E-commerce: how to protect your business when trading online

19 October 2021

E-commerce has been growing steadily for the last few years, and has seen an explosion since the pandemic got in the way of face-to-face transactions. Customers now expect rapid online purchasing processes and delivery for all kinds of goods—from groceries to building materials. The businesses that are most likely to thrive in this environment are the ones who have a solid e-commerce solution in place. 

Today’s B2B companies are also increasingly turning to e-commerce for its promise of broader reach and capacity to make lightning-speed transactions. But with these new online opportunities come new challenges. How do you safely extend credit to a new customer that you can’t even run a classic risk assessment on? 

I often speak to clients who want to take advantage of the new opportunities presented by online trade, but that are mystified by how to navigate the added level of risk involved. While it is important to be aware of specific related risks, there are several solutions in place for businesses to safely explore e-commerce.

B2B companies are now generating more business by creating their own dedicated e-commerce platforms to sell their goods or services. To stay competitive, they provide a variety of payment options, like buy-now-pay-later schemes. These new trends require innovative security,  business fraud prevention and credit risk management solutions.

New online marketplaces also enable businesses to buy or sell their products or services to other companies via a third-party platform. This is the Amazon business model, connecting the dots between businesses and consumers. In France, we are seeing new B2B online marketplaces opening to serve the needs of specific niche industries, such as food-processers, landscapers, gardening businesses, or freight transporters. 

Most B2B businesses in France expect to buy on credit, giving them 30-60 days after delivery to pay their supplier. The slower pace of traditional, offline trade provides suppliers time to run background checks on potential costumers, evaluate a costumer’s credit risk, and consult with a trade credit insurer before signing on to trade agreements. When operating offline, suppliers can also ask customers to pay for a first transaction in cash as a security measure before extending subsequent trade credit.

However, the nature of e-commerce changes the game. Online, customers no longer have the patience they had offline and want transactions to happen immediately, with no friction and little waiting for background checks or due diligence. Adapting to this new context should not mean forgoing appropriate risk management solutions. 

Much like having the option to add travel insurance when buying a flight online, online credit risk management solutions should be seamlessly integrated into digital transactions.

To make this possible, insurers are now partnering directly with businesses trading through their own e-commerce platforms. One example is our ShopinSafe solution, which enables businesses to offer to extend credit to their online clients while getting automatic cover for transactions. 

Insurers such as Allianz Trade also partner with businesses indirectly through online marketplaces, to provide merchants with coverage options. When a vendor joins a marketplace, they can indicate if they want to take out trade credit insurance to cover all their transactions made through the platform and see the fee they would be charged as a result. With this solution there is no compromise on speed, and suppliers receive protection from late or non-payment  that is fully handled by the marketplace on their behalf. 

As the Head of Partnerships and Digital Business Development at Allianz Trade in France, my focus is helping companies take advantage of new online opportunities while managing their credit risk

In the fast-moving world of online trade, it’s important to find the right solutions that protect your company from unnecessary credit risk while helping you expand your business.

Mickael De Sa

Partnership and Digital development project manager
Allianz Trade in France