Iīm a webdesigner and Iīve setup some online-shops (not in the US
however) in the last years.
E?Commerce is a still rapidly growing market but I think itīs very
clever to spend some time in planning and risk evaluation.
I will provide an answer in several parts.
Part 1 ? risks
Some examples for risks in e-commerce are rather obvious:
- not getting paid for he goods you deliver
- customers may place orders without the intention to buy (maybe playing a joke)
- capacity limits (can you produce enough if you get many orders ?)
- costs of delivery (there must be a reasonable relation between the
delivery and the goodīs price)
I found an article with a very fine analysis of more risks in e-.commerce:
"The most important step you can take to evaluate your e-commerce plan
is to take a close, realistic, ? even pessimistic ? view of it. Have
your project team look at the plan and point out the places where
disaster is most likely to fall and compile the list ? you end up with
your very own risk list. If you know where the dangers lurk, you can
safely navigate the rapids and enjoy the benefits. So get your key
players together, and let them have at it!
When you're putting together a risk list, be sure to review the list
of benefits to see if some of the benefits of the plan also come with
great risk. For example, you may find that some of the benefits
require the use of new and unproven technologies, therefore making
them risks themselves.
Here's a sample risk list to get you started (Try to be realistic;
"The world might end tomorrow" is a little off target for this
-This project could distract key resources within the company, causing
the rest of the business to suffer.
-We will be placed on the same level as our major competitor, a
company that already does most of its business online. (Yes, this is a
risk as well as a benefit!)
-Our customers may not want to change the way they do business with
us, so the cost of an e-commerce project may not generate profits.
-Increasing the number of products we offer by using a Web site will
create warehousing and distribution issues.
-If we decide to use alternative warehousing options, we have to
create partnerships that make us vulnerable ? we have to count on
those partners to ship products on time.
-Our employees may feel threatened by the project and refuse to use it
or recommend it to customers.
For example, one risk is that your Web server could crash, preventing
customers from accessing your online business. How likely is that?
Very ? it will happen, sooner or later. So, give that risk a
likelihood of 1, for "will definitely happen at some point." How
devastating will it be? Pretty much totally devastating. So give it a
1 for "this will kill us if it happens."
Try to keep your likelihood/potential for devastation numbers on a
scale of 1 to 3 (high, medium, and low). This scale will make the list
easier to work with and keep you from splitting hairs when assigning
priorities to your risks.
After you assign numbers to all the risks, arrange the list in order
of likelihood and rank each item by how bad things would be if and
when a disaster occurs. Then move on to less-likely risks, and so on.
Plan to revisit the risk list regularly ? at each status meeting ? and
revise it periodically as risks arise and are mitigated. Use the risk
list to prioritize your efforts ? doing so will keep the project on
( http://www.dummies.com/WileyCDA/DummiesArticle/id-1311.html )
Another analysis covers some more points. Risks are divided in three areas here:
Iīm sure that for a small e-commerce business many of these points
will be of minor importance. Nevertheless I provide the complete list
"RISKS IN E-COMMERCE
Scant comprehensive literature exists about e-commerce risks.
Anecdotal evidence indicates that the main risks associated with
e-commerce concern hackers, viruses, and interception of credit card
numbers travelling over telecommunication lines. Technological
advances can mitigate many perceived risks  and recent surveys 
indicate greater concern over more mundane issues such as running out
of stock and high shipping costs.
We have categorized risks in three primary areas: information risks,
technology risks, and business risks. Information risks stem from
information published and contained in web sites and associated with
the conduct of e-commerce. Peripheral to information risks are risks
associated with misuse of information, such as violation of laws in
the United States and other countries. Technology risks include risks
involving hardware, software, telecommunications and databases. These
risks include the consequences resulting from the misuse of technology
or the use of inappropriate technologies required to address business
needs. Business risks concern customer and supplier relationships, and
risks associated with products and services marketed and distributed
over the Internet. They also include risks associated with managerial
aspects of the business including personnel and contractual relations.
Because e-commerce straddles many functional and technical areas,
authors in many disciplines have identified e-commerce-related risks.
Examples of these can be found in , , , and . From these
sources and from the general risk management literature -- for
example,  -- we compiled a partial list of risks that appears
1. Information Risk
1.1. Content on web page exposing web publisher to libel, defamation
of character, slander
1.2. Copyright infringement and invasion of privacy suits stemming
from posted textual content
1.3. Copyright infringement and invasion of privacy suits stemming
from digital scanning and morphing
1.4. Copyright, patent, or trade secret infringement violations by
material used by web site developers
1.5. After unauthorized access to a web site, online information about
employees or customers is stolen, damaged or released without
1.6. Electronic bulletin boards containing defamatory statements
resulting in liability or embarrassment
1.7. Worldwide legal exposure resulting from use of creative material
(e.g. names, likenesses) that violate laws of countries outside of the
1.8. Credit card information intercepted in transit is disclosed or
used for fraudulent purposes
1.9. Information that has been changed or inserted in transmission is
processed leading to erroneous results
1.10. Flight of intellectual property due to employees moving to competitors
2. Technology Risk
2.1. Negligent errors or omissions in software design
2.2. Unauthorized access to a web site,
2.3. Infecting a web site with computer viruses
2.4. Internet service provider (ISP) server crashes
2.5. Software error and omission risks causing unauthorized access
2.6. Software content risk that violates a copyright or is libelous.
2.7. Third party intercepts credit card information in transit causing
breeches in security for online payments.
