Consumer worries holding back e-commerce, say analysts

Consumers’ fears over lack of security on the internet are set to wipe $2bn (£1bn) off e-commerce sales in the US, analysts have warned.

Industry analyst Gartner warned that despite consistently rising sales revenues, recent security breaches are having a significant impact on shoppers’ behaviour.

A Gartner survey of 5,000 US internet users in August found that online shoppers’ security concerns were behind around $913m in lost e-commerce sales in 2006. The refusal of many consumers to shop online at all because of security fears accounted for another $1bn of lost sales.

Nearly half of those surveyed said that concerns about theft of information, data breaches or internet-based attacks had affected their purchasing payment, online transaction or e-mail behavior, with e-commerce the hardest hit.

Gartner vice-president Avivah Litan said, “Financial institutions and other e-commerce service providers need to beef up security in their online channel to retain customers, but they must be careful to keep the added measures relatively convenient.”

The industry analyst urged businesses to adopt a two-pronged strategy aimed at both increasing consumer confidence and at reducing fraud.

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