Estimates from Nasdaq suggest that 95% of purchases will occur online by 2040, with the proportion of eCommerce sales made using smart devices growing continuously. Technology is reshaping eCommerce, and as such, a growing number of new businesses are setting up in the field.
New online retailers, particularly those trading through platforms with in-built policies like Shopify, can be tempted to skip traditional policy procedures, but this can lead to a business’ downfall: although some policies will depend on the nature of the business, there are certain policies that every eCommerce business should have in order to meet the regulations of both business and technology.
Basic Policies: Terms Of Service And Privacy
As soon as an eCommerce business begins trading, the terms of service should be clearly available on the website: customers will be agreeing to these when they use the site and make a purchase. A comprehensive terms of service policy will protect the business owner’s rights to the site’s content and should list any prohibited user actions, reserving the right to terminate accounts if users violate this agreement. There is no legal requirement for an eCommerce business to have a terms of service policy, but without one, it’s difficult to regulate user activity, and the risk of customer lawsuits is higher.
A privacy policy is, however, a legal requirement for an eCommerce business. GDPR regulations mean that companies serving EU clients must obtain consent from their customers before processing their data. That data must be kept anonymous in order to protect customer privacy, and businesses must notify customers if there is a data breach. Unless a business can guarantee that it will not serve customers based in the EU, it is essential to have a privacy policy which is GDPR-compliant.
Returns, Exchanges And Shipping Policy
A shipping policy is essential for any eCommerce business, and should outline the plan for how goods will be shipped. This should include the shipping company and speed, the handling times and the pricing. While many retailers will have a distinct shipping cost, there are some business where the shipping costs will be more appropriately worked into the overall cost of the product. Subscription box businesses, for example, should account for shipping, packaging, marketing costs, product sourcing and fulfillment in the final price of the box, and this should be clearly indicated in the shipping policy.
The business should also have a clear returns and exchange policy in place before shipping the first order. It should clearly outline whether the company offers returns and exchanges and what the procedure is for pursuing them. Associated shipping costs, if any, should be covered, and it should be explained how customers will receive refunds. Other conditions, such as limited time frames and receipts, should also be detailed.
Tax Policy: Key For eCommerce
A less obvious policy essential to new eCommerce businesses is a tax policy. If a business has a nexus with any state, sales tax will need to be charged on a transaction in that state. The tax policy is crucial because different states have different regulations, and a nexus is defined differently in different states: it may depend on a business’ physical presence in the state, the number of transactions done, or whether the company uses cookies on devices used within a state. Any state in which an eCommerce business has a nexus will need to be registered with for a sales tax permit. Many customers expect to see the amount of sales tax their transaction includes, so the tax policy should be clear on how much information is shared.
Business and technology intersect in the world of eCommerce, often on a global scale, and for this reason, it is essential that any new business has clear policies to address the nuances of each. Although every business will require specific policies according to its niche, the terms of service, privacy, shipping, returns and tax are essential policies to have in place before a new company begins trading.