How to Minimize the Risks inherent in online
Business
By Jayaram V
In my experience, I found the most troublesome customers
are those who make mistakes in choosing their products and services
or those who do not pay attention to detail and later complain
that they have been misled. In case of online business, such
mistakes are more common and so also complaints from customers
want to pass on the cost of such mistakes to the sellers. If
you are doing online business, you know how difficult it is
to protect your online reputation. Years ago, Amazon introduced
customer reviews and the practice was picked up later on by
several. While the reviews help new customers to make intelligent
purchase decisions, they also make many online merchants vulnerable
to threats, fraudulent claims and bogus complaints. It
is very easy for a customer to threaten an online merchant with
a bad review and get away with it. If you want to spoil the
reputation of an online merchant, you have many avenues available
to you to do it and you can leave behind a trail of destruction
which will be difficult for the merchants to erase. While big
companies may manage to deal with such situations with the help
of money and a team of lawyers, small merchants and fledgling
companies have fewer options to deal with them and survive.
Friction points
Here are a few instances how online businesses can come under
pressure.
1. A Customer chooses a wrong product. After the product
is shipped, the customer informs the seller that he or she was
shipped a wrong product. The customer would blame the merchant
for providing false information or wrong information, even though
the product information is showing correctly the product details.
For example, in one instance, a customer ordered an artificial
bamboo plant and later complained that she received an artificial
plant instead of a real bamboo plant! That particular site specializes
in selling only artificial plants and therefore it was not clear
why the customer thought she was buying a natural plant while
the product itself was placed in the category of aritificial
plants. Returning the plant back to the warehouse meant heavy
shipment costs, since the plant was about 6 feet and weighed
over 15 pounds and the customer demanded that the merchant should
bear the entire two and fro costs, since it was their fault!
2. Customer provides a wrong billing address. The shippers
fail to deliver the product at the address since the address
does not exist or the place is vacant. The shipper may or may
not return the package back to the merchant or the new occupant
at the address collects the package and does not bother to return.
Customer demands full refund or files a chargeback stating that
she did not receive the product. Since no signature was obtained,
which is usually the case fo small packages, the merchant ends
up refunding the customer.
3. Customer complains two or three weeks after delivery that
she did not receive the packagte although the tracking information
clearly shows that the package was delivered at the specified
address. Obviously someone stole the package from the mail box
or from the multistory apartment complex where the customer
lives. Merchant is forced to refund the entire amount, since
no signature was obtained at the time of receipt of the package,
whch is again the norm for most small order items.
4. Customer places an order, but forgets about the order.
A month or two later contacts the bank and raises a chargeback.
The merchant is forced to fax all the documents to the banker
to prove that an order was placed and fulfilled.
5. Customer places an order for an expensive product. On
receiving it she decides to return the item. She reviews the
merchant's return policy and notices that the return costs
are to be paid by the customer. She calls the merchant and demands
that the shipping costs should be paid by the merchant because
she received a defective product or probably a "fake product."
6. Customer chooses a wrong shipping option and then blames
the merchant for over charging him if she has chosen an expensive
shipping method or for delaying the shipment if she has chosen
the standard shipping.
7. Customer is unfamiliar with the online payment process
or a provides wrong pin number or wrong street address during
credit card processing and blames the merchant for keeping the
transaction on hold or for having a faulty payment gateway.
Alternatively, even though no transaction took place, she would
demand that since the merchant has collected the payment he
should ship the order
These are a few instances, where small online businesses
and merchants can come under pressure for no fault of theirs.
It is not that the customer is always wrong or the merchants
are always right. Sometimes, merchants do make mistakes in fulfilling
the orders and cause inconvenience to the customers. Some merchants
may also indulge in unethical business practices or fail to
provide correct product information. These examples are provided
to illustrate how small businesses that manage their businesses
ethically can come into friction with some customers and find
themselves in hot spots. They are relevant to our discussion
because in the end they cost small merchants time, money and
reputation. They may also severely interrupt their normal business
operations, as most of the businesses are run with tight budgets
and limited staff.
Bad Reviews
Online merchants have also to cope with bad reviews. While
satisfied customers rarely bother to leave their positive remarks,
disgruntled customers promptly file a bad review and pour out
their anger and frustration in no uncertain terms. It is tough
to manage online business for this very reason. Say if you have
filled a thousand orders and of them you had problems with ten.
you can expect that those ten will most likely leave negative
remarks while the rest 990 may say nothing about their experience.
Therefore, when a new merchant visits your site, he will most
likely see the negative reviews and form a negative opinion
about you.
Solutions
While you cannot complete eliminate problems such as these,
you can minimize them to some extent by improving your communication
with the customers and by specifying your business terms and
conditions clearly on the website. The following suggestions
are used by many merchants to minimize the risks inherent in
online business.
1. Lay down your terms and conditions clearly.
2. Make your return policy, shipping policy and taxation
policy as explicit as possible.
3. Make sure that the customer receives a copy of the order
as soon as it is placed with full details.
4. Where customer provides different billing and shipping
addresses, do not fulfill the order unless you contact the customer
and verify the details. If the order amount is high, you should
even ask for a copy of photo ID.
5. Send the customer tracking information as soon as the
order is shipped. If the order amount exceed $250, make sure
that you ask the shipper to collect customer signature.
6. Resolve disputes with customers in a timely fashion. Even
if the customers are at fault, it helps if you show them leniency
and resolve the matter to their satisfaction. Most customers
who make mistakes know that they have made a mistake and they
readily respond to a positive and amicable solution on your
part.
7. Learn from your mistakes. Improve product information
based on your experience and minimize the scope for ambiguity
and misundestanding.
8. Where you are at fault, accept it gracefully, even if
it may cost you money.
9. Avoid gimmicks and misleading offers.
10. Keep visiting online forums and discussion forums to
know how other businesses and merchants are dealing with similar
problems and what remedies and suggestions they are following.
11. Encourage customers to leave reviews and feedback. Send
them reminder emails a few days after the order has been shipped
and delivered. Follow up with a few more reminders.
Prserver all communication with the customers. You may need
it later in the event of a dispute
12. Make sure that your online systems and E-commerce website
are user friendly, robust, secure and reliable.
Online businesses have many drawbacks. It is very difficult
for them to build customer loyalty even with exceptional service.
In the online world, good service is taken for granted while
bad service is seldom forgiven. Whatever may be the level of
your service, know that customers are attracted primarily to
the lowest prices and reviews from previous customers. Other
things being equal, even pennies matter. So if you are an online
merchant, it is natural on your part to feel frustrated, seeing
and knowing that while customers expect the highest level of
service, they do not usually reward it with a repeat order.
On the top of it, you may have to answer for the mistakes they
may make in choosing the products or returning their orders.
You have to be therefore doubly careful of what you do and say
to them in the course of your business through the website,
emails and personally over the phone. In case of transactions,
customers also enjoy many advantages from the credit card companies,
government agencies, customer protection platforms and the various
opportunties and avenues available to them on the internet to
vent their feelings and opinions. Therefore, whatever you do,
know that customers matter, their opinions matters and no matter
who is at fault, it is your duty to resolve the problems. You
have to keep in mind that the environment in which you operate
as a business owner, is heavily pitted against you and least
forgiving.
For Further Reading