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Online shoppers will pay more for privacy

Tim Callan posted about how online shoppers are willing to pay more if they feel that their privacy is protected.

Carnegie Mellon recently released research indicating that shoppers are willing to pay more online if they believe their privacy is protected. The article studied real purchasing decisions using real money (test subjects got to keep their savings) and found that shoppers were willing to spend an extra $0.60 on a $15.00 purchase, a 4% increase in ASP. In the world of online commerce, that's an enourmous amount of additional margin for a site.

It makes sense to me that online retailers will seek to differentiate themselves based on this information. Consumers value best-in-breed privacy to the tune of a 4% price increase. That means a merchant who engages in the best practices to protect customers' confidential information should expect customers to prefer her site over others' with equivalent prices but less attention to protecting confidential information. In fact, this site should be able to maintain slightly premium pricing and still have an advantage.

Some traditional, but effective, ways of demonstrating that you value your cusomter's privacy include placing SSL site seals on your page or by getting a seal from TRUSTe.

Online shoppers will pay more for privacy

Originally posted on Sun Jun 17, 2007
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