The constantly touted drawback to commerce on the Internet is the lack of security, despite the fact that people currently use far less secure methods to carry out transactions all the time. Now a new report has shown that the combination of more devices to access the Internet, improved bandwidth, and efficient delivery logistics will bring about the electronic commerce revolution, not new security measures.
The security risk of using the Internet for purchasing, particularly using credit card details, has been the headline reason for the slow consumer adoption of commerce on the Internet. However, US market research organisation, the Aberdeen Group, has taken issue with that theory and instead argues that consumers are quite willing to take the perceived risk when the brand name is trusted or when the service given is of a high quality.
?New Internet access devices and broadband communications, rather than security protocols, will be the ultimate cause of mainstream Internet consumerism,? said Chris Stevens, senior analyst at Aberdeen Group and principal author of the report, 'Internet Sales: Virtual Corporations, Real Profit'.
According to Stevens, businesses slow to use the Internet for electronic commerce have failed to match the demographics of their business with the user profile of the Internet.
The leaders in the Internet pack have been those with products or services that have gained value in being sold online. Online bookstore Amazon.com has had one million customers in less than two years, principally because it sells a commodity product, delivered via third parties with an international infrastructure, and has a selection far greater than any terrestrial store. As a result, more than 40 per cent of trade is from repeat customers.
US share broker Charles Schwab runs half its business on the Web, has more than $50 billion in online assets and over 700,000 online accounts. By offering greater access and better value, Schwab was able to put users security concerns aside.
In contrast, some businesses that seemed to offer an obvious Internet sales route have done less well than expected. Catalogue companies such as Argos and Great Universal Stores have not had much of an impact ? the customer base is not necessarily the same as that of the Internet whilst little value is added for the customer of seeing the goods online compared to a paper catalogue. Nor is there much room for discounting goods already considered low price.
Meanwhile, some companies have been scared a success online might jeopardise their existing business. K-Mart in the US set up an Internet sales operation but initially prices are higher than in-store because it cannot afford to damage its vast investment in property or risk reducing the revenue gained from impulse shopping.
Tesco?s has hit headlines with its high profile Internet shopping venture but only a small number of stores are so far offering the facility and the supermarket refuses to say when the operation will be profitable.
Most other retailers are considering and trialing Internet shopping without investing heavily. Marks & Spencer?s IT director, John Sacher, sums up the general view when he says he believes the future is in electronic trading but it is too soon to do anything yet.
?Aberdeen Group recommends that all companies start selling on the Internet soon because it will take time to learn how to interact with Internet consumers, alter existing systems and organisational structures, and, develop and protect brands prior to the second flood of consumers. Noah comes to mind ? build an Ark,? said Stevens.
The importance of not misjudging the hype about security issues is backed by Roger Till, chief executive of the Electronic Commerce Association.
?Stop worrying about Internet security ? by that I mean that companies should be aware that there is reasonable security available for the Internet already,? he said.
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