Internet retail

A recent study predicts that western European consumers will buy 123.1 billion euros of goods online by 2014, recording an average annual growth rate of 9.6 percent.

The Paris-based Organization for Economic Cooperation and Development (OECD) quoted the study by the Forrester research group in a report released at the weekend on how the Internet global shopping mall is booming as people and businesses look for bargains in bad times.

Citing the study, the OECD report, entitled "Empowering e-consumers," says shoppers in Britain, Germany and France can save 17 percent by buying electronics goods, DVDs and clothing online rather than in physical stores.

In Germany alone, more than half of the turnover of large mail-order companies is due to orders placed over the Internet.

Mainstay of Otto's business

For the country's biggest mail-order company, Otto, the classic paper catalogue plays only a minor role in its business. Online shopping is now the order of the day for the Hamburg-based giant and sales are brisk. Otto spokesperson Thomas Vogt says online buying now forms the core of the company's business.

"Online shopping is the absolute norm and the only growth sector. The majority of people in Germany buy online from us," Vogt said. "Women have already overtaken men and the proportion of female customers continues to rise. Interestingly, we also notice that even the older generation does online shopping as if it were the most natural thing in the world."

Growing security concerns

However, as the global online sector continues to register unprecedented growth, it also has to reckon with a growing number of drawbacks. In online business, large amounts of sensitive data are sent through the Internet every day – from the names and addresses of customers to bank account details and credit card numbers. Concerns over security are on the rise.

"Our entire turnover depends on whether the customers can trust us," Vogt said, stressing how vital security is. "When in an online store, customers give us their data, they must be sure it's not being passed on to third parties. And we do everything to meet these high security standards," he added.

These concerns have led to large investments in security systems. Security experts are constantly developing new programs in a bid to stay one step ahead of criminal hackers.

Christian Engmann, a computer expert based in the western German city of Bonn, says that updating security systems is an urgent requirement.

"A hacker takes a look at the program and it's only a matter of time till he works out what the programmer was thinking," Engmann said. "The programmer has to be faster than the hacker. It's a permanent race against time, anything can be cracked."

Both in online banking and online shopping, data transfer is a risky process.

Hackers are constantly trying to intercept bank account information or credit card numbers on the Internet, along with the associated passwords and PIN numbers. The process of trying to fraudulently acquire such sensitive information is referred to as a "man in the middle" attack or "pfishing."

But there's more to this problem than meets the eye.

"Identity theft merely means stealing the name, personal information such as date of birth, marital status, address, and so on. Then the imposter applies for an ID card and after that he can claim he is you. He goes on a shopping spree posing as you and you end up with the bill," Engmann said.

To prevent such criminal activities, online stores use different security systems that send personal data using encryption. However, customers cannot entirely relinquish their responsibilities.

Consumer behavior is crucial

Iwona Gromek of the Consumer Advice Center in the city of Duesseldorf says customer behavior is crucial, while admitting that often the most difficult thing is distinguishing between serious vendors and imposters.

"When shopping online we generally recommend taking a look at the vendor's imprint to determine whether there is a phone number. If you are unsure, go ahead and call," Gromek said. "Secondly, we advise against making any advance payments."

As the Christmas spending binge – vital to retailers and manufacturers around the world – gets under way, the recent OECD report highlights these and other worries.

The e-trade revolution is being held back by hidden frontiers, including language problems, delivery costs and taxation and regulation barriers, the report says. It warns that the future of the sector "depends largely on the level of confidence that consumers have in online shopping."

Author: Zoran Arbutina/rb/AFP

Editor: Kyle James