Businesses are still not doing enough to soothe consumer fears about buying online, says the Office of Fair Trading.
In its latest market report into internet shopping, the Office of Fair Trading (OFT) said shoppers still have significant worries about privacy and security, which are limiting the growth of the sector — despite its obvious successes.
Although internet sales have been increasing for years, online sales comprised just three percent of all retail sales, and only six percent of businesses were selling online to consumers, according to the latest OFT data from 2005. While there are many reasons people choose not to shop online, it identified security worries as a significant factor holding back the sector.
The OFT said 79 percent of web users it surveyed were "very concerned" about the security of their payment details when shopping online. And it estimates that 3.4 million internet users shun e-commerce because of "a lack of trust or fears about personal security".
The OFT report said: "Shoppers' fears about online payment security risks are considerable", adding that many consumers were even willing to forego potential savings online in order to gain peace of mind by buying goods offline.
The report added: "Confidence and trust are important to the success of internet shopping."
In addition, the OFT said increased consumer confidence would make 42 percent of offline businesses surveyed more likely to open an online channel.
There is also evidence online shoppers are not always aware of precautions they should take to help safeguard their security, the OFT said.
According to its research, one in five web users never check the security of a site and 34 percent only do so sometimes. But while businesses need to help improve consumers' security savvy by informing them of actions they can take to help protect themselves online, it cautioned against over-hyping the threat and scaring people away.
The report said: "[Consumer security awareness] campaigns need to be balanced, so that shoppers know how to protect themselves, without having excessive fears about online shopping."
Another area identified by the OFT as in need of attention is online shoppers' rights — both businesses and consumers are not always aware of their rights under laws such as the Distance Selling Regulations, it said. In its survey, the OFT found nearly a third (28 percent) of UK-based online traders were not aware or only slightly aware of the laws applying to online shopping, and two-thirds (66 percent) had never sought advice on them.
The OFT added that with the online shopping arena evolving so rapidly it's likely the existing laws will need updating to keep pace. The report said: "The backdrop to internet shopping is changing at a dizzying pace, with developments such as mobile phone commerce, targeted advertising, digital delivery, Web 2.0 and virtual worlds."