E-commerce platforms have become an integral part of dealers’ operations, offering access to a broader customer base. However, a recent study by the Federation of Small Businesses (FSB) reveals that while these platforms have their advantages, there are significant challenges that dealers face in this digital landscape.
CREDIT: This is an edited version of an article that originally appeared on London Loves Business
The FSB’s research, presented in their new publication, “Net Benefits? Small business use of online platforms,” delves into the terms and conditions governing small businesses’ activities on e-commerce sites. It uncovers areas of concern, ranging from delayed payments to deceptive reviews, potentially jeopardising the interests of small businesses that engage with these platforms.
Small businesses and e-commerce
Over half (53%) of small firms participating in the study currently utilise online platforms as part of their business operations. Moreover, 71% of active small business users of these platforms deem them ‘important’ or ‘very important’ for their business.
Challenges on the horizon
Despite the undeniable benefits of offering products and services on these large company-owned platforms, there are pitfalls too. For instance, two in five (39%) small businesses report that resolving issues with these platforms can be ‘difficult’ or ‘very difficult.’ Additionally, one in six (16%) small businesses encountered issues resolved ‘very unfairly.’
The issue of fake reviews
One of the concerns highlighted in the research is the prevalence of fake or malicious reviews on e-commerce sites. Approximately 12% of small businesses using these platforms within the past year reported encountering such reviews. This issue underscores the need for increased integrity and transparency regarding online reviews.
Integrity of sales data
The study also questioned the usefulness of the sales data provided by online platforms. Some small firms reported having their products de-ranked or delisted entirely after a platform launched its competing product. Additionally, intellectual property infringement is a recurring issue, with small businesses reporting breaches, including design and product copying.
Payment delays and cashflow concerns
The recent issue of online platforms withholding funds due to small businesses has made headlines. Platforms like Etsy and Amazon have changed their fund release policies, causing some small businesses to wait over a month for payments. For example, 16% of Amazon users in FSB’s research reported delays exceeding a month, which can have adverse effects on cashflow.
A call for change
The FSB report includes several recommendations aimed at regulators, online platforms, and the government, based on the research results. These recommendations include commitments to pay small businesses within 30 days, increased investment in issue resolution systems, and legislation against fake and malicious online reviews. The report also suggests establishing a rapid, effective, and affordable dispute resolution procedure for small businesses and e-commerce platforms.
Furthermore, it calls for an investigation by the Competition and Markets Authority into the charging structures of retail platforms and the pricing levels of accommodation and food delivery platforms to identify any monopolistic behavior.
While online platforms provide numerous opportunities for small businesses, there are significant challenges to navigate. The FSB’s report highlights the importance of addressing these issues to create a more transparent and stable relationship between small businesses and e-commerce platforms. This, in turn, will benefit all stakeholders, ensuring constructive and sustainable online marketplaces for small firms, e-commerce sites, and consumers alike.
Be the first to comment