Trust. That is the keyword when exploring the trends in e-commerce. Doing good business online requires consumers to trust you.
This is not just an idle motherhood statement; trust has a real and quantifiable value online. Breach the trust of your customers, and it will affect your bottom line. In fact, every breach of trust that occurs online has a detrimental effect to the collective online sector. So all e-businesses have a stake in protecting the privacy and security of their clients and customers. While e-commerce sales continue to grow, as the data below show, the spate of privacy and security breaches that have occurred during 2006 does not reflect well on the sector. And this is likely to be hitting business.
According to a Gartner survey of 5,000 online US adults in August 2006, nearly half of online U.S. adults, or 46% of more than 155 million people, say that concerns about theft of information, data breaches or Internet-based attacks have affected their purchasing payment, online transaction or e-mail behavior. Of all the behaviors affected, online commerce (including online banking, online payments and online shopping) is suffering the highest toll.
The research firm estimates the financial cost of this mistrust in the sector is approximately $2 billion in 2006. Gartner estimates that $913 million in 2006 e-commerce sales is lost because of security concerns among online shoppers. Another $1 billion is lost because of shoppers who refuse to shop online due to security concerns. While the word "lost" may not be exactly the right word to use as one cannot lose something one never had, it is clear that increasing trust online will result in a corresponding increase in online spending.
Online banking is clearly at the coalface of online privacy and security issues. Banks have a strong financial incentive to drive online banking because of the potential financial savings they may be able to accrue, but data from Gartner suggest banks could do far more to foster trust. Approximately 33 million U.S adults do not bank online because of security concerns, according to Gartner. Nearly nine million U.S. adults have stopped online banking altogether, while another estimated 23.7 million will not start because of their security concerns.
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