Suppose you are an e-commerce business owner and need help knowing how investing in privacy infrastructure and tools like a e-commerce privacy policy and consent management platforms will help your business to grow and thrive.
In that case, these two statistics will surely make you take action today.
By 2026, E-commerce sales will reach $8.1 Trillion.
But more than 69.99% of online shoppers abandon their carts before purchasing.
You can understand the massive potential of the e-commerce industry, and betting on the right horse will surely make your business stand out.
But still, so many e-commerce business owners need help to attract and retain customers.
Reason?
The strategic need for personalization in all marketing and other digital operations channels.
89% of e-commerce companies are investing in personalization due to high turnover rates and low conversion and retention rates.
But authentic personalization comes from accurate customer data. And this is the core topic that we’ll discuss today:
How e-commerce businesses can use privacy policies and other data privacy tools to nurture consumer trust and drive long-term business growth.
The importance of data privacy in the e-commerce industry
In the digital age, data is the lifeblood of any business, and undermining its importance will only create inefficiencies in sound decision-making.
So let me give you three reasons why businesses, especially e-commerce owners, should understand the seriousness of data privacy and what it can do to your business.
83% of consumers consider customer service quality when deciding what to buy.
80% of shopping carts are abandoned.
On average, only 1.62% of e-commerce website visits convert into purchases.
I know. The last one sucks!
But that’s what e-commerce business owners need to understand.
It would be best if you came up with a unique selling point (USP) and channel that into all your business operations:
- Builds trust with the consumer.
- Gives you authentic customer data.
- Drives sales and revenue with personalization.
Data privacy tools like a free privacy policy generator are just a starter.
Consent Management Platforms and cookie consent management will help you build privacy by design in all your business operations, including marketing and web development, that allows you to create an authentic relationship with consumers based on transparency and trust.
Why is having a Privacy Policy essential for E-commerce Websites?
With ease in supply chains due to cutting-edge technology, online shopping sees no slowdown.
Online e-commerce sales are expected to reach about $7.4 trillion. That’s huge!
There are four crucial reasons why e-commerce needs privacy policies and other data privacy tools like consent management platforms.
Collecting Data
Given the vast web traffic that the e-commerce industry deals with, it is nearly impossible to overlook customer data’s importance in driving this industry.
When dealing with consumer data, businesses must proceed cautiously, as personal data can be used for purposes other than initially intended.
That’s why privacy regulators like California’s CCPA and Colorado’s CPA want businesses to outline and describe their data collection practices through the privacy policy.
Many businesses and even consumers need to be made aware of the ways that personal data is collected.
Businesses collect and process personal data with the following:
- Registration and sign-up process
- Live chat or chatbot interactions
- Emails to customer service
- Consumer’s social media accounts
- Customer’s shipping and residential information
- Web cookies and similar tracking technologies
Having a privacy policy is crucial for organizations to keep their customers informed of the direct and indirect ways their personal information is collected so that they stay legally compliant with relevant data privacy laws.
Consumer Trust
No business in this world can thrive without consumer trust!
Your privacy policy lays a foundation for the business to implement respectful attitudes toward your customers and their data.
More than 80% of consumers consider “Trust” as the buying factor with businesses. (The Drum)
And around 84% of the consumers remain with the business for more than a year and demonstrate transparency and trust.
Customer Retention makes most of the sales in e-commerce, but often, it’s what they lack the most too. And that’s why building consumer trust is more important than ever before.
A strong privacy policy helps businesses be open and truthful with customers about their data gathering and processing practices.
Safeguarding Minors
With new daily regulations, legal authorities, such as minors, are becoming very vigilant in using highly sensitive data.
Given the ills of the digital world, like online bullying, data theft, human trafficking, and whatnot, children and young people need special attention and care.
Being immature, young adults and children accidentally put themselves at risk almost all the time, and this is what lawmakers and businesses must be aware of.
A well-rounded privacy policy protecting minors and prioritizing their safety will make your business not only safe from legal hawks but also find your business a particular place in your consumer’s heart.
Remarketing
The E-commerce industry is data-intensive, relying heavily on advertising and remarketing for sales and revenue.
Having customers’ preferences, likes, and dislikes upfront, such as what items they have left in the shopping carts or other orders, all these are a part of remarketing.
A user might feel threatened if your business uses their data for marketing which they hadn’t consented to and may feel their privacy is being used for behavioral profiling.
Third-party requirements
Most e-commerce businesses use other financial merchants for payment processing and monitoring.
These third parties often have their requirements and purpose for using customer data.
So, your privacy policy must be laid out strategically, including third-party vendors and their respective concerns regarding the consumer’s data.
For instance, if Google Analytics is being used to track consumer information on your website, Google mandates that you present a current, accurate, and thorough privacy policy for your online store.
That’s why e-commerce businesses must invest in data privacy infrastructure, starting with an accessible privacy policy.
