As an importer, you may think you have little exposure to liability claims, but in many circumstances, you are more exposed than you think. To address some important areas of this topic, we are doing a mini series covering the basics of product liability, the risks of reselling and redistributing products from overseas and the hazards of selling products from risky categories.
The modern world is increasingly connected through e-commerce, with consumer products regularly flowing across international borders. The Canadian market is no exception. When it comes to choosing what products to sell for your online business, certain products fall into categories that can be considered risky. Understanding what products fall into these categories will help you to avoid pitfalls early on and achieve a profitable and feasible business plan.
Some high-risk product categories include:
- Electric bikes and Electric scooters (E-bikes / E-scooters)
- Children’s products
- Natural health products
- Supplements and vitamins (Nutraceuticals)
- Food additives
- CBD products
- Vaporizers / Vapes
- Kitchen utensils / Food contact materials
- Chemical products
- Machinery, pumps & equipment
When it comes to selling products through an online marketplace like Amazon or Shopify, you may be searching for a unique product in order to make your business stand out from the crowd. Before you settle on the perfect product, think about what category it falls into. Choosing products from these high-risk categories as well as mixing product categories can make your business harder to insure. It can also be confusing to insurance companies, which can add more time to the quoting process and can make it harder for you to find insurance as a result.
It is also important to consider the potential regulatory issues when choosing your product categories. Regulations in Canada are constantly evolving, and failing to keep up with these changes can result in you facing penalties for non-compliance. For example, supplements and vitamins are under strict regulations by Health Canada that impact what products can be imported and distributed within the country.
Many online business owners fail to recognize that even if you are not manufacturing the products you sell, you can still be held liable for them and exposed to claims. If you import products from outside of North America, you are responsible and can be held directly liable for all aspects of those products, even if you sell your products through a third-party distributor such as Amazon, Walmart, Best Buy or Shopify. Leaning on your manufacturer for liability coverage is unlikely, so it is important to obtain your own coverage for your products and business.
While finding the right products and meeting regulations to sell those products online in Canada can be complicated, it is not impossible. Taking the time to research the potential risks of your product category will set you up for a successful ecommerce business. The most important step you can take in protecting your business is by working with the right insurance broker that will help evaluate your risk potential and address your insurance needs. If you are looking to insure your e-commerce business, speak with the experts at Fuse Insurance. Use our online quote application or call us at 1-866-387-FUSE (3873).