In 2021, e-commerce sales are expected to account for 18.1 percent of retail sales worldwide. The growth of e-commerce is a clear indication that an increasing number of people are buying and selling goods and services online. This is because of the numerous benefits that the business model offers both companies and consumers. However, e-commerce is not without some risks. It is important for online businesses to understand these risks so they can better prepare for the unexpected.

Here are some e-commerce risks you need to know.


Cybercrime cost the global economy nearly $1 trillion in 2020. With cyber criminals becoming more and more sophisticated by the day, e-commerce businesses are constantly exposed to cyber security threats. Some risks that online businesses face are phishing attacks, website hacking, malware, credit card fraud, ransomware attacks and unprotected web services.

Most online businesses handle sensitive personal information from customers and process numerous transactions. As such, online security breaches can have far-reaching consequences for your business. Without proactive cyber security measures in place, your business will be exposed to lawsuits, penalties and fines.


E-commerce businesses have to collect information about visitors and existing customers. This information can help to identify potential customers, provide great customer service, ensure personalized communication and process payment transactions. However, to avoid legal problems, the information must be collected without interfering with rights of privacy.

Similarly, businesses have a responsibility to keep customer data safe and secure. However, there is always the risk that such data being compromised and used for identity theft, unsolicited marketing and spamming. As a custodian of personal data, your business should work hard to protect the privacy rights of all online visitors.


Violation of intellectual property is a common threat that can result in huge losses. Businesses in the e-commerce industry face the risk of copyright, patent and trademark infringement. Even when you have adequately protected your intellectual property, you may end up violating someone else’s intellectual property. This could cost your online business a fortune.

When it comes to intellectual property, there is yet another risk that you may not have considered. If a third party’s advertisement appearing on your website violates another party’s intellectual property, you may still run into serious problems.


Just like regular retailers, e-commerce businesses are concerned about product liability issues. The products or services you sell online can be defective, result in some type of injury or cause damage to property. This could be due to design flaws, manufacturing defects or marketing defects. When this happens, your online business may face third party claims.

When running an e-commerce store, there is no telling when you will encounter product liability issues. To protect your business from financial losses, make sure you have product liability insurance to cover the associated expenses.


Even with thorough record keeping and clear communication, mistakes can happen when shipping items to customers.  Because purchases are made online, e-commerce businesses typically make promises and enter into contracts before the actual transaction takes place. However, there are times when you will run out of stock, orders will be misplaced, the wrong items are sent and orders will get lost in transit. This could be due to errors or warehouse and logistics challenges.

If the errors and challenges result in your customer losing money, you could be held professionally liable. You can be sued for breach of contract, professional negligence or failure to deliver a promised product or service on time.


Apart from exposing you to professional liability, human error can also cause data loss. In fact, about 95 percent of cyber security breaches are caused by human error. An innocent mistake such as deleting a file, poor password hygiene, poor access control or email misdelivery can present serious cyber risks.

To minimize the risk of losing important customer, employee and business data, invest in a reliable backup and recovery solution. Also, educate your employees on the importance of remaining vigilant and train them for cyber security. This will go a long way in reducing human error.


Even a few minutes of system downtime can be disastrous for an online business. Outages may occur due to coding errors, a surge in traffic, problems with online payment systems, or scheduled downtime to update servers and security. Platform downtime will lead to business interruption and loss of productivity. When the outages are frequent and lengthy, they will damage your reputation and impact your bottom line.

Apart from website downtime, several other factors can contribute to poor customer experience. These include low quality imagery, a site that is difficult to navigate and slow site speeds.


E-commerce businesses must adhere to certain regulations relating to data privacy and protection. Business owners who operate without regard to the applicable laws run the risk of paying hefty financial penalties, serving time in prison or having their company shut down altogether. With this strict regulatory environment, non-compliance could jeopardize your business continuity.

Whether you sell locally or internationally, you should understand your obligations under these laws. This way, you will take statutory compliance seriously, something that will help you to protect your business, employees and customers.


Disasters happen, and they can take many different forms. Whether natural or man-made, these unforeseen events can have adverse effects on your online business. One of the potential risks that e-commerce businesses face is loss of premises and inventory damage due to disaster. Inventory can be damaged while in the warehouse or when in transit.

To ensure your online business survives and carries on after such disasters, you should have the right protection in place. Having adequate insurance coverage will minimize your financial loss and help you get your business back up and running.

Putting in place the right preventive measures will go a long way in ensuring your online business is protected. Part of this involves buying a comprehensive business insurance policy. At Harris Insurance, we are a B2B commercial insurance provider based in Las Vegas, NV. Our policies are designed to help you contain and transfer the risks that are inherent to your business. Contact us today to learn more about our insurance services.