Organic Cosmetic Online Store’s Financial Risks Essay

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Today, the internet provides a big platform for the business world to interact with their customers. However, the ability to trade with potentially billions of clients in a global village is not a remedy to the challenges of business as most people think. It is important to note that success in any retail business still depends on the primary idea of a demand backed up with exceptional and appealing service and products. Setting up an organic cosmetic online store is a lucrative way to attract clients, discover new markets, and improve your sales, (Schmidt, Döbler, and Schenk 52). However, “additional factors that include security, privacy, copyright, and taxations are important factors and in most cases hinder achieving set goals in online marketing”, (53).

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This paper will discuss various financial risks and external factors that affect the actual goals and objectives of an online organic cosmetic store.

In most cases, financial issues concerning online stores can better be explained by looking at the customer perception of online trade procedures and law. Online business involves a significant perception of uncertainty for clients, (Schmidt, Döbler, and Schenk 50). Many researchers explain this reason as the primary principle of consumers’ reluctance to use the online market as a new purchasing framework. Uncertainty in most cases involves risk, and this leads to a reduction in profits since most customers do not feel safe to make transactions. Further, a more elaborate way of discussing financial risk as an influential aspect of the success of the online organic cosmetic store is by discussing security and privacy issues.

Security is the most important component of risk that hinders transaction using an online platform. Dealing with customers’ data and payments requires maximum safety. Three main situations explore the reduced involvement in the transaction to financial security fears. First, as a retailer, it is important, even though, hard to establish whether the credit card user is the owner or a fraudster. This aspect hinders business in fear of losses. The second issue involves the risk of accessing electronic information of customers’ cards by hackers, and the third aspect involves limited ability to verify whether the client is giving information to a genuine merchant of a fraudster. These factors limit engagement in online business hence reduced customer base. It, therefore, leads to low-profit margins.

Privacy is another important risk that affects returns from online stores. As new software enables retailers to store and transfer individual information for future demand analysis, consumers hesitate to use these platforms for fear of fraud. This process limits the customer base hence lower returns.

Another important is building customer trust. Customers still focus on the “touch and feel” experience, (Madaan 62). This limits involvement in trade over the online platform. This perception together with competition from other online stores and the physical market restricts the profitability of online retail stores, in general. Customers feel safe selecting physically before purchase. The organic cosmetic market is more of a luxury where customers are very keen and, therefore, may require sampling a few items before purchasing them.

Starting an online organic cosmetic retail store may involve some challenges that include; storage of goods and the distribution process. Its success, however, requires involvement of appropriate online tools, (Madaan 63). Starting an online organic cosmetic retail store requires a good selection of website tools that will help you offer appropriate financial security and privacy for clients to purchase effectively. Furthermore, domain names and hosting packages are given much attention if the customers will be able to view your store.

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Works Cited

Madaan, K V. S. “Multichannel retailing and ownership structures in retail.” Fundamentals of Retailing; New Delhi: Tata McGraw Hill Education Private Limited, 2009. Print.

Schmidt, Inga D, Thomas Döbler, and Michael Schenk: “Age of change.” E-commerce: A Platform for Integrated Marketing; Case Study on U.S Retailing. Münster Lit, 2000. Print.

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"Organic Cosmetic Online Store's Financial Risks." IvyPanda, 23 Aug. 2020, ivypanda.com/essays/organic-cosmetic-online-stores-financial-risks/.

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IvyPanda. (2020) 'Organic Cosmetic Online Store's Financial Risks'. 23 August.

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IvyPanda. 2020. "Organic Cosmetic Online Store's Financial Risks." August 23, 2020. https://ivypanda.com/essays/organic-cosmetic-online-stores-financial-risks/.

1. IvyPanda. "Organic Cosmetic Online Store's Financial Risks." August 23, 2020. https://ivypanda.com/essays/organic-cosmetic-online-stores-financial-risks/.


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IvyPanda. "Organic Cosmetic Online Store's Financial Risks." August 23, 2020. https://ivypanda.com/essays/organic-cosmetic-online-stores-financial-risks/.

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