Why GDPR compliance matters for e-commerce growth
Is data protection, cookie policy, and GDPR something you are vaguely familiar with? You might know that they are important in terms of e-commerce, but if someone were to ask how - you couldn’t quite explain.
Without further ado, here is GDPR in a nutshell and why it matters for e-commerce growth.
What data do e-commerce websites collect?
When running your e-commerce website, you collect multitudes of data from your users such as:
Basic data: contact details & demographic data (gender, age, income)…
Interaction data: page views, subscriptions, social shares, email inquiries…
Behavioral data: free trial sign-ups, logins, feature utilization, etc.
Attitudinal data: online reviews, comments, ratings, satisfaction surveys, etc …
This data allows businesses to:
Better understand their customers & their behavior
Personalize customers’ shopping experience
Improve their strategy to offer an improved e-commerce experience
That being said, these are large volumes of sensitive data, which means keeping it safe is vital.
How user data is collected with opt-in and opt-out models
The EU has the world’s second-largest economy and a population of 450 million people of whom 80% have internet access. Enter GDPR or the General Data Protection Regulation, a law that concerns all European citizens and the businesses targetting them, effective from May 2018.
In total, 17 countries have GDPR-like privacy laws, such as CCPA or the California Consumer Protection Act.
Here, let’s compare GDPR and CCPA:
GDPR
Applies to EU & UK citizens
Applies to companies that target EU customers, even if these companies are outside the EU
Works on an opt-in model: a user must give their consent for their data to be collected, such as by clicking on “accept cookies”
CCPA
Applies to California residents, even if they are temporarily out of the state
Applies to businesses outside California & the US
Works on an opt-out model: data can be collected before the user gives their consent
Users can opt out of selling or sharing their personal information
As you can see, GDPR applies an opt-in model, which means that you cannot collect specific data before the user consents to it, meaning:
If users don’t accept the cookies on the banner, you will get less data
Pre-checked boxes and pre-validated formulas are not allowed, users must give their consent such as checking the boxes themselves
Some data may still be collected before user consent such as IP addresses, and session information (pages visited, time spent on the website, device used…), provided that users remain anonymous.
Not complying with these rules can expose your company to large and painful fines. Also, if your company employs over 15 people, you must appoint a DPO or Data Protection Officer in charge of GDPR compliance. This can be your company’s CEO for example.
If your data is not properly collected, it means it cannot be properly transferred to Google Analytics, Google Ads, Meta ads, or other advertising and data processing platforms.
This in turn means:
Fewer insights on your users and customers
Less data for a true data-driven e-commerce strategy
Less optimized advertising campaigns = your advertising budget is not spent as effectively
and many more…
Now that we have established why GDPR compliance matters for e-commerce growth, it’s time to discuss:
How to improve GDPR compliance to boost e-commerce growth - coming soon!
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Further reading & research: