The percentage of purchases made online continues to grow, as does the percentage of countries protected by data privacy laws. Learn how data privacy is shaping ecommerce and the best ways to gain a competitive advantage for both sales and user experience.
Table of contentsData privacy is a fundamental part of modern business. In 2024, 75 percent of the world’s population are expected to be protected by modern data privacy regulations.
The United States saw five new data privacy laws in 2023 alone, while global data protection authorities like France’s National Commission on Informatics and Liberty (CNIL) ramped up compliance enforcement.
Data privacy is particularly important for ecommerce businesses. Global online retail sales are projected to grow 39% by 2027, increasing regulatory scrutiny of how companies protect their customers’ data.
The good news is that ecommerce data privacy compliance brings peace of mind, increases long-term customer engagement and unlocks revenue growth
In this article, we share how data privacy is shaping ecommerce and the future of data collection, and what your privacy policy should include to stay compliant.
Ecommerce compliance covers the various legal and regulatory requirements that online businesses must follow. This spans from consumer data protection to consumer rights and financial transactions.
These requirements protect consumers and ensure ecommerce companies do business ethically, securely, and in line with local and international laws.
This can include adhering to data privacy standards, such as the GDPR in the European Union, ensuring secure payment processing, and displaying contact information and return policies clearly on the website.
Ecommerce compliance is crucial to build customer trust, avoid legal penalties and grow a reputable brand.
Rampant cybercrime has increased consumer concerns about the security and privacy of their activities and data online, especially when shopping. As such, they expect businesses to ensure the security of their websites, apps and ecommerce operations.
This shows that consumers are increasingly sensitive to the security, data collection and privacy measures taken by online businesses. This focus and pressure should be met with tangible action, which can then be communicated to site visitors to earn their trust.
The ecommerce industry is seeing a major shift in the type and source of individual data that companies rely on, from third-party data to first-party or zero-party data.
Third-party data is gathered indirectly, from advertisers, aggregators and other sources. Third-party data often includes demographic information, buying signals and behavioral data from tracking tools.
As a result, the industry is shifting toward first-party or zero-party data. Zero-party data, for example, comes directly from customers who are intentionally sharing their personal information and relates to their expressed interests and preferences. This meets the requirements for valid consent under privacy laws like the GDPR.
First-party data, on the other hand, is collected by companies based on customer and visitor web activities on company channels — using browser cookies and other tracking technologies.
These activities include ecommerce browsing, shopping and any other forms of site or app interaction. The resulting data can include IP addresses, navigation patterns, shopping preferences, time spent on page or on-site, and much more.
To check which cookies and tracking technologies are collecting data, scan your website with our Data Privacy Audit tool.
Which cookies and tracking technologies are collecting data on your website?Scan your website with our free data privacy audit tool and find out in seconds what cookies and third-party services access user data on your website.
Personalization is key to this data strategy shift as well. A reported 70% of consumers now expect personalized experiences and are frustrated if they don’t get them. Zero-party data, in particular, is all about personal preference, since it comes right from the consumer.
When implementing personalization best practices, centralize your data in a preference management platform (PMP). This enables you to collect, store and activate data harmoniously across tools and systems, and maximize its value. When combined with consent management, this data is then used according to the customer’s expressed consent preferences.
Companies need to thread the needle of meeting increasing ecommerce data privacy expectations, building and retaining trust, and delivering great, personalized experiences. Consent is the linchpin that makes this possible.
It ensures individual preferences are respected while giving customers control, freedom of choice and the personalized experiences they want.
Back in 2020, McKinsey found that 76% of consumers changed stores, brands or channels as brand loyalty weakened; though pandemic-driven ecommerce spending increased.
Ecommerce businesses can’t expect or rely on brand loyalty. However, personalization — especially when supported by data — can be a powerful tool to strengthen brand loyalty and connection.
But at that point, only 15% of retailers had implemented it across all channels — despite the recognized value of personalization, which was identified as a top priority by nearly two-thirds of surveyed businesses (64%).
Fast forward to 2024, and 85% of businesses are using personalization. And the global market value for personalization software is predicted to hit $943 million by the end of this year.
Choose a CMP that complies with data regulations while growing your sales.
Conversion rate optimization (CRO) is another crucial ecommerce practice that’s heavily influenced by changing attitudes to data privacy.
To give prospective and returning customers the best possible experience, ecommerce companies are using behavioral data to cater to their specific needs and preferences.
These activities demonstrate respect for privacy in ecommerce — while building a seamless customer experience and increasing conversion rates.
Using a preference manager for your data gives you more control over when and how that data is made available to other systems. In-depth analysis of data can also happen more regularly, leading to better and longer-term strategy and planning.
And with a consent management integration, you can rest assured that all preference management activities comply with relevant regulations.
Most of these laws provide consumers with the right to submit a data subject access request, to review all of the data you have on file for them.
A 2022 report from DataGrail revealed that three out of four consumers will abandon their favorite retailer if they found out their personal information wasn’t safe with them. The report also reveals that consumer groups with the most purchasing power are also those that feel most strongly about buying from a brand they trust.
Companies that don’t prioritize security and consumer privacy in ecommerce are leaving money on the table — and risking fines.
While eight out of ten Americans agree that there should be a federal data protection law, for the time being, much of the responsibility for navigating data privacy remains with retailers.
Fortunately, data privacy is increasingly becoming a competitive advantage. Transparency with consumers is a winning marketing strategy, especially when combined with personalization.
Many consumers are open to sharing their personal information — but only if they trust it’ll be stored securely, used only for the purposes they’ve consented to and provide them with the benefits they want.
The ecommerce industry is in an ideal position to deliver on all of these things. And when a business proves itself trustworthy, customers are more likely to consent to provide further data and do more shopping in the future. It’s a winning formula all around.
Looking to create an ecommerce privacy policy? You could start from a template or draft one yourself, but this can be time-consuming and might not cover all legal requirements. For a more streamlined approach, consider using a policy generator.
Policy generators simplify the process while ensuring the policy is comprehensive and compliant with all relevant laws.
The Usercentrics policy generator creates a policy that’s tailored to your specific business needs, to support you as you navigate data privacy laws. The tool provides a customized privacy policy by asking you a series of questions about your business practices, ensuring that all relevant aspects are covered: cookies, analytics, third-party services, and more.
Find out more about our policy generator or speak to an expert to see how we can help you remain compliant.
Are your ecommerce platforms compliant with privacy regulations?Connect with our team to find out what Usercentrics data privacy solutions can help.