’s likelihood of experiencing it is very high. That reason alone is why you have to make sure your business has protection against libel and slander with professional liability insurance.
2. Fraud
Fraud is something that happens in both brick-and-mortar stores as well as e-commerce stores. Where the difference in the severity of risk lies is that it’s a lot easier to spot fraud in brick-and-mortar stores than it is with e-commerce businesses.
Take credit card fraud for example. There used to be a time where brick-and-mortar businesses would ask for ID when an item was being paid for with a credit card… that has since come to a complete halt. With e-commerce stores, there’s no ID required at all.
A person can be whoever they want to be online, especially if they have a credit card for it. This is not only a threat to your customers but it’s also putting your bottom line at risk as well.
3. Defective Products
Defective products are something you’re going to always be at risk for, and it’s something you don’t really have full control over unless your e-commerce business is handmade products made by you. Lots of businesses resell retail items, which means they don’t see the product or can test it out. The only thing you can do as a business owner is to make sure you’re only selling quality items and trust that they’re not defective.
4. Breaches in Data
Data breaches are very common with e-commerce businesses but that doesn’t mean your business has to become part of the commonality. A data breach is when sensitive information (your customer’s information) is used by an unauthorized user.
Norton states that breaches in data happen for various reasons but some common reasons stem from not creating strong enough passwords and using software that’s outdated. According to IT Governance, if you’ve experienced a breach in data, you want to report it within 72 hours, at all costs.
As a way to reduce your chances of putting your business at risk of data breaches, make sure you’re computer is utilizing the most updated software and you have strong passwords.
5. Cybersecurity
With cybersecurity, your business is going to be at risk for hackers. Hackers like to get into the servers and databases of e-commerce sites and steal or completely destroy sensitive information. Computer hackers are extremely smart. They have the technical knowledge and skills to install malware onto your computer and you won’t have a clue that it’s been done…
Invest in an effective cybersecurity system to protect your digital files and sensitive information against unauthorized users.
