Hackers could derail retailers’ one-click world

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Starbucks’ pay-ahead app is a tremendous innovation that is not only a big hit with customers of the coffee chain but it also featured in second position in the Top 50 table in the recently published Retail Insider Digital Retail Innovations 2015 report (sponsored by Webloyalty).

It’s one of a number of innovations in this year’s report that have the fundamental objective of making things super easy and convenient for customers. Ordering and payment can be done with minimal effort as it holds all the data it needs on the individual. Customers simply can’t get enough of these sorts of initiatives.

But what if Starbucks was hacked and all the valuable personal details on its millions of happy coffee drinkers were stolen? My guess is that they would no longer be happy customers and an exodus could occur. At least it would only be coffee we’re talking about and nothing of a more sensitive nature.

Like Mumsnet, you could say, which among other things has systems containing lots of personal details on thousands of families, and Ashley Madison that holds the very delicate details of its 39 million members who conduct affairs around the world.

Well, if you’ve been watching the news of late then you’ll know that it just so happens that both these organisations have been hacked recently and in the case of the latter there are massive repercussions. It’s very future is now in doubt because its guarantee of maximum data security for its customers has been proved to be meaningless and confidence in its model has evaporated.

They follow other recent hackings at retailers including Carphone Warehouse and Target in the US that are undoubtedly selected by hackers because of their high profiles. They know they’ll garner greater notoriety from breaking into such familiar organisations.

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Looking for notoriety

Retailers’ success depends on customer trust so the big question is: at what point is trust eroded as a result of a breach? Pretty quick would be my guess.

The current acceleration in hacking potentially poses a threat to the real growth engine of the sector – online. Yes, we all agree that the internet offers choice, price transparency, and convenience but is hacking its possible Achilles heel? Will people be increasingly scared to reveal any details about themselves when visiting online stores and be sceptical about undertaking transactions?

This was very much the case in the early days of the internet when there was a great reluctance by many people to pay by credit and debit cards. Even if we don’t have a return to avoiding paying online maybe we might still see more obstacles being placed on websites to enhance the security of users information. We might have to identify ourselves when using a site.

This would be a problem because any such steps will strip away the ease-of-use that retailers have been working hard to achieve on their websites. There is the risk of online retailing moving from a one-click world to a three-click environment.

The reality is that online is a data gathering paradise for retailers where they can amass a mountain of rich data on their customers’ activities. If the risk of breaches leads to shoppers preferring to visit and purchase from merchants’ online stores as ‘guests’ rather than as registered customers then the opportunity to collect the valuable data on them is dramatically reduced.

So many of the innovations in the Retail Insider Digital Retail Innovations 2015 report revolve around data that it would be a calamity for innovation in the sector if people started to make a preference to remain anonymous online and there was a move towards greater regulation in order to reduce the chance of breaches.

Any legislation that removes the opportunity for the free flow of data would undoubtedly be a restriction on the ability of the retail community to innovate. No end of amazing innovations that are in the market today, and could appear in the future, would be stymied by some rancid hackers whose selfish motivation is based simply on gaining notoriety.

Guy (online only)Guy Chiswick, Managing Director, Webloyalty Northern Europe (@webloyalty_Guy)

About Guy Chiswick

Guy Chiswick is the Managing Director of Northern Europe for Webloyalty. He is interested in retail innovation and discussing the future of retail. You can follow him on Twitter @Webloyalty_Guy