Surviving the Unexpected: Crisis Management in Online Retail

Best SEO Course - SEO Genius
New Batch Starting
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
10x your Productivity
Get your
Free Course Now.
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

Change is constant in online retail. Every day, trends come and go, new technologies and platforms emerge and potential disruptions appear. As a trillion-dollar industry, with forecasts showing that retail e-commerce sales will reach 8.1 trillion dollars by 2026, it is important for e-commerce retailers to stay afloat (Statista, 2022).

This results in retailers changing their business formats, visual designs, communication processes, business operations, and transactions. With this volatile nature of online retail, entrepreneurs must always be ready to adapt to changes and apply it to their businesses to keep up with the times. Moreover, this volatile nature could bring out e-commerce challenges making e-commerce management specifically crisis management significant in the industry.

Crisis management is the process of managing unexpected or unfavorable events that can negatively affect a company’s reputation, sales, or growth. It could involve supply chain disruptions, cybersecurity threats, reputational crisis, natural disasters, and financial emergencies.

Crisis management is important in e-commerce because whenever a crisis arises, you can respond to it quickly and effectively making you minimize its negative effects and damage on your company and immediately place your company for recovery. It is important to have crisis e-commerce management so you can deal with possible problems efficiently and face them with certainty because you have anticipated them beforehand.

This article will tackle crisis management in the online retail context or industry. It will discuss e-commerce management, e-commerce tips, e-commerce challenges, risk management, Shopify tips, and more. Moreover, it will elaborate on the online retail crisis, how to prepare for it, and the strategies you can employ to ensure that you efficiently respond to different e-commerce challenges.

This article serves as a guide so you can prepare for possible crises that will happen in your online retail business and utilize strategies to your advantage.

Understanding Online Retail Crisis

Online Retail Crisis

Understanding online retail crises entails that you must know different online retail crisis types.

a. Supply chain disruptions

Supply chain disruptions involve events that cause disruptions in the production, sale, or delivery of your online retail products. It could include health crises like a pandemic, natural disasters like earthquakes or typhoons, regional conflicts like wars or political issues, new technologies like AI, logistics delays and failures, price fluctuations, cyberattacks, problems with your products, and many more.

b. Cybersecurity threats

Another type of crisis in online retail is cybersecurity threats. Cybersecurity threats are malicious attacks made by an individual, a group of people, or an organization to gain access to your computer network, steal confidential information about your business and its process, and corrupt your data. Cybersecurity threats are done for different purposes like theft, disruption, extortion, or other vile motives.

c. Reputational crisis

Reputational crises refer to situations where a business or company experiences risks or serious damage to its image or reputation. A reputational crisis has the ability to destroy or negatively affect the public perception of your online retail company like a failed campaign that puts your company in a bad light.

d. Financial emergencies

Lastly, financial emergencies are cases when you encounter unexpected problems that focus on the finances of your company. Financial emergencies could include losing your biggest client/s, crises in the environment, and failure of investments and funding.

Preparing for a Crisis

Crisis Management in Online Retail

After learning the different types of crises in online retail that you may encounter, it is now important for you to be ready for the same e-commerce challenges and apply them to your e-commerce management plan. The following are e-commerce tips that will prepare you for a crisis.

a. Developing a crisis management plan

The first step you must do is to develop a crisis management plan that will outline how your online retail business will respond to a crisis when it occurs. In this e-commerce management plan, you will identify the type of online retail crises that you may most likely face in your business, planning responses to each of the crises given and updating them regularly.

To start developing your crisis management plan, you must first determine your crisis leadership team, assess risk, determine the impact of your business, plan the response, and strengthen it by reviewing and updating regularly. 

b. Identifying potential vulnerabilities

The next step is for you to identify the potential vulnerabilities of your organization. These vulnerabilities refer to areas of your system or business where a crisis may come from or arise. It pertains to the weakness that can be exploited by cybercriminals to gain unauthorized access to your online retail system.

Potential vulnerabilities on your e-commerce system include SQL injection, cross-site scripting, path and information disclosure, price manipulation, and buffer overflows.

c. Training your team for crisis response

The third step in preparing for a crisis is for you to develop and train your crisis management team. A crisis management team known as CMT or sometimes incident management team is the team that prepares your company on how to respond to potential disruptions or e-commerce challenges that you may face.

This team develops the plan, executes it, and coordinates with your different members when the crisis occurs. Training your team includes designating a leader, assigning specific roles, and educating each one on their responsibilities through workshops and seminars.

d. Establishing communication protocols

The last step in preparing for a crisis is establishing a communication protocol. Communication protocol refers to formal descriptions of your digital message formats and rules that outline the type of information to be relayed to your organization and determine the people who will be responsible for communicating about specific subjects or areas.

Communication protocols that can cover error detection, signaling, correction, and authentication are significant as they provide consistency in your online retail communication processes.

Crisis Response Strategies

After preparing for the crisis, you now need to employ response strategies when the actual crisis occurs.

A. Immediate actions during a crisis

The first strategy for responding to a crisis is to employ the immediate actions needed. 

a. Stopping the crisis from escalating 

The first step you need to do when the crisis arises is to stop it from escalating or becoming big. You have to carefully assess the situation and activate and alert the correct people to respond properly to the crisis. You need to take measures that will stop the crisis from blowing out of proportion. You have to stay calm and not panic to ensure that you are doing more good than harm. 

b. Protecting customer data

When a crisis arises, protecting your customer data should be one of your top priorities. You must always ensure that the information of your consumers is safe and should be kept private as it could result in bigger problems in the future. Your customer has entrusted you with their data, hence you should be responsible for safeguarding them by taking necessary steps to protect them quickly when a crisis occurs.

c. Assessing the financial impact

The last immediate action you should take is to evaluate the impact of the crisis on the financial department of your business. You must know its implications on your finances to better prepare yourself and ensure that you can handle the crisis with your existing resources.

B. Communicating with stakeholders

After taking immediate actions, you now need to properly communicate with your stakeholders.

a. Transparency and honesty

Communicating with your stakeholders in times of crisis shows transparency and honesty on your part as an online retail entrepreneur. During e-commerce challenges, it is important to be transparent and honest to individuals like your customers who will be affected by the crisis. You need to tell them about the problem yourself so they don’t hear about it from other channels first, hence establishing that you value their trust and perception.

b. Managing public relations

Next is managing public relations to ensure that your relationship with the general public and individuals that matter will not be damaged and affected severely negatively. You have to manage the relevant media, platforms, or news outlets when informing about the crisis to not further escalate the situation. Managing public relations in times of crisis is important to maintain good relations with your stakeholders. 

C. Adapting operations during a crisis

The next step to do during a crisis is to adapt your operations accordingly.

a. Supply chain adjustments

During a crisis, it is important for you to perform necessary adjustments to your supply chain processes. You have to adapt to the situation and take needed steps. You can use different technologies to your advantage, develop strong relationships with your suppliers, and be sustainable and secure.

For example, the global pandemic disrupted almost if not all industries. During the pandemic, entrepreneurs adapted by performing health protocols like wearing masks to ensure the safety of their workers and consumers.

b. Shifting marketing strategies

Next is to shift your strategies in marketing where you must now focus on safeguarding or rebuilding your image as a business. You must e-commerce tips or strategies that adapt to the changing times and trends. For example, as more and more people are becoming concerned about sustainability, you must take measures to make your product offerings more sustainable for everyone and make it known through marketing to develop better relationships with your market.

D. Cybersecurity Measures

a. Protecting your online store from cyber threats

As an e-commerce entrepreneur, you must always protect your customers and online stores from e-commerce challenges like cyber threats. The practices you can best perform are implementing the best practices when using a password, having a secure hosting and SSL certificate, scheduling site updates and backups regularly, and installing multi-factor authentication, security plugins, and antivirus software.

b. Data security best practices

You should employ the best practices in securing your data such as understanding databases and data technologies, having a backup of your data, creating a data usage policy, identifying and classifying sensitive data, using endpoint security systems, data encryption, and controlling the access to your sensitive data and performing vulnerability assessments and cybersecurity penetration tests.

c. Incident response plans for data breaches

You have to develop an incident response plan for a data breach that outlines how your business will respond when a breach happens. It should include information about the breach, the persons involved, the team behind the plan, and the necessary steps on how to handle the breach and future actions.

