The Age of Data Privacy: Can GDPR Build Trust Between Consumers and E-Commerce Businesses?

E-commerce, along with social media and finance sectors, has been one of the most affected industries by the General Data Protection Regulation (GDPR). As online companies rely heavily on the analysis of customer data and metrics in order to personalize customer experiences, it has put website traffic and revenues at risk. 

Let’s be honest, for marketing teams, no matter the industry, GDPR is a burden. But it benefits and protects the consumers, a crucial aspect in all this.

In the long run, is it possible for companies and individuals alike to benefit from data privacy regulations, and how? 

GDPR came with a lot of extra work and costs – new job roles: GDPR officers, data controllers, and new processes, and extra administrative work. But it hasn’t been all doom and gloom, perhaps it forces marketers to rethink and build closer relationships with their audience. 

Let’s see how you can improve your e-commerce marketing performance and turn GDPR to your advantage.  

What is GDPR and when did it come into effect? 

The General Data Protection Regulation (GDPR) was introduced in 2016 on the 14th of April and was enforced on the 25th of May 2018. The aim of this regulation is to protect the private data of citizens of the European Union. 

And it doesn’t apply only for businesses set up in the EU – any business that handles or processes personal data of EU citizens must also adhere to the GDPR laws. Meaning, that even if your business doesn’t have an official presence within the EU, e.g. your business is located in the US, but is dealing with data of EU citizens, you still need to adhere to the GDPR rules. 

There have already been several hefty GDPR fines, so it is probably best to follow the rules. 

How have e-commerce platforms like Shopify dealt with the GDPR? 

Shopify and Woocommerce are two of the most popular e-commerce platforms globally. As of June 2021, both hold a total of  49% e-commerce platform market share in the US and empower over 1.4 million and 1.6 million online stores accordingly. 

There was, and still is, a lot of discussion in Shopify and Woocommerce communities regarding data and user privacy under the GDPR, and how it will affect their stores, and which Shopify apps to use to more easily manage new privacy rules and regulations. 

According to Shopify, they fulfill their legal obligations under the new data policy, providing all merchants with a platform that can be configured to be GDPR compliant. 

Meaning, each store is still responsible for adjusting how they run their store and collect and use their data. Besides the question of whether the stores were GDPR compliant, it raised the question of how the apps built for the SaaS eCommerce platform Shopify was adhering to the data privacy rules. 

Each app and each store is responsible for making theirs GDPR compliant. 

What are the main GDPR requirements? 

More than 3 years since new data privacy regulations came into force, GDPR can still be hard to grasp. It is important for you to know what action to take in which situation and when. 

It takes time to adapt to these new rules. No wonder companies have had to build entire teams around GDPR. So, let’s have a look at what type of businesses are subject to the new rules. 

Businesses are subject to GDPR, if: 

• They have a presence in any EU country
• They process or collect data of EU citizens
• They have more than 250 employees
• They have data processing methods that affect the freedom of data subjects

GDPR covers the protection of the following data: 

• Personal information: phone number, name, address, date of birth
• Biometric data: e.g. body measurements for voice recognition, fingerprint scanning, facial recognition, eye recognition 
• Web-based information: IP address, cookie data, location tracking
• Genetic data
• Political preferences 
• Sexual orientation 
• Racial, ethnic or cultural data 
• Data gathered on social media sites
• Any financial information: credit card details

How has GDPR affected e-commerce? 

The first talks of the new data privacy law started in 2014 when it was introduced in the European Parliament. This raised several questions for e-commerce businesses. 

Especially, how will new data privacy regulations impact their marketing and sales results? 

14 months after the GDPR came into force in 2018, e-commerce websites had recorded lower page visits, page views as well as decreased revenue, a study about early GDPR Impact on E-Commerce by ResearchGate shows. According to their initial data, revenues had declined by 8.3% due to the GDPR, with page views falling by 9.7%. 

So, this was 14 months since the new data privacy regulations came into effect. Let’s have a look at how e-commerce business owners and marketers can use it to their advantage to build trust with their customers. 

Data privacy concerns before and after the GDPR

Back in 2017, consumer trust in personal data security seemed to be at an all time low. Research into The State of Consumer Privacy and Trust in 2017 by technology company Gigya, found that 68% of the surveyed people in the US and the UK didn’t trust their personal data to be handled appropriately. 

