Mobile Commerce – Best Practices for Risk Management

Posted By: author
Posted On: 13 Aug, 2020
Last Updated On: 02 Sep, 2020

The explosive growth of Mobile Commerce has changed the way online retailers draw customers, earn their loyalty, and sell them their products and services. For the enormous opportunities that m-commerce has created, it has also uncovered new risks. M-commerce providers that fail to overcome these risks are forced towards elimination. Hence risk management in m-commerce plays a critical role in reducing the possibility of risk occurrence and its potential impact.  

The previous article on m-commerce gave us an insight into the effectiveness of m-commerce platforms in the current scenario and it also talked about the best practices one must follow to create a great user experience. 

This article talks about various risks experienced by m-commerce merchants and recommendations that should be incorporated into their risk management strategy. 

The first step in creating an effective risk-management strategy is to understand the qualitative differences among the types of risks that retailers face. From a broader perspective, m-commerce risks fall into one of the two categories. Risk events from either category can be critical to a company’s strategy and even its existence. 

Category 1: Risks based on Customer Behavior

With increased offerings on mobile platforms by various brands, customer expectations are rising drastically. To remain relevant in such scenarios, retailers must deliver personalization that maps to consumer needs. Meeting ever-changing customer demands is associated with certain risks like 

  • Customer Disputes and Chargebacks 
  • Returns and Refunds 
  • M-commerce Website SEO 

Category 2: Risks based on Advancements in Technology 

In current times it is hard to imagine how commerce would take place without modern technology. Alongside, technology risks in both e-commerce and m-commerce are also constantly evolving. While the advancements in technology offer a world of benefits such as enhanced performance and reduced costs, it also includes increased risks like 

  • M-commerce Online Security 
  • System Reliability 
  • Warehousing and Logistics Issues 

Now, we will talk in detail about the above-mentioned risks and the mitigation strategies. 

Customer Disputes and Chargebacks: 

Appeasing customers should be a business’ top priority, the customer is always right should be the motto for a successful business and their issues should be resolved promptly. Companies face setbacks in terms of loss of customers and revenue due to customer dissatisfaction. The most common complaints revolve around product catalogs and payments, like: customer have never received their order, the purchase was made with a stolen credit card, the product did not meet the customers’ expectations, the product did not match the website descriptions, retailer shipped the wrong product, or the order was billed twice. 

To reduce the costs associated with chargebacks and disputes, retailers must make sure that their company gives a swift response to chargebacks notice, ensures they receive full authorization of order before shipping and facilitate points of customer interaction throughout the transaction process. Also, personalization, chatbots, and quick response mechanisms promise better customer experience and increase loyalty. 

Returns and Refunds: 

Returns management in both e-commerce and m-commerce is crucial since it is one of the determining factors for a customer to buy products from an online shopping website. However, providing customers with seamless returns is a costly affair. Apart from refunding the proceeds from the sale of the item, there are several other costs at play that affect profit margins: preparing items for resale, obsolescence of returned items, lost warehouse productivity, cost of shipping including return shipping and reshipping. 

“41% of the customers buy variations of a product with the intent of returning!”

Retailers can manage returns effectively and improve customer satisfaction by creating a clear and visible return policy and automating the return process. Taking feedback on returns provides valuable information on hidden patterns and necessary action can be taken to correct the issue at hand. Making sure that every product displayed has high-quality images and descriptions prevents returns from product confusion and accidental misspelling. Implementing size guidelines and fitting tools can do wonders in reducing return rates specifically for the apparel industry. 

Mobile Commerce Website SEO: 

With regular updates in Google algorithms and other search engine platforms, there can be an inherent risk of getting insufficient traffic and a decline in sales conversion if a website does not stay updated.  Also, the increasing importance of mobile-friendly websites in search ranking by Google calls out for adherence to rules laid out for making the website mobile-friendly.  

The below steps can help website owners stay ahead of the competition and win customers   

  • Avoiding software like Flash which is not common on mobile devices 
  • Having a user-friendly interface in a mobile version which does not require horizontal scrolling or zooming 
  • Making the whole shopping process, including checkout, quicker and user friendly 
  • Tweaking and optimizing category pages with keywords to help prevent the individual pages from competing for the same keyword 

Mobile Commerce Online Security: 

The incidence and complexity of cyber-attacks have skyrocketed in recent years with the explosive usage of m-commerce services. There is a whole range of security threats one must be cautious of including Phishing, Data Errors, Unprotected Online Services, Credit Card Fraud, and Hacking. As leakage of user credentials and personal information is more prominent through mobile phones compared to desktops, online retailers must take extra precautions to minimize fraudulent transactions and chargebacks on m-commerce apps. 

To defend against these threats, retailers must make sure they update the platform’s operating system regularly, deploy PCI scans and updates, serve content on HTTPs, and use SSL (Secure Socket Layers). Along with following regular steps that are practiced for e-commerce, enterprises can provide a secure mobile app and environment through enforcing identity authentication (using passwords or pins), device authentication (using push notifications), and telephone number authentication (using OTPs). 

System Reliability: 

It is critical for an e-commerce business to avoid failures like ISP server crash, errors on the online payment system, and bugs in the e-commerce plugin. All these issues could cause the entire web presence to come crashing down and it would have a profound impact on customers’ satisfaction levels which in turn results in loss of revenue. 

To overcome these issues proactively, e-commerce owners should maintain disaster recovery teams along with redundant systems for web presence. Retailers can also benefit from using Content Delivery Network (CDN) which helps to minimize the risk of traffic spikes at point of origin and ensures site stability. 

Warehousing and Logistics Issues: 

Operating well-performing e-commerce warehouses and logistics can be complicated. And if it is not done properly, it can result in money, time, and customer satisfaction going down the drain. Some of the problems merchants regularly face include running out of stock in the warehouse, delay in product shipment, or mis-delivery of shipment (delivered to the wrong person). 

48% of the online shoppers find guaranteed delivery dates important when checking out online!

Merchants can resolve the above issues by taking certain measures like using automated inventory management software for effective stock management across all sales channels, implementing bar-code scanning, using autonomous delivery trucks, and robotic warehouse ecosystems to speed up the process. When it comes to order-fulfillment, merchants can decide to carry out in-house or outsource to third parties depending on the size of the business, order quantity, and the location of the consumer. 


One size does not fit all. As m-commerce continues to gain traction, merchants are bound to encounter some form of risk. Some will require their utmost attention for mitigation, while others are non-consequential. Also, m-commerce has unique vulnerabilities and merchants should ensure they are using the right combination of risk management strategies that address their business’s nuances. However, with the above mentioned recommendations they can reduce how those risks impact their costs & profit margins and ensure business stays running smoothly as it grows.

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