Nowadays many entrepreneurs want to jump into an ecommerce market, and it’s completely understandable. This industry is already enormous and growing considerably fast. However, every business has the possibility to fail, and this is especially the case for startups. It is not a secret that approximately 90% of new businesses fail in their first two years. But what are the main reasons of failure? One of the key causes of business’ failure is a lack of legal knowledge and a failure to establish a strong legal structure. Young entrepreneurs are usually very excited about launching their business idea as quickly as possible but they tend to forget about their legal protection. However, it is crucial to pay attention to your legal base.
Here is a list of the top 5 most commonly omitted legal documents that can avoid entrepreneurs serious legal trouble.

  1. Terms and Conditions

Your basic Terms and Conditions (T&Cs) should be the first legal document to be taken into consideration when you are starting an ecommerce business. Whether you have a website or an App, it is strongly recommended – although not obligated by law – to have your T&Cs drafted properly. This agreement acts as a protection for your idea and intellectual property (IP). It usually outlines how your website/App is intended to be used, and explains the rights you have to all your published content . As for ecommerce businesses, T&Cs are valuable because:

They allow you to withdraw accounts that do not comply with your terms.

  • They protect your intellectual property (IP).
  • They outline the procedure to be followed in case of any disputes.
  • They also allow you to use payment gateways with credit card operators.

T&Cs provide legal inevitability and build trust between your company and its clients. This document can be vital to your ecommerce business. Neglect to have it in order is very risky.

2. Privacy policy

A privacy policy is another important document for every ecommerce. Unlike T&Cs, the law obligates you to draft a privacy policy for your ecommerce business. This agreement is made between a website/App operator and its users. It determines how the operator will use, collect, keep, share, and protect the data that the user shares with the website/App.
Customers love to feel secure. If your business has a good privacy policy, clients are provided with a clear picture of how their data is processed. This will keep them feeling assured and build a level of trust that is crucial to the development of an ecommerce business.
It is also worth mentioning that the GDPR will replace the Data Protection Directive established in 1995, creating a greater territorial scope and stricter penalties for those businesses who fail to keep and handle data according to the new rules. From May 25th of 2018 onwards it will be compulsory to comply with these new regulations.

3. Cookie Policy

To those of you who were under the impression that we’d be discussing the kind of cookies that turn moments of pleasure on the lips into a lifetime of heavy burden on the hips, I was actually referring to the cookies that appear on your browser in the form of small text files, kept in a data folder. They are used by ecommerce websites in order to:

  • Retain login details and remember users’ custom preferences
  • Enable users to use a shopping cart, or make use of e-billing services.
  • Recognise and count the number of visitors.
  • Recognise users when they return to the Site.

When drafting this policy, aim for it to fit your website’s requirements without undermining users’ legal rights.
All websites in the EU are required to ask for permission to place cookies on your device, and in return users can choose whether or not to give it.
Statistics have shown that websites using a cookie policy attract a greater amount of users. Indeed, by remembering users’ preferences, you have the ability to improve your user experience.

4. Return Policy

Is a return policy important to you as a business owner? Probably not as important as it is to your customers. A Return Policy outlines how your company handles  unhappy customers.

In fact, 91% of consumers interviewed in Harris Poll claimed that a store’s return policy plays a crucial role in their decision-making process. A properly drafted return policy has the power of turning a new client into a long-term customer. How? One of the main questions an online shopper will have is: “In case it doesn’t fit me, can I return it?” Fair enough, considering the fact that he doesn’t get a chance to hold the product in his hands before purchasing it. So e-commerce businesses must make sure that their return policies are fair to their customers, and as incentivising as possible.

5. Warranty Policy

Determine the kind of warranties your business wants to provide to its customers. A warranty is a form of product insurance, through which a certain guarantee (with specific terms) is given to your customers in written form.
This policy outlines any default warranties that are included in the sale of your products, as well as any particular terms relating to warranties that your customers can purchase.

As a conclusion

During the process of setting up a business, time is a limited and precious resource. This is often the reason why entrepreneurs forget to pay attention to legal documents such as the ones mentioned in this article.
In the long run however, making sure that you cover the potential issues your business is likely to face can save you a lot of time and money. In some cases, it can even save your business from being shut down. This is why we recommend that all essential documents be drafted properly. Don’t postpone the legal protection of your business any longer!

Author´s Bio: This is a guest blog post submitted by Victoria Tselykh. She is a content writer for Linkilaw, a legal platform for startups.

Guest Blogger

This is a guest post written by one of our contributors.