This number seems to have dropped significantly according to some reports. Recent findings by Deloitte’s Digital Trends report from 2020, found that now only 29% have said to be concerned about how their personal data is being used. 

Quite an improvement since 2017. 

E-commerce retail companies can use it to their advantage. With data privacy rules in full swing, 59% of consumers have said to be willing to share their data for personalized offers, according to a report by PR Newswire. 

How can GDPR build trust between consumers and e-commerce companies? 

Google’s announcement that third-party cookies are projected to disappear in January 2022 has caused major concerns within marketing teams. 

The decision to stop tracking cookies on the Chrome browser came in an effort to move towards a more privacy-friendly web. Targeting consumers at an individual level will be replaced by aggregated group level targeting, much like current Facebook’s approach. 

With major changes like that in the digital landscape and more limited access to third-party data, brands should invite consumers into a mutual and trusting relationship. 

To be respectful and give each consumer the choice and transparency over how their data is used. This will result in genuine value and personalized experiences, most importantly, not at the expense of your customers’ privacy. 

1. Higher conversion rates through shorter contact lists 

On one hand, GDPR has caused a lot of extra administrative work and downsized the customer contact lists marketing teams can reach out to. However, there can be upsides to this. 

For example, as marketers have to be more careful with how they use their customer data, communication has become more personalized. By only reaching out to authorized contacts, outreach emails are more likely to be more personal and therefore more well-received. 

People who have opted-in to your offering are more likely to be genuinely interested in receiving these offers and engaging with these ads or emails. This, in turn, is good for conversion rates as it excludes disinterested customers and generic marketing tactics. Having a narrower target list will enable you to tailor your marketing efforts specifically to their preferences.  

2. User-centric approach to email marketing

Coming back to the “unsubscribe” button in email marketing. This could actually work to your advantage. As it is easy to put an email newsletter or a promotional email together and send it to as many people as possible, there now needs to be a focus.

The opportunity lies in creating a personal connection with your consumers. 

You don’t want them to unsubscribe straight after they get that one-off discount, right? So, make sure to show your customers ongoing benefits and adopt a user experience (UX) friendly email marketing etiquette. 

More customized emails can contribute to higher conversion rates. Emailing everyone doesn’t make sense, emailing the right people helps to create stronger connections. 

3. Strengthen consumer trust and loyalty

85% of businesses have said that data ethics is either moderately important or very important to their customers, according to Consumer Privacy research by EY. 

GDPR regulations have made companies rethink their approach to how they market to their customers. By remaining ethical and offering control over their customers’ data, businesses can align themselves with their consumer preferences. 

Making sure your company has got processes and procedures in place to ensure data security and privacy, and a framework to show how it is used, can be a big help in reinforcing trust. 

At the end of the day, it is a group effort – a collaboration between businesses and customers to adapt to different ways of working and behaviors. Once marketing teams have accustomed to new processes, things are likely to get easier. 

4. Differentiate – be clear on your privacy policies 

What is more, whilst ensuring your consumers that their data is secure, another opportunity in building consumer confidence in making your data privacy policy clear, easy to understand, and readily available. 

29% of consumers said that the privacy policies of different companies they interact with are not clear to them, according to consumer privacy research.

This can also give you a competitive advantage. Make sure you have an easily readable policy that can be found and accessed on your webshop. Placing privacy at the core of your business values and showing commitment to these values, can ultimately help to stand out and differentiate your brand. 

If you go above and beyond protecting your consumers’ data, they might just prefer you over your competitors. The more you look out for your customers, the more they will appreciate you. 

In conclusion – customer first

So, it seems like the extra administrative work might be worth it. If done right, it can lead to stronger end results. If you go above and beyond protecting your consumers’ data, they might just prefer you over your competitors. With online competition growing, you can leverage it as your USP to win customers over. 

Look at it from the point of view your customers might take. Step up and go above and beyond to protect their information. Stop marketing to people who haven’t given consent and fully participated in the decision to have their email addresses on your mailing list.

The more you look out for your customers and put them first, the more they’ll appreciate you. The future of marketing is about building deeper, long-lasting relationships, and GDPR might act as the push we all needed to do so.

This way, GDPR can act as a relationship builder rather than a nuisance.