Data Privacy and eCommerce – All you need to know about online privacy
The rise of privacy awareness and regulation didn’t spare the eCommerce sector. Trying to balance privacy and eCommerce is not an easy task. Online shop owners might encounter privacy difficulties when collecting and processing customers’ personal data. While the main goal of e-commerce sites is to deliver products to their customers, some collect personal data to better understand the customer journey and customers preferences. Privacy is one of the most complex legal issues the e-commerce field faces today. Many sites often collect significant amounts of personally identifiable data that may trigger liability risks that e-commerce owners should be familiar with.
Privacy & Data Collection on eCommerce Websites
To complete an e-commerce transaction, it’s expected that customers may need to share their personal data, such as name and last name, shipping address, and billing information, In order to receive their purchased items. Such information is considered personal data under the General Data Protection Regulation (the “GDPR“) and other privacy legislations worldwide.
Furthermore, most (if not all) eCommerce stores are using pixels and cookies to collect more insights and information about their visitors and users. They use it to understand further their journey and sales funnel in order to improve their sales. When combined with other pieces of personal data, online trackers may identify a person; therefore, it’s also considered personal data under some privacy legislation (such as the GDPR) since it’s “identifiable”.
Many site owners choose to record data about their users’ browsing habits for profiling and future predictions or preferences. They might use these profiles to target advertising or offer customized services to their customers and visitors. Profiling and automated predictions might curtail a high risk to individuals’ privacy and must be done in accordance with applicable privacy legislation.
Privacy as a business opportunity for eCommerce
Users may be reluctant to share their personal data if they believe their privacy can be invaded, put at risk, or shared with third parties without their consent. If your customers or visitors cannot tell that you can provide sufficient protection to their data, you might lose them.
If you see privacy as a mere legal obligation that you must avoid, you will be at risk of a fine, a privacy breach, and huge reputational damage. Instead, you should see privacy as a business opportunity that can benefit your company in the long term.
According to Cisco‘s 2021 Data Privacy Benchmark Study, on average, companies get a 1.9X ROI on their privacy investment and 16% of them get between 3X to 5X or more.
More than two-thirds of respondents felt they were getting significant benefits from their privacy investment in the following areas:
• Reducing sales delays
• Mitigating losses from data breaches
• Enabling innovation
• Achieving operational efficiency
• Building trust with customers
• Making their company more attractive
Privacy Fines and Liability
As an eCommerce website owner, privacy regulations apply to you as you process your customers’ and visitors’ personal data. Violations of such laws and regulations may result in high risk and severe consequences to your company and reputation.
The fines for violations of privacy laws keep getting bigger. Under the GDPR, it could be a fine of 20 million Euros or 4$ of your annual turnover (whichever is highest).
What can you do to avoid it? Don’t wait for a fine or a warning – Be proactive. Don’t assume the GDPR or any other privacy law doesn’t apply to you. Check which laws and regulations apply to you, understand your roles and obligations and the steps you should take to comply with them. Let your customers and visitors know that you work actively to protect their personal data.
Make sure to have the proper policies in place. After checking which regulation applies, you’d know the types of policies you should have in place (such as a Privacy Policy, a Cookie Policy, etc.). It’s crucial to update these policies every time you make a change to how you collect personal data or when a new privacy law applies to you.
It’s highly important to ensure that every third party you work with has proper data protection practices and compliance with applicable privacy laws.
Why should eCommerce business care about privacy?
Users are more vigilant than ever about their privacy protection and may stop using an e-commerce service if they have the impression that privacy safeguards are not guaranteed.
Based on a survey of more than 1,000 people across the U.S. and Canada, the study found that 57 percent of consumers suspect brands are actively selling their data, even when this is not the case. There was also concern about what kind of information brands were collecting. Only 20 percent were comfortable with brands monitoring their activity on the company’s website, and even fewer (11 percent) were willing to share their activity on other brands’ websites.
On the other hand, people were open to sharing specific information with a company if they felt confident their privacy would be respected. This includes their gender, age, zip code, and email addresses.