2.8. Intercepting and copying or changing non-credit card information
2.9. Insufficient bandwidth to handle traffic
2.10. Obsolete hardware or hardware lacking the capacity to process
2.11. Risk due to excessive ISP outages or poor performance
2.12. ISP phone numbers being busy
2.13. ISP or home-company servers being down
2.14. Scant technical infrastructure to manage cycle time to develop,
present, and process web-based products
2.15. Risk of improperly integrating e-commerce system with internal databases
2.16. Risk of improperly integrating e-commerce system with internal
2.17. Risk due to poor web site design manifesting themselves in long
2.18. Inability of customer or supplier computers to handle graphical downloads
3. Business Risk
3.1. Web page content exposes web publisher to libel, defamation of
3.2. Electronic bulletin boards containing defamatory statements
resulting in liability
3.3. Worldwide legal exposure resulting from use of information in
violation of home-country laws
3.4. Using web sites to conduct illegal promotional games, such as a
sweepstakes or contests
3.5. Risks related to payment to web site developers and disputes
between developers and clients
3.6. Lack of maintenance on existing web pages
3.7. Impact on business due to intellectual property lost due to
employees moving to competitors
3.8. Changes in supplier relationships re: data access, data
ownership, distribution strategy, and marketing tactics
3.9. Changes in customer relationships re: data access, data
ownership, distribution strategy, and marketing tactics
3.10. Products out-of-stock due to poor communication with operations
3.11. High shipping costs required for distribution
3.12. Inconvenient return policies -- lack of coordination with physical system
3.13. Excessive dependence on ISP to support firm's business strategy
3.14. Inability to manage cycle time for developing, presenting, and
processing web-based products
3.15. Risk due to unprotected domain names which are usurped by other
3.16. Improperly integrating e-commerce systems with internal
3.17. Insufficient integration of e-commerce with supply chain channels
The above risks can lead to events resulting in the deliberate or
inadvertent loss of assets. Deliberate loss of assets can result from
disclosing information, fraud, or deliberate disruption of service.
Inadvertent loss of assets can occur through inadvertent disruption of
service, legal penalties due to disclosure of information, or direct
or indirect losses due to lost business. As losses of these forms can
occur in non-e-commerce environments, what are the similarities and
differences between e-commerce and non-e-commerce risk environments?"
Risks in Electronic Commerce
In my opinion one point often quoted does not play a very important
role: webservers are very reliable . Sure you will not get a good
server for a few cents, but most Internet Service Providers working at
regular prices will do a good job and try to prevent server-downtimes.
Part 2 ? The use of e-commerce
"In many ways, adding a Web site is much like starting a new business."
That sounds a bit pessimistic, but thereīs some truth in it.
Everything has to be planned well.
Why not have a look at the way other bakeries present and sell their goods online.
I found a good example of a demonstration bakery shop for you:
Very well done in my opinion:
- at once you will find the product categories on the left side
- thereīs a division in categories and sub-categories so the customer
will be able to find the desired product fast
- for those who prefer a fast access a search function is included
- the page loads fast and does not make use of annoying graphical
elements (like senseless animations)
Thatīs what I call a really good job.
There are some things needed when you want to start e-commerce.
Do you already have a website where the online shop can be included ?
If your website is already online it would be great to include your
online-shop in your existing site rather than making a new site. You
do not have to start at ?0?, customers already know your page and it
will (hopefully) be listed in search engines as well.
So this chances should be used.
Are you going to setup the shop yourself or will you need the help of
experts (e.g. web-designers) ?
If you can do the job yourself (maybe with the help of a good
software) you will obviously safe money. On the other hand:
experienced web-designers will make a shop in a professional way. It
may take a lot of your time if youīre not experienced to achieve
From my experience an intermediate computer user will be able to setup
an online shops when good tools are used.
One of the best ones I know is shopfactory.
Prices for his widespread shop software begin at less than $ 200.
One of the major advantages is the clear structure of the program
which makes it rather easy ? even for beginners ? to create online
Payment systems ? especially for he us market ? are included and in
contrast to other (rent-a-shop?) systems there are no monthly fees
besides the costs for your domain.
And one important point is covered by shopfactory as well: all
customer data is transferred using the "secure socket layer" (SSL)
protocol, even if your provider should not support it.
So your customerīs data are protected.
"If you are looking for an easy to use yet powerful e-commerce
solution to create professional Internet shops for yourself or others
- and you don?t want to pay monthly fees or charges for every shop -
this might be just the site you have been looking for.
In 1995 we invented the world?s first do-it-yourself e-commerce
solution for non-programmers, for people just like you. We called it
"ShopFactory". Today ShopFactory is used by thousands of Website
developers and shop owners in more than 70 countries. It is available
in 12 different languages and has won countless awards all around the
Besides the software please keep in mind that you will need good
photos of your goods. I my opinion people will prefer to buy goods
online when they can take a look at what they will get before buying.
Again, as in the point before, you can take the photos yourself or ask
a professional photographer to make them for you.
Do you have a reliable Provider ?
In case you already have a website you may have found out if your
provider is reliable.
The market of internet presence providers is very complex,
comprehensive information about this point in beyond the scope of the
question you asked.
Part 3 - the benefits
Well, you might increase your income and maybe bring about economical
growth to your bakery.
You will find new customers and provide a good service to the existing ones.
Never expect wonders, it would be naive to believe that you will sell
online at once. It may take some time (one of my customers reported
3-4 months of moderate ordering, today he gets many orders every day)
Your customers may have to get used to this new way of buying.
I hope that my introduction to some points in e-commerce is helpful to
you. If anything still seems unclear for you pleas post a