E-Commerce Thrives on Search and Privacy

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Two new studies highlight patterns in the online retail market place: first, market research firm Hitwise finds that online retailers get almost 25 percent of their traffic from search engines, while Carnegie Mellon finds that online shoppers will pay more if a retailer works to protect their privacy.

First up, Hitwise finds that sites in its Shopping & Classifieds category got 24.95 percent of their upstream visits from Internet search engines during May 2007. The number isn’t actually a very large increase from May of 2006, but the balance of the search traffic has changed, with Google accounting for 15.55 percent of Shopping & Classified traffic, an increase of 8.7 percent, leaving the rest of the search engines to duke it out amongst themselves for the remaining 10 percent of the category’s overall traffic. The other gainer since 2006 has been social networking site MySpace, now accounting for 3.15 percent of the category’s upstream traffic—an increase of over 86 percent compared to the year before. And the top beneficiary of that MySpace traffic? Ebay.

Meanwhile, a study from Carnegie Mellon University finds that online shoppers are generally willing to pay a little extra to buy from retailers who make it easy to determine how consumers’ privacy will be protected. Led by associate research professor of computer science, engineering, and public policy Lorrie Cranor, participants using the Privacy Finder indicated they were more likely to buy from merchants with good privacy policies, as identified by Privacy Finder—and they were also willing to pay about 60 cents extra on a $15 purchase to buy from a site with a privacy policy they liked. Privacy Finder relies on data published using the Platform for Privacy Preferences (P3P) to present information on sites’ policies.

“Our suspicion was that people care about their privacy, but that it’s often difficult for them to get information about a Web site’s privacy policies,” said Cranor. “People can’t act on information that they don’t have or can’t understand.”

The study examined 72 people who were given $45 and and asked to buy two items—a package of batteries and a vibrating sex toy. Some used Privacy Finder, but others did not. Interestingly, users made about a third of their sex toy purchases from sites ranked with “high privacy” ratings by Privacy Finder—but made 50 percent of their battery purchases from high privacy sites. Cranor said they’d expected shoppers to be more concerned about privacy when buying a sex toy than they would be when buying batteries, and hopes additional research will clarify consumers’ motivations.