As we proceed with this new holiday shopping season, Internet merchants have an additional and even more important challenge facing them. Not only must these e-commerce merchants deliver their goods on time, they must be prepared to handle millions of e-mail orders and Internet credit card transactions securely, while providing a safe shopping environment for the consumer--an environment that guards against identity theft and credit fraud.
While the numbers looked good for merchants, and predictions for online sales made the eyes of many e-commerce merchants glaze over, this holiday shopping season poses some very real, very troubling privacy issues for Internet businessmen. The use and transfer of personal data will be closely tracked this holiday season. The online community is showing increased concern for a host of privacy-related issues including identity theft and online security.
Simply stated, if Internet merchants don't also post and enforce serious privacy policies on their Web sites they could suffer dramatic losses in brand loyalty and consumer confidence in their products and services. Gone are the days of Internet Web sites simply posting frivolous privacy statements on the bottom of a page and operating on the assumption that they have done enough.
This is important because, despite last year's holiday glitches in online shopping, the latest research indicates this could be a banner year for online purchases. BizRate.com, an e-tail ratings site, expects spending between Nov. 24 and Dec. 26 to reach $6.21 billion, a whopping 81% increase over last year. During the week prior to Thanksgiving, BizRate reported that online shoppers spent a total of $736 million in one week.
America's 150 million Internet users are apparently spending much more time online than they were even a year ago. According to a report from Nielsen/ NetRatings, Americans now spend roughly 23% more time connected to the Internet compared with last year.
In a sample month, October 2000, the research shows the average amount of time spent on the Web was just over 10 hours, compared with 8 hours, 13 minutes in October 1999. This jump in online time has translated into more Web page browsing, with average Web page views per person bumping from 524 pages per month to 720 pages per month.
It's clear the Internet community is spending more time online and that could well mean that increased Web browsing will turn into Web purchasing.
Not only is e-commerce expanding, the typical online user is becoming much more demanding and savvy about privacy protection. Online consumers are starting to closely examine how the typical dot-com uses and transfers personal data. Internet privacy policies must now be substantive, not merely Web site window dressing. This holiday shopping season presents the next high hurdle for e-commerce to clear. If e-commerce merchants can't deliver their holiday goods on time while, at the same time, protecting the identities and the transactions of their customers, they could easily find themselves on the dot-bomb list of 2001.
Legitimate privacy concerns are moving us very quickly toward an "opt-in" world. Companies that don't shift now and adopt "opt-in" privacy protection policies will soon be viewed by the online public as having dated, inadequate privacy standards that cannot properly ensure secure and confidential Internet transactions.
Internet companies looking to create successful, profitable business models will not be able to aggressively compete in the marketplace with standard "opt-out" privacy policies. In order for the e-commerce industry to rival the profitability of established, brick-and-mortar businesses, online companies must go the extra distance and adopt "opt-in" privacy protection for their customers.
Consumers want and need substantive privacy protection and if the Internet giants, America Online and others, do not move quickly to adopt "opt-in" privacy measures, government intervention from Capitol Hill or from state assembly houses all across America could soon force these merchants to comply.
Mr. Clayton, an attorney, is founder and president-CEO of The Privacy Council, Dallas (www.privacycouncil.com), consultants on international and domestic privacy issues and a developer of full-service privacy products.