Gartner: $2 Billion in E-Commerce Sales Lost Because of Security Fears

In 2006 alone, retailers lost almost $2 billion because of consumer security fears, with about one-half of those losses ($913 million) coming from people who avoided sites that seemed to be less secure and the rest (about $1 billion) came from consumers who were too afraid to conduct e-commerce business at all, according to a […]

Written By: Evan Schuman
Nov 27, 2006
Channel Insider content and product recommendations are editorially independent. We may make money when you click on links to our partners. Learn More

In 2006 alone, retailers lost almost $2 billion because of consumer security fears, with about one-half of those losses ($913 million) coming from people who avoided sites that seemed to be less secure and the rest (about $1 billion) came from consumers who were too afraid to conduct e-commerce business at all, according to a Gartner survey of 5,000 U.S. adults in August that the research firm will publish on Nov. 27.

The report is startling in the sense that it confirms what many retailers have long feared. It’s a frustrating problem because so many legitimate security defenses are invisible and the most visible security features—such as displaying a sign noting security standards compliance—do little to truly secure the site. Also, credit card purchases are overwhelmingly protected against theft, so the true risk for consumers is quite small.

Consumers, however, do not make purchase decisions based on reality nearly as often as they do on perception, so the reality of low risk doesn’t help much if consumers perceive high risk. Recent reports of payment problems at retail chains certainly doesn’t help.

On the other hand, a consumer survey may not be the most reliable means of measuring e-commerce losses, which, at best, are theoretical as it’s impossible to precisely quantify the value of purchases never made.

Also, consumers who want Web sites to improve security might tell survey researchers that the lack of security has stopped them from making purchases, even if that’s not true. Even if consumers are speaking truthfully, they are speaking generically about unspecified future purchases. When it comes to actually making a specific purchase, a consumer might very well change his or her mind.

“For 90 percent of people, if they want that refrigerator, they are going to buy it,” said Avivah Litan, a Gartner analyst specializing in security who is also an author of the report.

All those things aside, Litan stresses that the security perception issues are real and that e-commerce merchants would do well to improve the actual security as well as improve visible signs of security both for deterrence and to provide customer comfort.

“The two goals don’t necessarily call for the same technical approaches because the most effective fraud prevention applications are often invisible to consumers and criminals,” Litan said. “A layered approach to solving security problems is the most effective. Companies should implement back-end fraud detection, stronger user authentication [beyond single-factor passwords], transaction verification for high-risk transactions and data masking/truncation of sensitive data that is shown on Web-based screens.”

Gartner is reporting that the impact of the consumer fears extends beyond consumers choosing to make online purchases, but also to online banking—where the report projects that some 33 million U.S. adults have avoided online banking due to security concerns—and generic e-mail marketing. More than 85 percent of the consumers in the Gartner survey said they delete unexpected e-mail without opening it.

Retail Center Editor Evan Schuman can be reached at Evan_Schuman@ziffdavis.com.

Check out eWEEK.com’s for the latest news, views and analysis on technology’s impact on retail.

Recommended for you...

Concentric AI Adds Integrations to Data Governance Platform

Concentric AI adds Wiz, Salesforce, and GitHub integrations to boost Semantic Intelligence platform’s AI-driven data governance and security capabilities.

Jordan Smith
Aug 15, 2025
Brivo Launching New Solution to Boost Security Suite

Brivo and Envoy partner to unify access control & visitor management, delivering scalable, compliant, and secure workplace experiences.

Jordan Smith
Aug 13, 2025
GitHub CEO Steps Down as Microsoft Tightens AI Integration

GitHub CEO Thomas Dohmke to step down in 2025 as Microsoft moves platform into CoreAI, deepening its role in the company’s AI development strategy.

Allison Francis
Aug 13, 2025
Backblaze CEO on GTM Strategy & AI Demand on M&E Datasets

Backblaze CEO on record growth, AI and M&E wins, and how new products and partnerships are driving enterprise cloud storage adoption.

Jordan Smith
Aug 13, 2025
Channel Insider Logo

Channel Insider combines news and technology recommendations to keep channel partners, value-added resellers, IT solution providers, MSPs, and SaaS providers informed on the changing IT landscape. These resources provide product comparisons, in-depth analysis of vendors, and interviews with subject matter experts to provide vendors with critical information for their operations.

Property of TechnologyAdvice. © 2025 TechnologyAdvice. All Rights Reserved

Advertiser Disclosure: Some of the products that appear on this site are from companies from which TechnologyAdvice receives compensation. This compensation may impact how and where products appear on this site including, for example, the order in which they appear. TechnologyAdvice does not include all companies or all types of products available in the marketplace.