The rise of digital behemoths like Amazon and Etsy has revolutionised commerce, presenting SMEs with unparalleled opportunities for growth and reach.
Many are looking to enter the world of e-commerce or already have. However, the promise of flourishing sales comes with its unique set of challenges and “moving goalposts”, which we have outlined below.
- Payment delays: An alarming number of Amazon sellers have recently encountered payment holdbacks, placing significant strain on SMEs by hindering their cash flow, impairing their ability to restock, and making bill payments a challenge.
- Communication barriers: In 2016, Amazon unveiled a policy for new sellers, retaining money for a week post-delivery. This was expanded to EU and UK sellers in August 2023. However, there have been numerous accounts of SMEs missing out on these crucial updates, often buried in their spam folders. Regularly checking emails, including junk folders, is paramount.
- Shifting service terms: Digital platforms are notorious for their frequently updated terms, encompassing everything from return policies to commission rates. SMEs must be proactive in staying abreast of these shifts to avert potential legal entanglements or even account deactivation.
- Intellectual property concerns: The expansive reach of global platforms amplifies the risk of intellectual property conflicts. SMEs must rigorously ensure that they’re not unintentionally infringing upon any IP rights.
- Handling disputes: Although digital platforms often have built-in mechanisms to resolve disputes, these systems can sometimes tilt in the buyer’s favour. Being well-versed with one’s rights and when to escalate issues is essential.
- Privacy and data protection: Platforms amass enormous volumes of user data. For SMEs, it is imperative to align with data protection norms like the GDPR to circumvent legal hassles and penalties.
- Decoding platform charges: Marketplaces come with their price tags in the form of listing, transaction, or referral charges. A thorough understanding of these costs is crucial to ensure the sustainability of an SME’s operations.
- The exclusivity trap: Certain platforms may stipulate exclusive sales rights, restricting SMEs from diversifying their sales channels. This could stifle growth and leave SMEs vulnerable to the whims of a single platform.
- International regulatory adherence: Selling across borders requires compliance with a plethora of local regulations. From safety guidelines to import tariffs, SMEs must be vigilant in ensuring their products align with regional norms.
To truly harness the power of third-party platforms, SMEs must equip themselves against potential legal pitfalls.
An informed approach, coupled with an unwavering focus on the fiscal wellbeing of the business, is the way forward.
Seeking expert legal guidance on steering through these challenges? Reach out to us for tailored commercial advice.