Electronic Commerce and Privacy Issues

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Through its very nature, the Internet has altered and reshaped almost every aspect of the communication media, from books and news industry to television and various forms of personal interactions. One of the areas that emerged on the internet and developed into a massive, complicated industry is the online shopping.

Also called e-shopping and electronic retail, this service allows Internet users to engage in electronic commerce and purchase their desired goods and services online, from the sellers accommodating this branch of industry.

This has made the Internet a great option for customers who want expand their purchasing options, as well as improve their chances of finding a bargain. Not only are online shops extremely competitive against each other, and physical stores and shopping chains, but there are also numerous services which accommodate the customer’s need to compare different offers and conditions. This not only makes finding the best deals much easier but also adds a lot of much-appreciated transparency to the business, forcing the companies to be much more accommodating to the online users and their needs.

However, despite the massive appeal of online shopping as an easy, comfortable, and economically efficient way to acquire goods and services, and its rapidly rising popularity, there are still a number of critical issues which plague this industry and discourage a portion of the populace from fully embracing and trusting electronic retail. And the principle cause for this lack of trust is the danger to the users’ privacy which often accompanies the usage of online services.

This report aims to look at online shopping, how it grew and developed, why and how it has been plagued by privacy concerns during its history, and will also discuss what the customers and the online shop owners can do to avoid danger and facilitate a safe and convenient experience on the Internet.

Online Shopping and Privacy


Online Shopping was conceptualized, created and evolved into a successful endeavor extremely quickly. It was fist conceived in 1979, as a result of collaboration between two information technology engineers Michael Aldrich and Peter Champion, who were working for a British computer manufacturing company ROCC Computers, and were researching a way to connect a television to a computer.

In their line of work, they discovered a way to connect them together with a telephone line, which had the potential to allow visual navigation and usage of networked computers. By 1980 they were already marketing it as a technology that facilitated private business to business shopping, and could also fulfill the customers’ data and demand needs. In a year, their company had established the first business to business online shopping system, and in three more years, in 1984, the first consumer transactions were made. While the world did not have the necessary infrastructure to facilitate vast interest, within a decade the World Wide Net was created, and abundant and affordable computers set up the stage for a fast growing e-commerce (Coleman & Ganong, 2014).

Modern Electronic Shopping

In the short time span between 2001 and 2012, the numbers of the Internet Users in the world have increased by more than 6.5 times, from the impressive 360 million to the staggering 2.4 billion people. And the popularity and variability of e-commerce have grown exponentially with these numbers. The modern age offers the customers numerous ways to access the online stores, from the traditional desktop computer to the comfortable and compact smartphones and tablets, with an estimated 87 percent of tablet owners regularly making online purchases.

Modern communication technologies allow for total comfort when making online purchases, with the customers assessed by Equation Research study in 2011 admiring the ability to buy goods without leaving their couches and beds, and showing less restraint when spending money on products and services than people who engage in shopping in-person (Kelly, 2011). The major global retailers, such as Wal-Mart, Stables, Apple, and Amazon, provide for the needs of online shoppers, who are able to pay for the services through a variety of digital payment systems, either by using their credit card details, or by using online payments systems, such as PayPal, Google Wallet, Bitcoin, and others.

Privacy Issues

The Internet has developed a whole system to accommodate online shoppers. But one of the principle differences between physical shopping in a brick-and-mortar retail outlet is that e-shopping requires the customers to share their personal information willingly with the trading platform, in order to complete the transaction. This creates inevitable fraud and security concerns, as it can be very hard to distinguish which information should or should not be shared with the online merchant, and to differentiate honest businesses from fake ones which are only attempting to capture the users’ financial information and exploit it for illegal enrichment.

Also, regular surveys show a different privacy concern among the shoppers. They consistently point to the fears over how online businesses use their personal information, to the point that a survey made by Privacy & American Business in 2005 showed that 64 percentages of users were wary of dealing with a business due to general wariness over how their personal information will be used.

