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Trust becoming as important as security in e-commerce

Updated:
By Jim Landers / The Dallas Morning News

WASHINGTON – You're looking for a shoe supplier who can get you 200 pairs of a trendy sandal, and you are staring at a Chinese Web page offering just the shoes you want for a great price. Is it the real thing or a hollow.com?

You've got a savings account at a bank that's going whole hog into online services. An e-mail arrives purporting to be a 1099 tax statement showing how much interest you earned last year. Is it the real thing? Did the bank send it to you in time to prepare your taxes? Did somebody else read it before it came to you?
These are questions of trust, a hard-won attribute in business as in life. When you're working in the virtual environment, it's not yet easy to take what you see on trust.
A few companies are beginning to pursue opportunity in this e-commerce weakness.
Dun & Bradstreet, a common credit-checking source in the business world, is available for online checks as well.
Two other organizations entering this field – the U.S. Postal Service and Société Générale de Surveillance S.A. of Geneva – are offering their long experience as trustworthy names to reassure online customers.
Last month, the Postal Service partnered with PostX Corp. of California to offer electronic postmarks to companies using e-mail for secure communications.
"As with certified mail, the electronic postmark with PostX allows a company to create a document that is time-stamped by a trusted party," said R.C. Vekatraman, founder and CEO of PostX. Opening or changing the document breaks the postmark in ways the recipient will notice and threatens the vandal with the wrath of postal inspectors.
Deputy Postmaster General John Nolan sees the partnership as a good deal for the Postal Service, which knows it faces strong competition from the Internet.
"Rather than sitting here beating people back with a stick, we need to get into that space," Mr. Nolan said. "And PostX would have a very difficult time having a business plan that could be successful without our trusted brand in the middle."
Société Générale de Surveillance S.A., better known as SGS, has been auditing international trade around the world for 120 years. For example, it makes certain that the oil bought by a refiner has the gravity, sulfur content, volume and purity advertised by the producer.
SGS offers audits of other types of trade, and later this summer will start auditing online businesses to offer assurances for buyers shopping the Internet.
An SGS seal colored blue, silver or gold will be affixed to a seller's Web site, based on how the firm did during at least three audits. The seal is good for six months. A separate green seal goes to companies with a good environmental management approach, and a pink seal goes to firms showing sound social and ethical management. (There are International Standards Organization benchmarks for this that SGS says it will use.)
"Frankly, what we see in the press is a lot about 'digital' security, from viruses, worms and the like," said Hal Loevy, SGS global marketing vice president. "There are other issues, equally important, that aren't being addressed yet."
While Dun & Bradstreet, insurers and trade finance companies evaluate creditworthiness, "our focus is on the goods," Mr. Loevy said. SGS works with more than 500,000 companies around the world, and it hopes they'll sign up for its seal audits when they go online.
Trust and the related field of privacy are pieces of the e-commerce puzzle several firms are looking to fill, said Leon Kappelman, associate professor of business computer information systems at the University of North Texas.
"It may be the most important element for a new start-up, with an unknown name, but Wal-Mart.com doesn't have that problem, because they already have that branding established," he said.
SGS hopes to make its mark in international trade, where Dr. Kappelman said very little is happening yet.
"Although the Internet gets you an international presence, very few companies are prepared to do business across borders," he said. "They don't have customs and currency exchange worked out. They have language barriers. They don't have shipping worked out."
"At best, only 15 percent of online companies really do it, and then only with other English-speaking companies."
Many companies, such as Federal Express and United Parcel Service, are moving to fill those e-commerce spaces as well. And forecasters see mushrooming growth ahead.
Forrester Research in Cambridge, Mass., projects 14 percent of total world trade will be done over the Internet by 2004.
The Gartner Group of Stamford, Conn., predicts the worldwide business-to-business Internet market will grow from $145 billion in 1999 to $7.29 trillion in 2004.
It is only a question of how quickly all the pieces – including trust – will be in place.
Jim Landers cover international economic issues from The Dallas Morning News' Washington bureau.

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