December 26, 2000, 9:55 AM

For Whose Eyes Only

To understand how far Internet privacy has climbed on the agendas of e-retailers, consider that Garden.com recently tripled the size of its “privacy pledge,” detailing in three pages, instead of one, how it collects and uses customer information. “We wanted to make sure that it was as clear as possible that we do not gather any information that customers are unaware of,” says Wendy Carter, marketing manager of the Austin, Texas-based site. “It is explicitly asked for.”

What’s also explicit is the careful balance e-retailers must strike between consumer demand for personalized shopping and their concerns about privacy. According to e-commerce consulting firm Jupiter Communications of New York, more than 80% of Web sites personalize content for their visitors, whether based on previous shopping or from surveys. Not surprisingly, most consumers like it when sites pay attention to their interests and needs, with more than 70% saying they want customized pages. But the recent uproar over now-shelved plans by ad-serving network DoubleClick to create consumer profiles shows there are strict limits that consumers place on information gathered about their online activities-and a whole lot of anxiety about being watched at all.

“There are really very few merchants out to ‘e-screw’ their customers by doing malicious things with their inform-ation,” notes Bonnie Lowell, founder and chief technology officer of YOUpowered, a New York company that provides free consumer and e-business privacy software. “But it’s frightening that we’re living in a time where thousands of businesses will suddenly band together and collect information about you and share it with one central source,” Lowell adds. “That’s why the privacy issue has escalated as fast as it has. That’s why people are arming themselves.”

Companies such as Microsoft have introduced tools that give consumers more control over how much personal information they divulge. Using new standards known as the Platform for Privacy Preferences, or P3P, consumers will be able to translate complicated privacy policies and help squash “Web bugs” that surreptitiously track online behavior.

Data anxiety

Though Garden.com did not keep an official count or track hits to its privacy page, according to Carter, the customer service department steadily fielded calls from customers wanting to clarify how the site uses the data it gathers about them. The revised pledge is wordier, but there’s no fine print. It begins by describing the benefits for customers who register with the site, such as: receiving previews of sales and promotions, designing a garden with its free Garden Planner software, asking questions of its Garden Doctors and receiving customized regional gardening information.”

The policy then lays out the basics-discussing how the site ensures that orders and credit card numbers are kept secure, defining digital ID tags better known as cookies and how the site uses them, and promising customers that data is never sold or shared, not even with its partners iVillage, America Online and Excite@Home. Carter says this is merely Garden.com’s disclosure that its customer profiles and survey data are all about making the site a better and more personal place to shop. “We do it to provide customers with a landscape of ideas and information about plants suitable for their area of the country,” she says of creating customer profiles. “It helps us better personalize the relationship. That means we have to understand what kind of gardener they are, where they live and what the conditions of their backyards are.”

Knowing the condition of your customer’s backyard, bookshelves or clothes closet is the mother lode of direct marketing-and it’s what makes Internet retailing so promising. Some of the most visited e-retailers, such as Amazon, CDnow and Lands’ End, were built on the foundation of knowing their customers’ search patterns and interests better than physical stores and catalogers.

But personalization has its detractors, and one of them is suspicion. Some consumers are shocked to learn that any information is gathered about them at all. Others are already on their guard, convinced that every click is being recorded. Because so much online activity can be tracked, the privacy controversy is always at issue.

Amazon, through its acquisition of Alexa Internet and its use of the company’s zBubbles comparison shopping tool, also has entered the privacy fray. Five class-action suits allege that Alexa collects more information from its users than company executives have acknowledged. Alexa says zBubbles collects Web traffic and usage data anony-mously, but plaintiffs claim the service tracks full Web addresses and query strings that might include names, addresses and other personal information.

Most Web retailers are relying on their privacy policies to promote consumer trust. A report released by Enonymous.com, a company that rates privacy policies and hosts privacy and personalization applications, shows that nearly two-thirds of the top 1,000 Web sites post a privacy policy, compared with the FTC’s 1998 survey of 1,400 sites, which found only 2% did.

Personalization first

If you’re a cookie disabler, don’t bother shopping at Beautyjungle.com, according to the company’s privacy policy. “Our system is a little rigid,” concedes Lars Kry, vice president of marketing. “We haven’t had any complaints about it that I am aware of, but I think people who are opposed to the policy choose not to shop on our site.”

Kry says Beautyjungle puts a heavy focus on personal-ization to help distinguish itself in the crowded cosmetics category and assigns cookies to compile customer profiles. To coax customers to hand over the information, Beautyjungle runs sweepstakes that can pay out a prize of $22,000 in cash and gift certificates for up to $500. Customers who enter must fill out a beauty profile first. Kry says this allows the company to understand its customers and to better cross-sell and recommend products based on hair, eye and skin color.

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