RealTime IT News

In E-Commerce We (sort of) Trust

Despite all the horror stories about identity theft, account hijacking and assorted other rip-offs online, American consumers are more trusting when conducting Internet transactions now than they were a year ago, according to a new study called the "Consumer Internet Barometer."

And the most dramatic change comes with a surge in trust when conducting financial transactions online, according to the report, produced jointly by NFO WorldGroup, Forrester Research and The Conference Board.

Still, the actual numbers leave plenty of room for improvement.

The Internet Barometer is designed to be a quarterly report that tracks consumers' evolving usage, trust and satisfaction with the Internet over time and identifies emerging trends.

More than 33 percent of consumers polled express trust that their online financial transactions are safe, up from 27.5 percent a year ago, according to the report. Consumers also expressed a greater degree of trust when purchasing products online. One-fourth trust that their personal information will be safe when purchasing products online, up from 21.9 percent a year ago.

Consumer comfort online is being driven by two factors, said Ken Cassar, senior analyst at Jupiter Research.

First, "the longer that consumers are online, the more likely it is that they'll make a transaction online, Cassar said. "As these transactions are safe and successful, it increases consumers' level of comfort. And second, "the bulk of online transactions are through big, established retailers that have the resources to invest heavily in protecting their customers' data."

"Consumers' concern about privacy of their personal information has a significant influence on their willingness to engage in business exchanges online," said Lynn Franco, director of the Consumer Research Center of The Conference Board.. "But this trust barrier is beginning to erode."

Indeed. According to figures from measurement outfit comScore Networks, online consumer sales (excluding auctions) are on track to reach an estimated $74 billion for 2002, an increase of nearly 40 percent over last year. "Convenience, novelty and efficiency" were key drivers, comScore said, as well as increases in the number of new online buyers, and greater spending among by more experienced buyers.

comScore said that in its recent study, 38 percent of Internet users reported that to some degree, they are still uncomfortable providing their credit card information on the Internet. And 36 percent report they worry about the security of financial transactions. Another 40 percent say they are concerned about privacy when they shop online.

The Internet Barometer report says that now, nearly 61 percent of consumers go online at least once a month, up from 58.7 percent a year ago. The primary reason for using the Internet is personal communication (37.9 percent), followed by work-related activities (17.8 percent) and research (17.3 percent).

Interestingly, 33.6 percent of U.S. consumers have never been online, down from 34.7 percent. And 37.4 percent of users go online daily, up from 33.7 percent a year ago.

The Consumer Internet Barometer is based on a quarterly survey of 10,000 households. A unique sample is surveyed each quarter. Return rates average 70 percent and the data is weighted to reflect the latest U.S. household demographic information. This survey was conducted during the fourth quarter of 2002.