Privacy fears hold back online retail

Fears about privacy are causing online shoppers to refuse to give retailers information like their phone numbers, according to Jupiter MMI. Unless such fears are allayed, the analyst house predicts that US$24.5 billion will be lost in lost sales by 2006.

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By  Neil Denslow Published  June 10, 2002

Fears about privacy are causing online shoppers to refuse to give retailers information like their phone numbers, according to Jupiter MMI. Unless such fears are allayed, the analyst house predicts that US$24.5 billion will be lost in lost sales by 2006.

Jupiter reports that 70% of online consumers are worried about privacy, but only 40% actually read the privacy statements commonly found on web sites before handing over their details. Furthermore, only 30% of shoppers said that they found the statements easy to understand. The analyst house argues that business should overcome these fears by treating online privacy as a strategic marketing initiative, not as a compliance burden.

“Neither consumers nor businesses effectively address online privacy issues,” says Rob Leathern, Jupiter Research analyst. “In this increasingly complex world, even legitimate businesses will suffer when consumers’ perceptions of the control and safety of their personal information online are damaged. Companies should clearly and pervasively communicate their policies on data gathering and use of data to make trade-offs between information and benefits increasingly clear to consumers.”

The analysts’ research adds that 82% of online consumers are willing to give out various amounts of personal information, before making a purchase, in return for modest incentives such as entry in a US$100 sweepstake. Shoppers are most likely to give out their e-mail address (61%) and full names (49%) with their household income (18%) and home phone number (19%) the most closely guarded pieces of information.

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