If you’re running a small or medium-sized business, e-commerce platforms like Shopify can feel like a godsend. They allow you to set up an online store quickly and efficiently, without needing a technical background. But as with any tool, it’s important to understand how they work and the potential risks involved. In this blog, we’ll look at what e-commerce platforms do, the benefits and risks of using them, and how you can protect your business when relying on third-party platforms.

What are e-commerce platforms?

Taking Shopify as probably the best known example, it is an e-commerce platform designed to help businesses sell products or services online. It provides tools for:

• Website creation: Drag-and-drop website builders to design your online store.
• Product listings: Manage inventory and showcase your offerings.
• Payment processing: Secure options to accept credit card payments, PayPal, and more.
• Shipping and logistics: Integrations to handle orders and delivery.
• Marketing tools: Features like email campaigns, social media integration, and analytics.

The key advantage is accessibility—Shopify and its competitors (like Wix, Squarespace, or BigCommerce) handle much of the up-front work, letting you focus on selling.

Benefits of using e-commerce platforms

• Ease of use: You don’t need coding skills to get your store online.
• Speed: You can launch your online presence in days rather than months.
• Scalability: As your business grows, platforms like Shopify offer features and tools to scale with you.
• Support and updates: Regular updates, security patches, and customer support are included.
• Integrations: Seamlessly connect your store with tools for accounting, marketing, and customer management.

Risks to consider

• Costs: Monthly subscription fees, transaction charges, and add-ons can add up.
• Ownership limitations: Your store exists on Shopify’s platform, meaning you don’t fully control the infrastructure. If Shopify has downtime or changes its terms, you’re affected.
• Customisation constraints: While you can modify your store, highly specialised needs may require costly developers or aren’t feasible at all.
• Data ownership and privacy: Some third-party platforms have complex terms regarding the ownership and use of customer data.

Protecting your business when using third-party platforms

Before jumping in, it’s crucial to take steps to safeguard your business. Here’s how:

• Understand the terms of service:   Carefully review the platform’s terms of service and privacy policies. Look out for any clauses about data ownership, liability in case of downtime, and refund policies. You might wish to get some legal advice to be sure of exactly what you are signing up to.
• Back up your data:   Regularly export your customer information, sales data, and inventory details. This ensures you aren’t completely reliant on the platform.
• Custom domain name:   Use your own domain name (e.g., www.yourbusiness.com) instead of the platform’s default domain. This gives you flexibility to switch platforms without losing your online identity.
• Invest in security:  Use strong passwords, two-factor authentication, and reputable third-party plugins to safeguard your site from breaches.
• Monitor costs:  Regularly review your subscription plan and add-ons. Ensure the services you’re paying for still align with your business needs.
• Plan for growth:   Ensure the platform can handle your future needs, whether it’s handling larger inventory, more traffic, or international sales.

Top tips for small businesses

• Start simple: Choose a plan that fits your current needs, but consider the potential costs of scaling up.
• Read reviews: Research what other businesses say about their experiences with the platform.
• Negotiate where possible: If you’re on a paid plan, some platforms may offer discounts for annual subscriptions or growing businesses.
• Consult an expert: If in doubt, speak to a solicitor or a consultant familiar with e-commerce to ensure you’re protecting your legal position and that of your customers.
• Keep control of your branding: Always maintain ownership of your logo, designs, and website copy to avoid being tied to any one platform.

E-commerce platforms like Shopify offer incredible opportunities for small and medium-sized businesses, but they aren’t without their challenges. By understanding how they work and taking steps to protect your business, you can reap the benefits while minimising risks. 

If you need assistance with reviewing contracts and understanding your rights feel free to contact Sarah Naylor, Head of Commercial and Dispute at sarah.naylor@switalskis.com or call us on 0800 1380 458 for expert legal advice tailored to your business needs.