In 2024, protecting customer data is crucial for ecommerce businesses. However, recent large-scale data breaches, such as Casio’s breach, which hit their customers in 149 countries, have highlighted the need for better data privacy in online retail. When companies fail to secure sensitive customer information, it damages consumer trust and can seriously impact their business.
So, what measures should ecommerce companies take to enhance data privacy while still delivering a personalized experience for their customers?
This article explores the evolving data privacy landscape, emerging trends, and best practices that online retailers should adopt. Let’s dive in.
The Evolving Landscape of Data Privacy
Data privacy regulations vary globally, as countries have different regulatory compliance requirements.
This can present compliance issues for ecommerce companies that sell internationally. They must ensure they align their operating procedures with varying baseline laws regarding customer consent, data security, and breach disclosure.
For instance, some regions implement strict policies like the General Data Protection Regulation (GDPR) in Europe, which charges hefty fines for non-compliance and mandates companies to implement robust data protection measures.
Highest fines issued for GDPR violations (Source: Statista)
Key Data Privacy Challenges in 2024
With this in mind, there are several key data privacy challenges ecommerce businesses must prioritize:
Cybersecurity
Ecommerce systems contain highly valuable personal information like names, addresses, payment details, and browser history — information of great interest to malicious hackers who can profit from using and selling such data.
Retailers must implement solid defenses to detect and prevent sophisticated hacking attempts aimed at stealing this sensitive customer information.
Consent
Managing consent and rights related to collecting and sharing personal data is becoming more complex.
Rightfully so, customers expect more transparency and control over how their data is being used, meaning retailers must provide straightforward consent management protocols. These should gather only necessary data while empowering customers to access, edit, or delete their information easily.
Cross-Border Transactions
Handling cross-border data transfers between different jurisdictions with varying regulations can create compliance burdens for ecommerce businesses in 2024.
Global ecommerce means customer data often flows across jurisdictions with differing privacy laws. As such, companies must track data movements and establish proper protocols to satisfy regulations in all associated countries and regions.
Emerging Trends in Data Privacy for Ecommerce
Several emerging trends are poised to transform data privacy in ecommerce, primarily artificial intelligence, blockchain technology, and consumer expectations and empowerment.
Keeping customers’ data private and secure will become increasingly important as it is predicted that 65% of organizations will be fully data-driven by 2026. This trend is expected to rise further as data soon becomes the new currency.
Artificial Intelligence
Now, let’s explore the popular topic of AI. AI and machine learning-based tools allow retailers to automate and enhance data privacy.
Predictive privacy tools can forecast data risks and vulnerabilities in real time, enabling proactive protection. By combining machine learning with threat modeling, these tools continuously score risks across retailer infrastructure and systems, alerting security teams to potential issues before a breach occurs.
AI-powered threat detection can also quickly identify irregularities and security incidents for a rapid response. By creating behavioral profiles of normal user activities, AI algorithms can spot unusual patterns indicating a data breach or cyberattack much faster than traditional rules-based systems. This enables retailers to contain breaches before substantial damage occurs.
Blockchain Technology
Blockchain’s unique structural properties provide privacy advantages that could enhance ecommerce security.
An infographic explaining how blockchain technology works by Investopedia
Blockchain allows decentralized storage of customer data across networks, minimizing the impact of breaches. Rather than a centralized database, data is distributed across thousands of synchronized ledger copies on participating nodes, limiting data loss from any single breach.
Moreover, smart contracts on the blockchain securely automate data sharing with third parties. These self-executing scripts enable validated third parties to access only the necessary customer data stored on blockchains.
However, due to current technical limitations around performance and storage, blockchain must scale before mainstream commercial businesses widely adopt it. Once these challenges are overcome, blockchain may revolutionize data privacy.
Consumer Data Empowerment
Customer attitudes and expectations around data privacy also drive retailers to provide more user control.
Consumers now demand more control over their data through user-friendly privacy tools. Features like data access portals and real-time consent managers empower customers to view, edit, delete, or revoke data permissions, improving transparency perceptions.
To gain more customer trust, brands should take advantage of this and concentrate on data transparency and consent management. By proactively informing consumers about the reason for information collection and how it will be used, they can reassure consumers and enhance their credibility.
At the same time, though, consumers also expect personalized experiences, requiring retailers to balance customization and privacy.
Retailers must employ advanced data management strategies, like using anonymized data and sophisticated algorithms, to provide customization without infringing on privacy. This approach meets consumer expectations for tailored experiences and adheres to their growing data control and security demand.
Ultimately, the ability of retailers to balance these aspects is key to building and maintaining trust in the digital age.
Granular consent lets consumers filter their consent between different categories of cookies
Best Practices for Data Privacy in Ecommerce
By taking proactive measures across operations, ecommerce companies can get ahead of data privacy risks.
Implementing a Robust Data Governance Framework
Managing data ethically and securely begins with robust governance.
Data minimization means only collecting, processing, and retaining essential user information that is required and deleting non-critical data points. This lowers the risk of a breach and the need for compliance by routinely eliminating outdated data.
Purpose limitation requires clearly defining and communicating why customer data is needed before gathering it. Data use policies must be limited to predefined purposes.
