Wednesday, March 25, 2009

$21 Billion Lost Due to Security Fears

Javelin Strategy and Research released a study recently that estimates that e-commerce vendors may have missed out on as much as $21 billion in online sales in 2008 due to consumers' concerns about identity theft. This represents a missed opportunity that is more than 15% of the overall e-commerce market ($130 billion according to Comscore). As part of the research, Javelin contacted over 2,000 consumers in Dec. 2008.

What's behind this? Consumer awareness of identity theft has grown significantly over the past couple of years due to increased media coverage of identity theft, website hacks and cybercriminal activity, especially during the current down economy. As a result, consumers are much more wary about shopping online.

Smaller e-commerce merchants are impacted by security fears more than larger brand names, as expected. The study found that 40% of consumers only shop at well-known sites like Amazon.com.

So what can an e-commerce merchant do? Javelin recommends increasing your site's security measures, and then communicating your security practices to your customers. “Online retailers are leaving business on the table by not communicating their security and customer service policies clearly to consumers which is something that no business can afford to do in today’s economy,” James Van Dyke, president and founder of Javelin Strategy & Research, said in a statement. “To recapture these missed revenue opportunities, merchants need to reassure consumers that their information is being processed securely and that they have recourse should they become the victim of identity theft. These survey results show that simply by making security and privacy policies more visible on their sites, merchants can begin to win back the trust of wary online shoppers.”

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