Security concerns estimated to cost etailers $2 billion in 2006

Posted by Wolfgang Gruener

Stamford (CT) - A continued series of online and offline security breaches is showing its impact on Internet buying patterns among US adults, Gartner reports. According to the market research firm, almost $2 billion will not be spent online this year because of security concerns that keeps shoppers from certain sites or from shopping online entirely.

Gartner's estimates are drawn from a recently conducted survey among 5000 US adults, which indicated that 46% of more than 155 million U.S. adults are concerned about theft of information, data breaches or Internet-based attacks in a way that their purchasing payment, online transaction or e-mail behavior has changed. The firm believes that online commerce is "suffering the highest toll."

For 2006, security concerns could translate into almost $2 billion of online sales that are lost because of specific security concerns are because of alarmed online shoppers who simply refuse to shop online. "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," commented Avivah Litan, a vice president at Gartner.

According to the market research firm, security concerns have kept up to 33 million U.S. adults from banking online. Nearly 9 million U.S. adults may have stopped online banking altogether, while another estimated 23.7 million won't start because of their security concerns, Gartner estimates.

Fraud email also has left its mark and develops into a challenge for ecommerce and especially financial institutions. 70% of online consumers whose behavior has been affected by recent security incidents say that their concerns have affected their trust in email from companies or individuals they don't know personally. Of these, more than 85% delete suspect mail without opening it, Gartner said.