Building Trust in Electronic Commerce

By Salnoske, Karl | Business Credit, January 1998 | Go to article overview
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Building Trust in Electronic Commerce

Salnoske, Karl, Business Credit

According to analyst predictions, the volume of global purchases made electronically over the Internet will expand from $131 million in 1995 to as much as $600 billion by the year 2000, accounting for approximately eight percent of all retail purchases. Retailers, wholesalers and businesses an every link in the procurement chain are seeing their business models revolutionized by the advent of electronic commerce, also called e-commerce.

As companies of all sizes and in all industries gear up to do business on the Internet, technology leaders worldwide are working together to build the requisite electronic commerce infrastructure - this spans everything from the network technologies that tie businesses together, to the software applications that permit them to engage in commerce with each other.

While making electronic commerce a reality has posed a number of technological challenges, the issue of transaction security has received the most public attention. Both businesses and consumers regard it as their most serious concern. But security has also been the focus of the most innovative and creative inter-industry collaboration. Leaders in the technology, financial and credit card industries have spent the last several years creating the critical security component of the electronic commerce equation.

The Issue of Security

Part of the challenge in achieving mainstream acceptance of online shopping is convincing consumers that the Internet is secure. As sudden as the Internet's rise to popularity, it still followed the same cycle of assimilation as any other "brand new" technology before it, albeit a dramatically abbreviated cycle. While many people were quick to investigate the Internet phenomenon, there were others who waited. Likewise today, there are people who use the Internet every day, but still would not choose to conduct their most critical personal transactions online, because of concerns over security.

The concept of online shopping is new for many people and troublesome for some. It means a fundamental change in how they make purchases. Nevertheless, the consensus in the technology industry and within the analyst community suggests that greatly enhanced convenience will be the most important factor driving consumer acceptance of online shopping. The ubiquity of the Internet, its 24-hour availability and access to an unimaginable assortment of merchandise will prove to be compelling reasons to shop. There is little doubt that electronic commerce will inevitably become mainstream.

In the meantime, the challenge to technology providers is how to make the online shopping experience as inviting as possible, to as many people as possible. This is the commitment technology providers have strongly supported. IBM encourages its customers to explore online opportunities, and works to ensure that markets will be there waiting for them. This means addressing the obstacles that keep shoppers and merchants away from the Internet, allaying their concerns about security and working to make electronic commerce secure and convenient for the veteran browser as well as newcomers.

In short, the answer to the security challenge involves two strategies. One is reassuring shoppers and merchants that it's safe to conduct transactions online. The second is developing technologies and creating products to reaffirm that promise.

Getting on the Internet

For businesses looking to get online, the best approach is evolutionary rather than revolutionary. Where possible, existing investments in back-end inventory management and customer data technologies should be salvaged. Small businesses with little or no information technology (IT) need to build on entry-level systems to permit them to start simple and grow fast. Companies can begin by setting up a website to advertise their brands. Ultimately they move on to selling over the Internet using secure e-commerce technologies.

The idea is to match a company with a solution that is appropriate to that company's size, its industry, its level of technological sophistication and its specific e-commerce goals.

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