Post COVID-19: What Increased E-Commerce Means from a Risk Perspective

Overall, the COVID-19 pandemic has had an impact on essentially all industries, including logistics. The effects are immediate, short term and long term. One major change is that consumers are moving their spending online. In fact, back in April 2020, an article in Forbes discussed a 129 percent growth in e-commerce orders year-over-year (YoY) in both the U.S. and Canada. This shift in spending patterns has – and will continue to have – a great impact on supply chain disruption. And while supply chain disruption is part of the overall issue, we’d like to draw attention to what increased e-commerce means from a risk perspective across industries.

First, increased demand of particular products means overworked and tired delivery drivers. Aside from showing what a disruptive event can do to upend “just in time” sourcing, increased demand and panic buying has additional effects. Your business may need to bring in additional drivers as fill-ins or contractors to help meet increased demand. They may not be familiar with routes and may be working longer hours, thus leading to potential accidents.

Second, the increase use of “gig economy” delivery services such as Instacart, Grubhub, DoorDash, etc. create new risks for businessowners. Many restaurants had to stop dine-in services due to COVID-19 and while many states are opening in phases, a lot of these business owners are continuing with takeout and delivery services in part due to changing consumer demand. With these services, employees are driving personal vehicles. What does this mean for insurance purposes? It is important to make sure that your business’s insurance policy provides coverage for the actions of the driver or if you need to add a Hired Auto and Non-owned Auto Liability (HNOA) endorsement to provide coverage for non-owned vehicles used in your business. In addition, if you are a driver, make sure that you have the proper coverages in place if you are doing any type of delivery work.  

Third, buy online, pick up in store (BOPIS) services along with curbside pickup and subscription services increase the potential for fraud. The practice of BOPIS was popular before the pandemic as busy consumers were using this service to cut down on shopping time with their overloaded schedules. According to Digital Commerce 360, BOPIS orders increased by 208 percent in April 2020. If you are a business who is offering this service, it is important to take steps to prevent BOPIS fraud and properly safeguard yourself and your customers. Such steps include asking for shopper verification, online account registration and chargeback insurance, which can cover your business for fraudulent charges.

As a business owner, if you find yourself doing more business online due to COVID-19, the team at Rose & Kiernan, Inc. is happy to work with you on risk management and loss control. You can also contact us here or by calling 800-242-2433.

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