Along with technology, retail has evolved rapidly over the past couple of decades. Through innovation and advancements, commerce now knows fewer geographical boundaries and more channels through which to sell. The rise of ecommerce has made things scale even faster, providing a global platform for brands and products.
While these changes have helped many brands, they add new ecommerce regulatory challenges to stay ahead of like data, trade, and governance. Businesses that fail to meet retail regulations face fines, legal actions, operational disruptions, and reputational damage. Moreover, they may experience loss of licenses, criminal penalties, increased audits, and, worse, business closure.
It’s critical to maintain awareness of current ecommerce regulations. This can be done both internally and with the help of retail partners. A good place to start is to understand some of the most common ecommerce regulatory challenges and how to comply with them effectively.
Common ecommerce regulatory challenges to look out for
Challenge #1: Customer data privacy and protection
The retail industry is very attractive to cyber attackers. Its rich volumes of sensitive personal data and reliance on technology make it more vulnerable to these cyberattacks. According to Statista, in 2024, there were 3,158 data breaches in the US, affecting 1.35 billion people. Furthermore, a significant portion of those were shoppers.
It’s a rare consumer who hasn’t received a notice stating, “We regret to inform you of a data security incident…” The prevalence of these breaches has created increased global scrutiny around how customer data is collected, stored, and used.
To counteract the number of data breaches and increase protections, the US has begun to patch together local, state, and federal laws to protect consumer privacy. This makes it important for brands to understand which laws affect them, local or international, including:
- Comprehensive state laws like California’s CCPA
- Protecting data federally under the FTC’s enforcement of the unfair and deceptive trade practices
- The EU’s GDPR and China’s PIPL
One thing that sets the US apart from some of its world counterparts is the lack of a comprehensive national law, making it more challenging for retailers. Instead, they must ensure they know the laws and adhere to the protections that cover their customers’ data.
How brands can handle customer data
Retail businesses benefit from having clear protocols around how they handle customer data. The more stringent they are willing to be, the better. Some of the data governance policies they can implement include:
- Establish clear consent
- Offer data opt-outs
- Use data encryption
- Create data breach response plans
- Understand how third-party tools introduce risk
- Conduct regular audits and offer transparent privacy policies.
Challenge #2: Marketplace compliance
Marketplaces (like Amazon and Walmart) have become popular selling channels for brands. They offer retailers increased visibility and large, built-in audiences. However, each marketplace has seller policies, listing rules, performance standards, product restrictions, and penalties for not complying. The consequences range from account suspension and removal of listings to withheld payments and fines.
Some of the most common issues are improper product categorization and delayed shipment. But brands will also face issues if they have information inaccuracies in their product listings or are not adhering to stringent inventory timelines and standards.
How brands can comply with marketplace policies
Brands benefit from understanding the rules or having a compliance manager or partner who stays current with evolving marketplace rules. For example, a good 3PL provider is well-versed in marketplace compliance and, through their expertise, can help retail brands navigate guidelines and regulations.
Challenge #3: Product and industry-specific regulations
Some products require stricter oversight because of potential harm or negative impact on consumers, the environment, or market integrity. For example, these regulations ensure that food and supplements are safe to consume or that labeling lets consumers know how to handle potential hazards within a package containing something such as a battery. The most common types of product and industry-specific regulations include:
- Product safety and quality
- Product labeling
- Environmental regulations
- Product registration and certification
Industries often affected by regulations include chemicals, pharmaceuticals, health and wellness, consumer electronics, food and beverage, healthcare, hazardous materials, pet supplies, and beauty and cosmetics.
Common areas of ecommerce regulatory challenges are sustainability and environmental regulations, supply chain, ecommerce and data, Proposition 65, and any food additive bans.
How brands can navigate product and industry compliance
There are many ways retailers can navigate end-to-end compliance for a product or within an industry. Whether vetting suppliers and manufacturers or working with experienced retail partners who know the ins and outs of specific industries, it’s all about knowledge.