The results also showed that an even larger percentage would refuse to use the service entirely if they felt that too much information was asked of them. On the other hand, the survey participants were much too willing to give up their security concerns for minor prizes and discount offers, despite potentially opening the way to larger losses (Tsai, Egelman, Cranor, & Acquisti, 2011). Users usually give up a small amount of their privacy in exchange for comfort by allowing websites to create “cookies,” which are how the site stores personal information. Cookies help personalize the customers’ experience on the site, as well as stop them from having to input information each time they log in.

The stored information can help advertisers create personalized profiles for their users, which many people fear might end up containing too much of actual personal information. For example, Facebook, the popular social network website, has had a bad history of selling the data about the users’ personal preferences to advertising sites without the consent of the former (Laudon & Laudon, 2016). The popular retail website Amazon had also been observed attempting to profit from the users’ personal information, with the potential to use it to control and track web transaction made by users (Waugh, 2011).

The consequences of not protecting one’s personal information can be quite severe, ranging from annoyance, due to targeted adverts and unpleasant tracking software, to serious issues, like privacy breach and even identity theft, if information gathered from a shopping website fell into the hands of scammers. This could result in a great deal of psychological and financial stress for the customer.


Seller Privacy Solutions

Customer trust is the key to the success of an online business. To maintain a beneficial relationship with the customer, the industry needs to treat security and privacy as its principle priorities. Investments in additional security measures have proven to attract consumers and improve their trust and loyalty. This means that the businesses benefit from maintaining a reputation for honesty and transparency (Roca, García, & Vega, 2009).

Not only should online shops take efforts into protecting the user data and educating them in ways of maintaining their privacy, but they should also be able to create perceived security and privacy so that the users are not scared away from sites that respect their privacy by bad website design and complicated access and navigation (Özgüven, 2011).

Customer Privacy Solutions

The customers are just as responsible for their privacy as the online shops. It is a good approach to carefully assess which data is mandatory for input on a shopping site, and which is optional, and only reveal information necessary for the order completion when purchasing online, which includes never sharing information such as Social Security Numbers or credit Card PINs. The users should also be wary of unsecure internet connections. It is also important that the user does not ignore the sites’ Privacy Policies, as these include what exactly can businesses do with the users information (Privacy and Online Shopping, n.d.). Finally, the customers should strive to educate themselves about internet privacy.


It is evident that the e-commerce industry will continue to expand in the future, and will find new ways to accommodate their customers. The current trends show that it is almost inevitable that the customers will have to trade some of their information privacy in exchange for better, more comfortable, and more personalized service.

However, this does not negate the issue of user privacy, and should only encourage the users to be more careful and educated about which of their information is tracked and shared, and how is it going to be used afterward. The online businesses, on the other hand, should be ready to meet such customer demands, and provide an honest, transparent, and secure service.

Reflective letter

This was a very interesting assignment, and I found a lot of enjoyment from studying both the online shopping industry and the privacy related issues. It was sometimes difficult to find information that focused specifically on online shopping and privacy, rather than popular topics of the overall Internet safety, and the general purchasing practices, although both of these provided useful materials for the report. It was also interesting to learn about the “perceived security” and the importance of not only providing safety to the customers but also projecting it to them.


Coleman, M., & Ganong, L. H. (2014). The social history of the American family: An encyclopedia. Thousand Oaks, California: SAGE Publications.

Kelly, S. M. (2011). More Consumers Using Tablets to Holiday Shop [Study]. Web.

Laudon, K. C., & Laudon, J. P. (2016). Management information systems managing the digital firm (14th ed.). Boston, MA: Pearson Education Limited.

Özgüven, N. (2011). Analysis of the Relationship Between Perceived Security and Customer Trust and Loyalty in Online Shopping. CBR Chinese Business Review, 10(11), 990-1088.

Privacy and Online Shopping. (n.d.). Web.

Roca, J. C., García, J. J., & Vega, J. J. (2009). The importance of perceived trust, security and privacy in online trading systems. Info Mngmnt & Comp Security Information Management & Computer Security, 17(2), 96-113.

Tsai, J. Y., Egelman, S., Cranor, L., & Acquisti, A. (2011). The Effect of Online Privacy Information on Purchasing Behavior: An Experimental Study. Information Systems Research, 22(2), 254-268.

Waugh, R. (2011). Privacy experts ‘roast’ Kindle Fire for ‘watching you’ online – worse than Google OR Facebook. Web.

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