The E-Commerce Opportunity
A secure e-commerce Web site can provide businesses with powerful competitive
advantages, including increased online retail sales as well as streamlined application
processes for products such as insurance, mortgages, or credit cards. E-commerce credit
card sales can be especially lucrative: according to independent analysts, cash
transactions on the Internet will reach $9 billion in 2000, and $30 billion in 2005.
By offering products and services on the Web, businesses can gain unique benefits:
· New customers: Anyone with an Internet connection is a potential customer: millions
around the world are already using the Internet for business transactions. Web
storefronts are open 24 hours a day, and require no investments in brick and mortar.
· Cost-effective delivery channel: Many products and services, such as software or
information, can be distributed directly to customers via the Web, enhancing the
customer experience and increasing profitability by eliminating the shipping and
overhead costs associated with order fulfillment.
· Streamlined enrollment: Paper-based enrollment workflows are fraught with delays.
Applications for insurance, a mortgage, or a credit card, for example, can be held up
in the mail. And once received, application information must be entered into
computer systems manually, a labor-intensive process that can introduce errors. By
accepting applications via a secure Web site, businesses can speed application
processing, reduce processing costs, and improve customer service.
· Better marketing through better customer knowledge: Establishing a storefront on
the Web positions enterprises for one-to-one marketing—the ability to customize
products and services to individual customers rather than large market segments. The
Web facilitates one-to-one marketing by enabling businesses to capture information
about demographics, personal buying habits, and preferences. By analyzing this
information, enterprises can target merchandise and promotions for maximum impact,
tailor Web pages to specific consumers, and conduct effective, tightly focused
marketing campaigns.
No business can afford to ignore this opportunity. But businesses also can’t ignore the
potential pitfalls. Before entering the fiercely competitive e-commerce arena, businesses
must carefully assess and address the accompanying risks.
A. The Risks and Challenges of E-Commerce Trust
To succeed in the fiercely competitive e-commerce marketplace, businesses must become
fully aware of Internet security threats, take advantage of the technology that overcomes
them, and win customers’ trust. Eighty-five percent of Web users surveyed reported that
a lack of security made them uncomfortable sending credit card numbers over the
Internet. The merchants who can win the confidence of these customers will gain their
loyalty—and an enormous opportunity for expanding market share.
In person-to-person transactions, security is based on physical cues. Consumers accept
the risks of using credit cards in places like department stores because they can see and
touch the merchandise and make judgments about the store. On the Internet, without
those physical cues, it is much more difficult to assess the safety of a business. Also,
serious security threats have emerged. By becoming aware of the risks of Internet-based
transactions, businesses can acquire technology solutions that overcome those risks:
· Spoofing—The low cost of Web site creation and the ease of copying existing pages
makes it all too easy to create illegitimate sites that appear to be published by
established organizations. In fact, con artists have illegally obtained credit card
numbers by setting up professional-looking storefronts that mimic legitimate
businesses.
· Unauthorized disclosure—When transaction information is transmitted “in the
clear,” hackers can intercept the transmissions to obtain customers’ sensitive
information.
· Unauthorized action—A competitor or disgruntled customer can alter a Web site so
that it refuses service to potential clients or malfunctions.
· Eavesdropping—The private content of a transaction, if unprotected, can be
intercepted en route over the Internet.
· Data alteration—The content of a transaction can be not only intercepted, but also
altered en route, either maliciously or accidentally. User names, credit card numbers,
and dollar amounts sent “in the clear” are all vulnerable to such alteration.