“Add to cart”: Doing business in a COVID-19 world part 2 – Business considerations

online shopping
27 Jul 2020

Establishing your business online helps you reach a larger audience and expand your brand beyond the scope possible through traditional brick and mortar sales channels. Part 1 assisted with legal considerations to bear in mind when starting to lay down the foundation of your online presence. Part 2 aids in providing further business considerations that need to be taken into account including but not limited to payment methods and portals, loyalty programmes and logistics.

Payment and electronically signing agreements: Handling cash at the moment brings a high risk for transmitting Covid-19, as a result EFT, various payment portals and other electronic methods of payment will be used by many South Africans. Businesses must ideally ensure that they have various options available to consumers, but, more importantly, that they have the necessary security in place to secure their consumers’ financial information.

If the business is processing its own consumer’s financial personal information, it must comply with the security safeguards prescribed in terms of the Protection of Personal Information Act (POPIA). If businesses choose to use third parties to process financial personal information, they must still ensure that they have agreements in place with the third parties which require the third parties to comply with the conditions set out in POPIA and set out clearly the third parties’ mandate and the manner in which they can process the business consumer’s financial personal information on its behalf.

In order to comply with lockdown regulations and to prevent the spread of infection and cross-contamination from the sharing of pens, more and more businesses have switched to virtual negotiations and entering into agreements electronically. With the exception of a handful of agreements, the Electronic Communications and Transactions Act (ECTA) recognises electronic signatures for the purpose of entering into a binding agreement and stipulates that for a signature to be valid (1) the name or mark of the person signing must appear on the document, (2) the person signing must have applied it themselves, and (3) the person signing must have intended to sign the agreement. Businesses must ensure they incorporate these criteria into their agreements to ensure that binding agreements are concluded. Businesses today must also be careful of using instant messaging in their negotiations, as electronic communication can be construed as consent to enter into a binding agreement. For more information, click here.

Loyalty programmes: Let’s be honest, many online shoppers don’t view and consider the retailer’s website details and terms and conditions before selecting the items they desire. Rather, online shoppers are lured to shop online by a retailer’s colourful websites and the offer of loyalty programmes. In these tough economic times, consumers are looking to loyalty programmes offering rand for rand value in exchange for products in order to reduce expenditure as much as possible. To protect consumers and online shoppers, the Consumer Protection Act (“CPA”) regulates the use of loyalty programmes. Loyalty programmes are recognised as a legal medium of exchange and are as valuable as cash. Because these programmes are seen as a legal tender, consumers are not required to pay or do anything extra to receive their loyalty benefits . Therefore, an online shopper who uses a loyalty programme has the same rights as consumers who purchase goods through the use of credit cards, deposits and EFTs.

Logistics: Since shoppers are not entering physical stores, and goods are being delivered directly to the consumer’s door, businesses need to revamp their logistics department to cater for multiple delivery destinations and for the ability to collect goods that a consumer may want to return. Businesses may need to consider the need to outsource logistics or have several distribution warehouses instead of a centralised warehouse. Clear agreements need to be in place with logistics companies regarding the risk of products in transit, ownership of products and damage to products between destinations, from businesses premises to consumer’s premises etc. Furthermore, due to demand in e-commerce, businesses need to also ensure that logistic lead times between date of order confirmation and delivery are not extended more than is reasonable.

Currently consumers consider delivery times after seven days to be too long. Businesses must also factor in that had a consumer visited a physical store, there would be no cost of delivery, and they may not be willing to pay unreasonable delivery costs for products ordered online. Therefore, the costs of delivery and returns, and who shall incur them must be considered.

Should your rights as an online shopper be contravened or should you require assistance with the establishment of an e-commerce site or require any clarity in the above please do not hesitate to contact our Commercial Department at [email protected] or [email protected].

See also:

(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)
Anola Naidoo

Anola Naidoo is an attorney at KISCH IP's commercial department. Anola specialises in the drafting of commercial agreements, consumer law compliance, company registrations, business enterprise management, commercial law and litigation. Read more about Anola Naidoo


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