88 Does your shop have a presence online? There’s a good chance it does - over half of small firms (53 percent) currently use an online platform as part of their business, according to the Federation of Small Businesses’ 2023 report, Net Benefits?. Small businesses have been a part of online retailing from its earliest days, and the possibilities opened up by trading online are potentially huge. Small businesses, e-commerce platforms, and customers alike reap the rewards of a strong small business presence on shopping sites, with the platform getting a greater range of goods to attract browsers as well as a share of the sales, the small retailer getting access to a larger customer base, and shoppers getting a better choice. At its best, it’s a relationship where all parties benefit. However, when disputes and difficult situations inevitably arise, the picture becomes less rosy. Issues reported by small firms who use online platforms range from malicious or fake reviews and infringement of intellectual property, to dissatisfaction with how customer complaints are handled, among others. For some small businesses, the drawbacks end up outweighing the benefits; a small but notable proportion (3 percent) said they had previously used an online platform for their business, but had stopped in the last 12 months. A stark imbalance There can be a stark imbalance of power between a small firm selling via an online platform, and the platform itself. Two in five of the small businesses who took part in our research (39 percent) who have had an issue with a platform said they found it ‘difficult’ or ‘very difficult’ to resolve that issue, while one in six who reported issues with platforms (16 percent) said they were resolved ‘very unfairly’; a further sixth reported that the platform took no action at all to resolve the issue. Small businesses are often dismayed to find that the protections they have against unscrupulous and dishonest competitors are ineffective. Small retailers who find their products or designs have been copied, and are being sold at a knock-down price, often come up against a brick wall when complaining to the companies providing a platform for the rip-off merchants. This does not have to be the case. Online platforms should invest much more in systems to resolve disputes, so small firms can have confidence that any problems they encounter will be handled swiftly and transparently. The Digital Markets, Competition and Consumers Act requires large platforms to have resolution processes in place for all users and potential users, which is encouraging. Some disputes will not be able to be settled via the platform’s own process. For those instances, we would support the creation of a dispute resolution procedure, which could be funded by the platforms themselves. A trust issue Many of us have had the experience of buying something online, only for it not to be quite as advertised when it arrived. In some cases, people are sent items which are not fit for purpose, or even dangerous. Such experiences harm legitimate businesses, as consumers become more reluctant to buy online. Consumers and businesses alike need to trust that the platform is technologically capable of presenting accurate and useable information, and that regulators have the necessary tools to deal with those breaching their obligations, such as rogue traders selling poor quality goods and services. A flexible and proportionate enforcement system is needed; compliance can impose significant costs on small businesses, and a minor mistake made in good faith should not mean a small firm is immediately booted off a platform. Instead, they should be helped to comply and put things right, while misunderstandings could be reduced by platforms themselves making it clear to small firms the rules they must follow, any changes which have been made, and how enforcement will be handled. With a quarter of all UK retail sales taking place online, the opportunities for small firms to expand sales and reach new customers are huge. A responsive and transparent enforcement environment, as well as robust and effective dispute resolution mechanisms, will protect small firms and consumers alike, by making the online retail ecosystem a more pleasant place to buy, and to sell. With a quarter of all UK retail sales taking place online, the opportunities for small firms to expand sales and reach new customers are huge. However, effective dispute resolution mechanisms are needed to protect small firms and consumers alike, says Tina McKenzie, FSB Policy Chair OPPORTUNITIES ABOUND ABOUT FSB As the UK’s business support group, FSB is the voice of the UK’s small businesses and the self-employed. Established over 40 years ago to help its members succeed in business, FSB is a non-profit making and non-party political organisation that’s led by its members, for its members. As the UK’s leading business campaigner, FSB is focused on delivering change which supports smaller businesses to grow and succeed. FSB offers members a wide range of vital business services, including access to finance, business banking, legal advice and support along with a powerful voice in Government. Each year FSB also runs the UK’s Celebrating Small Business Awards. More information is available at www.fsb.org.uk. You can follow us on twitter @fsb_policy and on Instagram @fsb_uk.
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