Thinking about adding an ecommerce store to your website or do you already sell products via an online store on your website?

These could be either physical products, where you post something out to a customer -  often seen as the main type of ecommerce in online stores. But in the past few years, we’ve seen a noticeable increase in digital products being sold online too. This is where someone makes a purchase and they receive a link to download something. This could be a template, e-book or online course, for example.

But what happens if things go wrong?

If you have a shopping cart on your website then you might already know that you need to create terms and conditions for your online store. This article digs a little deeper and covers the top 7 things I know you should consider to ensure you will make life easier for yourself as a new online store owner.

Create a contract for your customer

When a customer puts an item in their cart and before payment is taken, your online store terms and conditions should be displayed. This should ideally be a check box that the customer is required to tick to indicate that they have read and understood the terms of the sale (which are usually hyperlinked next to the check box), and they agree to be bound by them. At a minimum, you should have a hyperlink to your terms and conditions. What is most important though is that a customer knows when buying from you, the basis on which you are offering your products to them.  For example, what the shipping and returns policies are or what disclaimers you have in place to make sure customers can’t make a claim against you.

What you are doing with the link to your terms and conditions is creating a contract with the customer. All of the considerations that follow in this article should be covered off in those terms and conditions. By ensuring that you have a contract in place, it can help alleviate any issues that may arise down the track with the online purchase. As T&Cs are very rarely thought about in times of a seamless experience (think about when you buy things online, how often do you read them?), they only really come into play when an issue arises. 

Protect your payment pathways and platforms

When you have an online store and take payment online, most people use a third-party payment platform like Stripe or PayPal to facilitate this. Additionally, you might also offer payment plans and take advantage of services like Afterpay or Latitude. 

By using these third-party services, the payment details of your customers sit with the third-party suppliers. So, say for example Stripe (the payment processor) is hacked, you don't want your business to be liable to your customer, for any possible impacts of that breach of security, especially when you can’t control the security or other settings Stripe has in place

This means that it is important for you as an online store owner to acknowledge that you use third-party platforms and that in proceeding to purchase, your customer agrees to provide their details to the third-party platform and uses it at their own risk. You might like to say in your T’s & C’s that you use Stripe, but you reserve the right to change that to give you the freedom to switch platforms or grow your business down the track. You will also need to note that those third-party platforms may have their own terms and conditions, which customers will also be bound to when they buy from you and use the payment platform. 

Refunds and returns

In Australia, the Australian Consumer Law in relation to rights and guarantees and faulty goods and services needs to be adhered to by online store owners. But you can guard your business against things that aren't covered by the Australian Consumer Law. 

For example, if a customer changes their mind about a purchase, which is common when someone makes a purchase online. Let’s say someone buys a pair of pants and when they arrive they don’t look like the colour the customer thought they would. Here is when you should have something in your T&Cs that states that goods may look different online due to, for example, the device they are viewed on or the brightness setting they have in use at the time of purchase.

In other instances, people might change their minds when there isn’t actually anything wrong with the product, so it’s not a case of the product being faulty. If the product is fit for its intended purpose, you don’t automatically need to allow a refund. But you should ensure that you are really clear about what you do and don't do in terms of a refund or exchange. If you do offer exchanges, say you sell clothes or shoes, it can make good business sense to offer a process for exchanging sizes. And you will also need to be really clear that it’s the customer's responsibility to cover postage costs if that is required.

Delivery of digital or physical products

When we say “delivery” we are referring to how the item is going to be delivered. There are considerable differences between the delivery of a digital product and a physical product. When you consider your terms and policy surrounding delivery, you, as an online store owner,  need to think carefully about the customer journey from when they first see it online to when they buy it and finally when it is delivered to them. For example, if the product is digital, is the download only available for a set period of time, say 24 hours? That detail needs to be really clear in the terms and conditions and on checkout from the online store.

For physical products, you need to think about who is going to be delivering the product for you. Is it going to be you? Or is it going to be a third-party courier like Australia Post? With third-party providers, you cannot control the whole experience once you package it and provide it to the delivery company. Sure you can pack it with due care, but if you sell a fragile item, you can't control what is going to happen and how it is going to reach the customer. 

If you are drop-shipping your products, then even more additional layers of third-party interventions will be involved. So your T&Cs need to be sure to identify that, and outline what you do and don’t take responsibility for. As well, it is wise to provide timelines for how long delivery may take to arrive, being sure to have a buffer in there for delays. This can be a helpful approach to managing your business's reputation. If customers know that delivery is to be expected anywhere between 30 and 45 days, their expectations can be managed, and you might get fewer messages in your inbox relating to delivery too!

Limiting liability for your products

This topic is a juicy one and it is important to ensure that you give your buyer a time limit to inspect the goods once they receive them. You need your terms and conditions to specify that if they have a problem, they are required to let you know of an issue, say within 24 hours or 48 hours. This minimises your risk of having someone come back to you 3 months later with an issue that they likely caused but claiming they had not unboxed it for 3 months. 

You also need to limit your liability to the cost of replacement only so that in the event the product is damaged or faulty and has a more significant outcome such as an injury, you avoid a more open-ended broader damages claim. Of course, insurance is a must also and we recommend you speak to an appropriately qualified professional in the insurance industry to arrange that aspect.

Disclaimers

Disclaimers will vary from an online store to an online store, depending on what you are selling. For example, a digital product requires that your disclaimers be around information and outcomes. That is, the product is not drafted specifically for an individual or a specific outcome.

If it is a physical product, then you need to look at what the purpose of the product is. Particularly if it’s a product to be eaten or put on your skin, there are risks of allergy-related issues. So you might need to have a disclaimer saying that you cannot guarantee what has and hasn't been used in the products if they are coming from a third-party factory. A nut allergy is a really good example of this.

It is difficult to give guidance here without knowing a business’ specific products so it’s always best to have a legal professional help you draft something up that is unique to your business needs.

User Content

Some online stores allow customers to leave comments and reviews. For the purpose of this article (and the terms and conditions we draft), we call this ‘user content’.  Adding something in your T&Cs about how customers are responsible for what they put up on the website and that reviews aren't necessarily accurate is a good idea. The reason for this is because a customer is acknowledging that they cannot rely on other people's reviews to make a buying decision.

You might also like to say that you reserve the right to take down a review that is offensive or defamatory. 

So, if you have an online store and sell products, whether physical or digital, a small investment in solid terms and conditions can save you in many ways. Often people come to me to set up their online terms and conditions after they had a very challenging experience with a customer. However, it is always recommended that you have these set up from the start, so you can avoid these messy situations and keep your business’ reputation intact.

Related article: Professional Services: It’s time for a digital product strategy

Our ecommerce bundle includes Online Store Terms of Purchase, Website Terms of Use and a Privacy Policy. If you would like to discuss your specific needs with me, book a no-obligation call here.