Brands should also stay aware of what regulatory agencies oversee their product or industry, such as the FTC, CPSC, FDA, or EPA. They must also create and implement stringent compliance programs and processes to minimize legal risks.
Challenge #4: International trade, duties, and tariffs
Today’s international trade has created a series of challenges for retailers. Tariffs and trade regulations vary by country and can fluctuate quickly. Staying on top of customs, duty thresholds, restricted goods, classification, and labeling can add major complexities for brands operating internationally, whether manufacturing abroad or expanding sales globally. Non-compliance results in delays, goods seizures, loss of export privileges, and fines.
How brands can manage trade compliance
Brands should stay abreast of any emerging trade announcements and prepare strategies to remain agile in more turbulent times. Working with partners familiar with trade regulations is also critical, particularly in fulfillment, where expertise is essential for mitigating legal and financial risks. The right partners also help retailers save on costs and streamline operations, which helps maintain a competitive advantage.
Challenge #5: Sales tax, VAT, and economic nexus
While operating as a nationwide and global retailer is beneficial, it also comes with new challenges. Operating in numerous regions adds complexities around taxes. Brands should be aware of:
- Economic nexus laws in the US (like the Wayfair ruling) require brands to collect and remit tax in multiple states once thresholds are met.
- VAT collection responsibilities when selling abroad, especially in the EU, UK, Canada, and Australia.
- Products that are taxable and which are exempt.
- How to collect the right amount of sales tax.
How brands can handle tax compliance
Retailers should expect to invest in software or services to track liabilities, automate calculations, and file returns. Moreover, don’t assume that marketplace sales fully cover obligations; brands should check nexus and liability regularly. One critical task is to maintain proper records to stay audit-ready. This includes the storage and retention of invoices, returns, and exemption certificates, as well as keeping things until the statute of limitations for an audit passes.
Challenge #6: Accessibility and ADA compliance
The Americans with Disabilities Act (ADA) was designed to ensure accessibility for people with disabilities. This means that ecommerce websites must meet accessibility standards (WCAG) or face legal and ethical repercussions. Some of the most common areas brands fail to meet standards include unreadable text for screen readers, poor color contrast, missing alt text, and inaccessible navigation.
According to Texas State University, in 2024, 1,202 web accessibility lawsuits were filed in Federal and State Courts, 77% of which targeted online retailers. The lifestyle, fashion, and apparel industries were the most targeted, with 1,121 lawsuits.
Brands should be aware of their ADA compliance for legal purposes and their reputation. Adhering to the standards broadens audience reach, improves user experience for everyone, and enhances brand reputation.
How brands can remain ADA compliant
Working with experienced website developers is the first step in complying with current ecommerce ADA standards. From there, expect to conduct consistent accessibility audits to remain compliant as regulations evolve to improve accessibility.
Challenge #7: Environmental, social, and corporate Governance (ESG) disclosure requirements
A growing number of consumers are becoming aware of environmental and social issues. Moreover, the younger generations of shoppers increasingly want more transparency around a brand’s sustainability efforts.
But that’s not the only place retailers are required to report social and environmental efforts. In some regions, the demand for ESG reporting is growing, especially around carbon footprint, packaging, and ethical sourcing.
How brands can comply with disclosure requirements
It’s helpful for brands to build ESG documentation and traceability as early as possible. Begin by understanding ESG regulatory requirements and staying current on any changes. It can help retailers to adopt voluntary frameworks, including the GRI, SASB, and TCFD. From there, ESG policies and goals that align with business values should be defined, and ESG should be integrated into operations. A dedicated team can help oversee initiatives and reporting.
Staying ahead of ecommerce regulatory challenges
Regulatory challenges aren’t one-size-fits-all and can change quickly, especially with global expansion or product diversification. It’s crucial to stay compliant to avoid fines, protect customers, and build brand trust.
Is your brand looking for an expert partner to help you stay ahead of ecommerce regulatory challenges? Talk to a fulfillment expert to ensure your systems, partners, and platforms are regulatory-ready.