Regular audits are critical for identifying privacy gaps and ensuring compliance as regulations change. Retailers should continually monitor systems and processes around data collection, storage, usage, and sharing to be able to catch issues early. Audits also verify that privacy policies match actual practices.
Strengthening Data Security Measures
Robust cybersecurity and access controls provide critical protection for customer data.
Encrypting data in transit and storage, along with access controls, protects sensitive information like financial information and passwords. Data should be encrypted via protocols like TLS for secure network transmission, while server-side and database encryption scramble stored data.
A TLS connection notice in an Ecwid store
Frequent vulnerability assessments and penetration testing reveal security gaps before hackers exploit them. Ethical "white hat" hackers can probe systems remotely or on-premise, allowing rapid patching of discovered vulnerabilities.
Investing in multilayered security tools like multifactor authentication (MFA) and AI-based threat monitoring enhances protection. MFA adds extra login credential checks like biometrics, while AI systems detect unusual user behaviors indicating compromised credentials or insider threats.
Learn more about must-have steps to secure your online store in the following article.
Read more
Building a Privacy-Centric Culture
Making data privacy a cultural priority across retail operations is also key.
Mandatory privacy training for all employees provides accountability at all levels. Staff must understand proper protocols for collecting, accessing, using, and sharing customer data, with training upon onboarding and regular simulated phishing attack refreshers.
Adopting a privacy-first approach when designing data-handling products, processes, and systems minimizes risks by default. Those handling data should proactively consider and enhance privacy protections during development cycles.
Protecting customer data is crucial in maintaining a privacy-centric approach. With Ecwid, you can secure your online store by granting authorized employees different access levels through flexible staff permission settings. Learn all about it in the article below.
Read more
Engaging with Customers on Data Privacy
Transparency and customer education around data practices are equally important.
Maintaining transparent privacy policies and terms clearly explains what data is gathered and how it is used. Customers should have easy access to information collection and processing, security, and sharing details — ideally explained in simple terms (or, as many like to call it, layman’s terms).
Moreover, educating customers on data rights like access, correction, and deletion empowers them to take control. Retailers should raise awareness around options for customers to view, edit, or delete personal data with straightforward, seamless processes for submitting data requests.
Communicating data safeguards in simple language fosters trust. Avoiding technical jargon, retailers should be upfront about security practices, governance protocols, and compliance audits in privacy notices and marketing.
With Ecwid, not only can you display a cookie notification in your online store, but you can also let customers choose what type of cookies they want to consent to. Your store visitors can change their decision and revoke all or certain permissions in the Cookie settings on your site.
An example of a cookie settings banner in an Ecwid store
The Future of Data Privacy in Ecommerce
As technology and regulations continue to evolve rapidly, data privacy will remain both a challenge and a competitive advantage for online retailers.
Consumer expectations for data security, transparency, and control will keep rising. Customers are becoming savvier about potential privacy risks, proactively searching for information on how retailers handle their data. Brands that fail to meet heightened expectations around secure and ethical data practices risk reputational damage and customer churn.
We can expect more complex regulations like GDPR at a global scale. As public awareness and scrutiny of corporate data practices increase, governments will respond with stricter information security and consumer consent mandates. Companies must invest adequately in compliance capacity or face substantial financial penalties.
Increased use of AI will make policies like ethics reviews and algorithm audits vital for unbiased data practices. Retailers leveraging AI must ensure consumer data is free from algorithmic biases that could discriminate based on race, gender, or other attributes. Internal audits, ethics committees, and external certifications will help.
Decentralized data models like blockchain could be mainstream in the next 5 years, transforming how retailers protect customer information. Currently, blockchain faces adoption barriers around scalability and storage limitations. But rapid blockchain innovation could soon make it a game-changing data privacy solution for ecommerce.
Preparing for Future Challenges
To stay ahead of the curve on data privacy, ecommerce companies should take several proactive steps:
- Build teams responsible for monitoring technology innovations and emerging regulations relevant to data privacy. Dedicated personnel can track developments globally and assess potential impacts.
- Conduct periodic risk assessments to identify exposures in existing data infrastructure. New technologies often introduce fresh privacy challenges that should be evaluated.
- Maintain compliance budgets to implement new capabilities as regulations change. Financial planning is key to upgrading security, access controls, and consent protocols to align with evolving laws.
- Test new data privacy solutions like blockchain through controlled pilot projects to gauge effectiveness. Measured experimentation provides insights into capabilities and limitations.
- Participate in industry groups focused on defining privacy standards and best practices. Collaboration is vital to balance customer rights with business needs.
- Foster a culture that incentivizes privacy innovation, such as rewarding employees for proposing ideas that enhance consumer data protections and transparency.
Companies prioritizing data privacy today will be best positioned to adapt and succeed. By following emerging developments and implementing best practices, ecommerce businesses can stay on track to provide secure and personalized experiences that build enduring customer loyalty.
Wrapping Up
Here, we’ve discussed key data privacy challenges and emerging trends that ecommerce companies must stay on top of in 2024.
With constantly evolving technologies and regulations, vigilant governance and security around customer data are crucial. Companies failing to protect privacy risk severe reputational damage and financial penalties.
Retailers can keep strengthening consumer trust by taking a proactive approach focused on security, transparency, and compliance. The winners in the future ecommerce landscape will be the brands that put privacy first.
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Irina Maltseva, Khareem Sudlow
