Privacy still blights online retailers

Costly

Privacy concerns have reared their ugly head again this week with the release of a new study from Jupiter Media Metrix (JMM). It found that as many as 70% of US consumers are still worried about their online privacy rights - and JMM reckons these worries will cost online businesses as much as $25 billion by 2006.

Privacy is a problem that just won't disappear. Ever since the Internet retailers appeared it has been one of the greatest stumbling blocks to their evolution and, ultimately, success. Unfortunately there's only so much that legitimate companies can do about it.

They comply with the various national and international regulations, they post a prominent privacy statement. But still it isn't doing the job.

The problem with online retail is the same one as with all online activities - nobody knows who you are. No matter how legitimate your business may be, no matter how many years of healthy and successful trading you have under your belt, a first time visitor to your site may still think you're a charlatan.

The study from JMM shows just how bad this problem really is. According to the findings of the study, almost 70% of US consumers are concerned about their privacy online. With this in mind, however, many of these consumers dive straight for the corporate, online, privacy statement as soon as they visit a site. But it isn't as many as you would hope. Only 40% of web site visitors read an online privacy statement and, perhaps more worrying, only 30% of them understand the privacy statements - leaving the majority in a cloud of uncertainty.

That doesn't mean that companies can't get personal information about their web site visitors. Because they can. 82% of those polled by JMM said that they would willingly hand over personal information even if they weren't planning to make a purchase. But there is a caveat. The consumer wants to see some kind of return. JMM says that entering them into a $100 sweepstake would suffice for many. Others may be more brazen, wanting cars, yachts etc. The point is that you can get the information if you really want it, but you have to offer inducements.

That, of course, only goes part of the way to solving the problem. Certainly you can buy personal information with said inducements. But if they don't trust you in the first place then what chance do you have? JMM makes an interesting comment that perhaps summarises how you should tackle this issue. Privacy, it argues, should be considered as a strategic marketing tool as opposed to a compliance burden. Bear that in mind and you shouldn't go too far wrong.

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