E. Financial Planning and Resilience

a. Maintaining financial stability during a crisis

During a crisis, it is important that your online retail business’ financial standing is stable. Financial stability is the condition in which the system of your finances can facilitate and adapt to potential disruptions efficiently. It manages the smooth flow of finances or funds between your company and investors.

b. Creating a contingency fund

You must create and have a contingency fund, especially during the time of e-commerce challenges. This risk management tip includes reserving a fund or money specifically to address unexpected financial emergencies in your business. You and your online retail must have a backup fund to ensure that you have extra resources to use to deal with future disruptions and problems that may occur.

c. Navigating economic downturns

As an entrepreneur facing a crisis, you should know how to navigate economic downturns and see change as an opportunity to grow. To navigate economic downturns, you must always put people first and place utmost importance on their experience as they are the drivers of your sales and growth. Next is to adapt to the changes by making your products and services relevant to the time and prioritize online outreach.

F. Reputation Management

a. Strategies for rebuilding trust

The following are e-commerce tips to rebuild the trust of your customers with you. During a crisis, when necessary you have to begin with a sincere apology, acknowledge the part that went wrong, and admit your responsibility for it. You must learn what you must do to gain trust.

Let your consumers guide you on how you can earn back their trust. Keeping your promises and taking advantage of your user-generated content like their public feedback to show that you are doing fine in your crisis risk management and e-commerce management.

b. Leveraging customer loyalty

Reputation management includes leveraging the loyalty of your customers. You must take advantage of your loyal consumers and get their opinion about matters like how your company handled the crisis to provide a positive light on your reputation to your other customers and the public.

c. Handling negative online feedback

You should manage the negative online feedback well by responding to them appropriately and treating every concern as a priority to you. You must address their negative feedback respectfully to not escalate it and show to your other consumers that you are doing necessary to better your service or company.

Post-Crisis Evaluation

Crisis Management in Online Retail

a. Assessing the effectiveness of your crisis management plan

After every crisis management, you must have a post-crisis evaluation where you assess the effectiveness of your crisis management plan. You must see to it that you have handled your finances well, if your good reputation is still intact, secured your online systems, and applied necessary supply chain adjustments.

b. Identifying areas for improvement

After identifying the effectiveness of your crisis management plan, you must evaluate the areas for improvement. You should identify the specific processes and segments in your plan that you should focus more on and need more priority to better them for future use.

c. Updating your crisis management strategy

As change is constant, you must always update your crisis management strategy as time goes by. You should employ new trends, current landscape, and technologies to have a crisis management strategy that is relevant with the time.


Surviving the Unexpected: Crisis Management in Online Retail

Truly, e-commerce management, specifically crisis management is significant in online retail, especially during these changing and unpredictable times. To survive the unexpected you must know and understand the different types of online retail crises, know e-commerce tips, Shopify tips and strategies on how to prepare for a crisis, respond to it, have cybersecurity measures, financial planning and resilience, reputation management, and post-crisis evaluation.

Crisis management is significant as it can make or break your company. Managing your actions well during a crisis will determine the future of your business. It could make you rise above the uncertainty, conquer the e-commerce challenges, and make your e-commerce business a success. Hence, as an online retail entrepreneur, you must proactively prepare for unexpected challenges and have an e-commerce management plan on hand all the time.

Author’s Bio

Yen Pedrajas, Removal.AI

Yen is a content writer for Removal.AI, an image background remover tool. She is a digital marketing and eCommerce enthusiast who loves to write and share new insights about marketing, eCommerce, and growth-hacking tips for startup businesses.

Blog Post written by:
Digital Marketing Institute