December 14, 2006, 12:00 AM

$2 billion in online sales lost due to security concerns, Gartner says

Consumer concerns about online data security continue to take a heavy toll on e-commerce, resulting in nearly $2 billion in lost e-retail sales in 2006, according to a new report from Gartner Inc.

Consumer concerns about online data security continue to take a toll on e-commerce, resulting in nearly $2 billion in lost e-retail sales in 2006, according to a new report from Gartner Inc.

Nearly half of online U.S. adults, or 46% of more than 155 million people, say that concerns about theft of information, data breaches or Internet-based attacks have affected their purchasing payment, online transaction or e-mail behavior, Gartner says.

While $2 billion represents less than 2% of all online spending, it is still an important figure, Gartner says. “If you look at it in the total context, it’s not that significant, but if you look at the trend, it is significant,” says Avivah Litan, a Gartner vice president and security technology analyst. “It’s the first time that spending is actually going down because of security concerns. It’s becoming measurable.”

In addition, smaller retailers also are the ones most likely to lose sales due to security concerns, because consumers consider large retailers as more trustworthy, she says.

Of the 41 million online shoppers who changed their behavior because of security concerns, 69% say they are more careful about entering sensitive data on sites, 66% say they are more cautious when purchasing goods online and 38% say they spend less money online than they otherwise would.

Of those who spend less online, 29% say they reduced their spending by 75% or more; 26% reduced spending by between 50% and 74%; and 28% cut spending between 25% and 49%, according to Gartner. That amounted to about $913 million in lost e-commerce sales in 2006.

In addition, of the 53.4 million online adults who don’t shop on the web, 27.4% say they don’t feel buying online is safe or secure, representing another $1 billion in lost e-commerce sales this year, Gartner says.

 

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