E-commerce business is one of the lucrative business space that is taking place in this era of technology and internet growth. Various companies have shown how profitable it is to venture into e-commerce space and are ready to spend millions of dollars on marketing and offer pricing and merchandise that ruthlessly undercuts upstart retailers. With the likes of E-commerce giants like Amazon and eBay, the client could have chosen to enter into e-commerce space maybe because of the following general strategies that can help them compete favorably:
Creating a unique product that allows the client to serve the vacuum in the e-commerce space. When entering into the online business that has been dominated by the likes of eBay and Amazon, it is essential to focus on targeting the niches that either does not exist or that are underserved. The client may choose to venture into e-commerce because h/she is innovative and wants to create his or her fashion that does not need to enter into the established marketplace.
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Mobile and the hearts of the customers. Mobile strategy is vital in the e-commerce business. According to Rampton (2014), 88 percent of people believe that having a mobile device with real-time information enables them to do spontaneous shopping. Besides, the majority of the population own mobile devices, and thus it makes it one of the most used devices to do online shopping. The client may be intending to use the philosophy of mobile-first and platforms that dominate mobile devices such as Instagram and SnapChat to make his or her presence known.
Identifying a need and filling it. In every market and niche, there is always an opportunity to make it better. Perhaps the client has assessed what his or her online market is missing and is prepared to dedicate some resources to perfect some common consumers’ complaints and difficulties. This strategy will help the client gain a customer base with ease.
Venturing into E-commerce space is associated with various benefits such as being able to reach a wide global customer base, low startup capital, increased demand for global goods by consumers, etc. However, the venture also has several risks associated with it. Such risks include pervasive e-commerce security risks, including virus attacks and the potential for the business to suffer fraud from employees, customers and others through unauthorized access, the risk of changes in laws and regulations governing e-commerce that may lead to noncompliance with taxation and other legal requirements, systems, and infrastructure failure, and financial risks. Besides, the following potential business risks may lead to the client's material misstatements in his or her financial statements.
The risk of an increase in production cost if the client intends to produce a unique product
A risk of cash flow problems
Risk of litigation and claims
Since technology is dynamic, the client faces a risk of technological obsolescence that may lead to business failure
There is also the potential of the risk an increase in the market competition after the client has ventured into the market
Low profits contrary to the client’s projection
High financial risk as the client will have to invest in website creation, warehouse and all other requirements for a robust e-commerce business.
Other startup and e-commerce risks that the client may encounter include privacy issues where customers' personal data could be compromised and used for unsolicited marketing and spamming, customer disputes due to failure to receive their order, receiving a product that does not fit the online description, or having their credit cards charged twice or more (Nagendra, 2017).
Due to the risks identified above, the nature of e-commerce business and other factors, planning an audit for such business needs a lot of caution. Therefore, the following issues will be put into consideration during the planning phase for the company’s audit. First, there is a need to understand the client and his business as well as the place of the business. This will help in auditing the imagery and visuals to check the imagery relevance with the type of business. The website usability – customers need a website that is easy to use and gives them the ultimate experience. A site with poor user experience may lead to business failure as it can't help in sales or conversion rates (Smoteks, 2018). Besides, there is a need to identify other market players that deal with products that are related to the client's products. Thus, planning the audit for the company will entail a market and competitor research.
Understanding IT controls will also be very crucial to ensure proper planning for mitigating risks associated with hacking, malware infection and technical problems. My team will also need to research and understand well the laws that regulate e-commerce in different countries where the client is targeting the customers from. Even, the team must understand corporate governance risk and how it may affect the business. Finally, developing a thorough e-commerce website auditing checklist that entails factors such as the e-commerce benchmarking, website usability, SEO optimization, Imagery and Visuals, and technical web elements will be very helpful for adequate planning of the audit report.
References
Nagendra, B. (2017). What kind of risk involved in an e-commerce startup? Retrieved from https://www.quora.com/What-kind-of-risk-involve-in-ecommerce-startup
Rampton, J. (2014). How to compete with the e-commerce giants. Retrieved from https://www.inc.com/john-rampton/how-small-retail-based-startups-can-still-win-in-the-= midst-of-e-commerce-giants.html
Smoteks, H. (2018). E-commerce audit checklist for 2019 – the guide to improve your eBusiness. Retrieved from https://blog.linkody.com/guides/e-commerce-audit-checklist
