Tab for E-Commerce Glitches Could Be $60 Billion by 2010

Problems with transactions could cost e-commerce merchants and other Internet businesses some $60 billion in sales through 2010, according to a consumer survey released Monday. Altogether, 88% of consumers reported problems with transactions at shopping, banking, travel, and insurance sites. About one-third of consumers who run into checkout or payment problems online go to a competing site, while another 7% simply abandon the transaction, the survey says.

Problems cited by respondents canvassed by the survey include: payments that didn’t post, causing a late fee for the consumer; a Web site glitch that deleted all data entered by the consumer, including a credit card number; and an error message on a travel site that left the consumer in doubt whether his credit card had been accepted and he had booked the flight.

The survey, conducted by Harris Interactive among U.S. consumers and sponsored by TeaLeaf Technology Inc., a San Francisco provider of software that untangles Web-site problems, indicates that while nearly two-thirds of adult online users are likely to have done a shopping transaction this year, up from 62% in 2005, these users are less willing to tolerate transaction glitches. Eighty-five percent said they expected to have the same experience online as that they have in physical stores.

In their announcement of the survey results, Harris and TeaLeaf estimate that, with 88% of consumers reporting problems with online transactions, some 4.5% of all Web transactions are potentially problematic. From this number, the companies further estimate a $60 billion impact on online sales over the next four years, based on Forrester Research projections of $201 billion in sales in 2006 and a 14% compound annual average rate of growth.

At the same time, the survey reveals that transaction problems also raise troubling questions in consumers’ minds about data security. Of those who experienced these problems, 91% said they were at least somewhat likely to doubt merchants’ ability to keep their private information secure. Meanwhile, the top two factors leading to a positive experience, according to the survey, are Web site security (26% of respondents) and ease of completing a transaction (22%).

Harris conducted the survey in late August, sampling a total of 2,790 U.S. adults 18 years old or older. Of this sample, some 2,508 (90%) had done at least one online transaction?shopping, banking, insurance, or travel–in the past year.