Companies must learn risk management in e-commerce


Selling through the internet is the rising form of commerce. Customers are drawn to the convenience of purchasing an object on the internet and are increasingly taking that convenience with them everywhere through mobile devices. Assuming that beginning e-commerce initiatives will immediately cure a company's ills, however, is an unsafe proposition.

There are several unique risks and factors that have to be taken into account when selling online. Everything from a reliable transaction management system to advanced supply chain management and awareness will test executives.

Expert hints

Practical Ecommerce recently published its guide to the many dangers confronting an internet-based business. The source divided them into two categories, "assumptive" and "operational." An assumptive risk is a danger stemming from lack of knowledge. E-commerce is a young field, and companies new to it will have to make certain leaps of logic to begin the journey. Operational risks stem from the actual day-to-day grind of running a fast, connected retail enterprise.

Companies venturing into e-commerce will not know beforehand the exact conditions of the market. According to Practical Ecommerce, they will have to take educated guesses for everything from the traffic that the website will see to the actual demand for the goods on offer. The source stated that companies can best prepare to fight through assumptive risks by repeatedly identifying and examining them.

The source prescribed similar processes to help companies solve operational risks. Managers should make themselves aware of the challenges ahead of time and methodically confront them, identifying which dangers are most relevant and making detailed contingency plans. Practical Ecommerce reported that the risks arising from operating an online store could include changes in search algorithms, sudden problems with suppliers, increased competition and unforeseen shipping delays. Each could be devastating, but can be planned for in advance.

High-demand field

Companies are braving the risks of e-commerce, however, backed up by data that states online is the place to be to capture customer attention. A recent Barron's report indicated that e-commerce is still a field on the rise, despite the relative weakness endemic in current retail sales. The source, citing MasterCard Spending Pulse data gleaned at Internet Retailing's Chicago trade show, found that internet retail rose 17 percent year-over-year in May. Companies are interested both in boosting their online sales and using the online channel to drive sales in physical stores. The source found companies changing their entire organizational character to tap into the new trends.