Consumers seem to have cast aside their reservations about shopping on the Internet. America Online (AOL) reported that its members spent $1.2 billion (#1.04 billion) with online retailers through the AOL Shopping Channel during November and December. About 1.25 million of its 15 million members shopped online for the first time. Research carried out for AOL by the Internet Research Group revealed that 63 per cent of AOL shoppers were very satisfied with the online shopping experience and the remaining 37 per cent were satisfied. Some 98 per cent of the AOL shoppers surveyed said they would be motivated to buy online in the next six months.
Until now, consumers had to enter the same information - such as name, address and credit card details - at every website where they wanted to purchase goods. This led to frustration on the part of many.
In fact, Forrester Research estimates that 66 per cent of the time would-be shoppers abandon their online shopping carts and merchants lose their business.
In addition, the Boston Consulting Group found that duplication of information and hassle with order forms are barriers to shopping on the Internet. New electronic wallets aim to rectify these shortcomings.
In order to make the consumer shopping experience more convenient and private, AOL is one portal site among many, introducing an electronic wallet. The aim is to allow consumers to type in their personal details just once, store them, and use that information to pay for goods at many merchant sites.
As is so often the case with new technologies, however, there are many models and no standards. There is much debate about which type of model will succeed but there is no doubting that electronic wallets are a good idea.
"An electronic wallet has uses beyond the payment aspect and that's the convenience aspect," said Mr David Pecaut, senior vice-president and head of the global e-commerce practice at Boston Consulting Group's Toronto office.
"The new breed of wallets are either server-based or ultra-thin," said Mr Vernon Keenan, Internet analyst and founder of Keenan Vision in San Francisco. "The heart of the new technology uses centralised servers to store personal credit card information for wallet users. The reason they may succeed is that they do not require installation of special software on the PC, all they require is a browser," he said.
This new technology, Mr Keenan said, contrasts with "old-fashioned wallets" that were marketed to the public but failed to be distributed and accepted. These wallets were known as "fat" wallets not because they were stuffed full of cash but because they required software to be installed on the client's PC.
AOL's wallet, unveiled late last year but yet to be released, will be called Quick Checkout. Another popular portal site, Excite, has a program called ExpressOrder which includes a registration process, billing, shipping and credit card information that is encrypted in a "cookie" on a user's PC.
Users enter their information once and then each time thereafter when they wish to buy something, they type in their password and the pre-entered information is sent to the merchant.
Each participating merchant adapts a "click to buy" button on his site and the fully completed user form appears on the page. "ExpressOrder simplifies the purchasing process," said Mr Andrew Halliday, vice-president of commerce at Excite.
ExciteShoppe has 25 merchants using the ExpressOrder system. Mr Halliday predicts that each portal "will define its own approach. AOL has the strength of a tight system, membership and billing relationships", he said. "It is a little less elegant for those portals that don't have merchant billing relationships."
Yahoo! launched Yahoo! Shopping in November and more than 3,000 merchants are now participating in the program. Yahoo! has created software that allows these merchants to create stores on the Yahoo! site. The form-filling is standardised and all the consumer needs to do is fill in his credit card number each time. Yahoo! calls this e-commerce solution the universal shopping cart because it allows consumers to choose products from different stores, add them to the cart and make purchases in one check-out.
"This is phase one," said Mr Tim Brady, vice-president of production and executive producer at Yahoo! Inc. "We will be enhancing the idea of the universal cart over time, adding more features."
His preference is for a server-side model that can guarantee purchases 100 per cent of the time. "Ideally users would love a client-side model but logistically that's difficult to pull off," he said. "You need to be able to reach merchants' order forms and pre-populate the forms without having a relationship with the merchant and that's quite a task."
Two new entrants in this field are e-Wallet of Pasadena, California and Transactor Networks of San Francisco. Since e-Wallet launched its program in November, more than 250,000 consumers have downloaded the Windows application for free from the company's website.
e-Wallet is stored on a user's PC and supports all existing credit and debit cards. Users enter their information and store as many credit cards as they like in the e-Wallet. All information is encrypted locally on the computer's hard drive.
Once consumers enter a check-out screen at an e-commerce site, they click on their e-Wallet, enter their password and drag the credit card of their choice over to the form. All the credit card and shipping information is entered automatically. E-Wallet lets consumers search for goods and services directly from the e-Wallet toolbar which resides at the bottom of the computer screen.
Until now, said Mr Francis Costello, chief operating officer of e-Wallet, shopping online has been "a pain. You need to remember passwords. The experience has been fairly negative and the abandonment rate at the check-out screen has been fairly high". The e-Wallet approach, he said, is "consumer-friendly".
Transactor Networks is working with Citibank to pilot the CitiWallet. In this model, once consumers register their information, a bookmark will reside on the shopper's World Wide Web browser for easy access. When a consumer wants to buy online from one of the merchant supported sites, he clicks on his bookmark, enters a login and password.
Transactor Networks has signed up a consortium of 10 merchants called thecatalog.com. Eventually, Mr Ron Martinez, founder and CEO of Transactor Networks, expects the wallet to support other Internet-connected devices like Palm organisers, point-of-sale terminals and automated teller machines.
An older payments provider, CyberCash, has been in the wallet market for years, first with a "fat" wallet and now with its new generation Agile Wallet. CyberCash's Instabuy service is network-based and by incorporating the Agile Wallet aims to be simple to use.
Consumers enter their personal information once and it is stored on CyberCash's secure servers during their first Instabuy purchase. Next time they visit that merchant or another Instabuy-enabled merchant, the information is recalled. Shoppers can use the same wallet and same password at different merchant sites.
This month, CyberCash will announce its first list of Instabuy merchants. In order to offer the service, merchants need to sign up with CyberCash and add scripts to their websites.
"I am very enthusiastic about our service," said Mr Russ Stephenson, senior vice-president at CyberCash. "This year, I expect it to be adopted by large numbers," he said.
