Consumer worries over online privacy are costing retailers big-time. That's gravy to iPrivacy, a New York-basedapplication service provider.
The company provides organizations with a private transaction infrastructure designed to make customers more comfortable doing business online, thereby driving up retention and use rates, said Ruvan Cohen, president and chief operating officer of iPrivacy.
Cohen joined the company after a 15-year stint in marketing at Citibank, in which he presided over the global rollout of the bank's major product lines and the introduction of Citibank Gold Cards, Photocards and co-branded cards with Ford, Apple Computer and MCI.
Few would argue against the need for greater privacy in the e-commerce marketplace. According to Forrester Research, 48% of consumers who worry about privacy won't shop online, costing merchants approximately $2.8 billion in lost revenues.
"It's virtually impossible to buy something online without disclosing your identity to the merchant. In the physical world we take for granted the ability to make an anonymous purchase using a very old technology that's called cash, which is simply not available online," said Jason Catlett, president of Junkbusters, a Green Brook, N.J.-based privacy advocacy firm.
Online shoppers abandon 70% of online shopping carts at checkout, Cohen added. "They don't want to provide all of this information to get a pair of socks."
The iPrivacy infrastructure, which will be marketed to banks and credit card issuers (among others) by the first quarter of 2001, shields consumers' personal information from online merchants and advertisers. Once authenticated through an iPrivacy-enabled Web site, all of a customer's subsequent traffic passes through a SSL (Secure Socket Layer) connection to iPrivacy's proxy server, preventing the placement of cookies or the identification of an IP address.
iPrivacy provides proxy names, proxy e-mail addresses and proxy credit card numbers that can correspond to a specific transaction for a one-time purchase, or can be keyed to the merchant's Web site, facilitating one-click ordering on future visits.
The proxy name, an alphanumeric code rather than a seemingly real "John Doe" name, works with the proxy credit card number through normal verification procedures. The associated proxy e-mail address is designed to accept e-mail only from the merchant's Internet domain, rejecting third party solicitations.
Customers using iPrivacy can have merchandise sent to their local post offices, and claim packages in person by furnishing an iPrivacy e-mail message and a valid form of identification. The company intends to offer home delivery using private carriers, who would be entrusted with the street address denied to the shipper.
The potential for increased sales from customers who would otherwise be reluctant to shop online should outweigh the loss of customer data to online merchants and advertisers, observers note.
"Any merchant, given a choice of an anonymous purchase and no purchase at all, will take the anonymous purchase," said Catlett. "Unless they're actually losing money selling stuff and trying to make it up selling data, which is a complete loser of a business model, they want the transaction."
For this reason, iPrivacy doesn't anticipate resistance from merchant Web sites, such as denying service to the iPrivacy proxy server, shunting them to a slower server, or rejecting form entries containing iPrivacy proxy names.
"Merchants tend to be pragmatic when it comes to individuals that take any steps to block their privacy," said Catlett. "Generally, merchants have got a lot better things to do than to deliberately make the customer experience worse."
The company anticipates that Web sites will offer incentives for iPrivacy users to reveal themselves. Customers can then make an informed choice as to whether they're getting the value that they want from the site, said Cohen. "This gives the consumer the choice of how much info they want to give up."
And once companies start rewarding customers for revealing their identities, more patrons would start to conceal themselves using the masks that iPrivacy wants to provide.