5 Often Ignored E-commerce Risks (And How to Mitigate Them)

To maximize your e-commerce revenue and minimize losses, you have to streamline your budget and keep up with industry trends and benchmarks. Things could go wrong in these areas without a proper mitigation strategy, but they’re not the only risks you should be worried about. For example, have you considered the possibility of being sued by an unhappy or injured customer? Keep reading to learn more about mitigating less obvious, potential e-commerce risks.

1. Your Product Triggers an Adverse Health Reaction

Some of your genuine products that are otherwise safe to use may trigger adverse reactions in people with certain allergies. For example, a customer may get an ear infection after wearing handmade earrings they bought on your e-store. General liability business insurance in King County, WA can cover your attorney fees, court judgments, or settlement if you’re sued for the resulting product injury.

To avoid exposing your customers to danger, utilize safer materials to make your products. For example, reconsider the use of synthetic materials like nylon, rayon, or polyester. Some people develop skin problems when they wear clothing made with these artificial fabrics. Also, minimize your liability risk by including a list of ingredients and their potential side effects in your products’ labels or user instructions/guides.

2. You Made or Designed a Defective Product

Product design, manufacture, or marketing defects can cause injury or damage to the end-user, triggering costly litigation against your store. Contaminated food is a common example of a manufacturing defect. Marketing faults can arise when your product has incorrect product labeling, leading to harmful use.
You can protect your e-commerce business against such claims by:

  • Having product liability insurance
  • Providing sufficient user instructions and product warnings
  • Minimizing your liability exposure with proper supplier contracts
  • Incorporating adequate quality controls and product tests
  • 3. Your Response to a Negative Review Dented Your Reputation

    Negative customer reviews about your e-store can hurt your online reputation. However, an angry response to any such comments can trigger a costly public relations disaster. To protect your company’s image, always be calm when addressing customer complaints that have been published or shared online. If possible, invite the reviewer to an offline conversation to minimize potential harm.

    4. Copyright or Intellectual Property (IP) Infringement

    Using marketing or promotional content or ideas that are too similar to any of your competitors may attract copyright or IP infringement claims. These issues can arise from trademark, logo, or even product design that borrows heavily from existing brands without the owner’s authorization. Tips to avoid copyright or IP violation claims include:

  • Always use original marketing/promotional materials
  • Seek owner’s consent before publishing or otherwise using copied or modified designs
  • Wherever possible, include enhanced warranty and indemnity clauses in your supplier contracts
  • 5. Shipping Delays

    Any customer would be frustrated when a product they ordered from your online shop took longer than expected to arrive. Shipping delays can occur due to a variety of reasons, such as:

  • Unforeseen supply chain bottlenecks
  • Misplaced orders
  • Orders getting lost in transit
  • Your staff or warehouse supplier shipping the wrong product
  • Your company could be sued and held liable for the customer’s lost revenue or other related inconveniences. Here are some measures to minimize your exposure to this e-commerce risk:

  • Consider having inland marine or transit insurance
  • Clearly indicate each order’s estimated shipping and delivery dates
  • Make provisions for shipping delays during holidays, busy shopping seasons, or bad weather
  • A proper grasp of the risks your e-commerce business faces day-to-day is vital to ensure the long-term sustainability of your operations. At Humble & Davenport Insurance Brokers, Inc, we can help strengthen your risk management program with cost-effective business insurance in King County. Contact us today to learn more.

    By Humble & Davenport Insurance

    At Humble & Davenport, we’re experienced in identifying the unique needs of the men and women who live, work, and play across King County. We have the ability and the skills to custom craft coverage for each client, whether the need is for personal or commercial coverage.

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