What is a Privacy Policy?
A privacy policy is a written statement outlining how a corporate organization will treat customer, client, or employee data while conducting business.
These guidelines, also frequently known as privacy statements or warnings, serve as a legal safeguard for the company and its clients.
E-commerce Businesses Privacy Policy: Legal Requirements and Regulations
More regions are brimming with laws and regulations surrounding data privacy.
They are mandated by legislation in many nations, including the United States and the European Union.
If you gather data and operate in a regulated industry, you may also shield your firm from other bad actors.
EU’s General Data Protection Regulation
Also known as GDPR, the world’s most stringent data privacy law; it has a strict requirement for data collection and processing.
GDPR’s privacy policy is sometimes called a GDPR privacy statement or GDPR privacy notice.
GDPR privacy policy requirements are more rigorous than any other privacy laws worldwide.
Article 12 of GDPR states that the privacy policy must be written in unambiguous and accessible language.
And as per Article 5 of the GDPR has six principal of data collection and processing that includes:
- Lawfulness, fairness, and transparency
- Purpose limitation
- Data minimization
- Accuracy
- Storage limitation
- Integrity and confidentiality
Your business must adhere to the GDPR if there is a remote chance that an EU citizen will buy something from your online store.
If you comply with GDPR, you can avoid paying hefty fines and harming your store’s reputation.
The maximum GDPR fine for a violation is $22.8 million or 4% of the company’s global revenue, whichever is higher.
California’s Consumer Privacy Act (CCPA)
CCPA is the US’s first and most comprehensive data privacy law.
Any company conducting business in or targeting California citizens must comply with CCPA regulations.
CCPA states that businesses must disclose what data they collect, how they collect it, and the purpose of using the data.
These businesses have to mandatorily provide an opt-out request to Californian consumers if they want.
California Privacy Rights Act (CPRA) enforces CCPA in the golden state.
CPRA focuses on “for-profit” organizations or businesses that operate in California and meet one of these criteria:
- Having annual revenue of $25 million or more;
- More than 100,000 customers’ data are purchased, sold, received, or shared for business purposes every year.
- More than 50% of yearly earnings are generated by the sale or sharing of consumers’ data.
Virginia’s Consumer Data Protection Act
Better known as VCDPA, this law follows some of the guidelines of the General Data Protection Regulation (GDPR) law of the European Union.
Under the VCDPA, businesses must provide consumers of Virginia with a clear privacy policy that includes the following:
- Transparency: Clearly state how personal data is collected, used, disclosed, and retained.
- Categories of Data: Specify the types of personal data collected.
- Purpose of Processing: Disclose the purposes for processing personal data.
- Consumer Rights: Inform consumers of their rights, such as access, correction, deletion, and data portability.
- Opt-Out: Provide opt-out mechanisms for selling personal data and targeted advertising.
Failure to VCDPA compliance, the Virginia Attorney General can impose up to $7500 per violation, plus a reasonable cost for investigating the case.
Colorado’s Privacy Act
The Colorado Privacy Act (CPA), effective July 1, 2023, becomes the third state privacy law.
It applies to businesses serving Colorado residents, with thresholds of 100,000 clients or 25,000 customers for income generated from personal data sales.
The CPA grants residents the right to opt out of data sales, mandates disclosure of data practices, and enables the attorney general to enforce the law with fines of up to $20,000 per violation.
Connecticut Data Privacy Act (CTDPA)
Enacted on July 1, 2023, CTDPA allows businesses to collect and process the personal data of Connecticut citizens.
It emphasizes data protection and imposes fines for inadequate data security.
Utah Consumer Privacy Act
The Utah Consumer Privacy Act (UCPA) became law on March 24, 2022, and will be fully implemented by December 31, 2023, safeguards privacy rights for Utah residents.
It mandates companies to disclose data-sharing policies and covers targeted advertising and sale of personal data, defining sale as the exchange of personal data for monetary consideration to a third party.
Iowa Consumer Data Protection Act (ICDPA)
Will be enacted on January 1, 2025, it requires explicit user consent before data collection.
It includes features like opt-out rights, processing agreements, and attorney general enforcement.
Indiana Data Privacy Law (IDPL)
Will be fully enacted on January 1, 2026, it mandates businesses catering to Indiana residents to comply with consumer privacy rules and imposes penalties for non-compliance.
Tennessee Information Protection Act (TIPA)
Will be enacted on July 1, 2025, it provides a safe harbor for businesses complying with national standards.
It focuses on user access to personal data and grants privacy rights, with penalties for non-compliance.
Canada’s PIPEDA
Canada’s PIPEDA first became law on January 1, 2000, and was fully implemented on January 1, 2004.
Canada’s PIPEDA is built on the fundamental principle of accountability, and that’s why it wants businesses to disclose through a privacy policy:
- What data does your company collect?
- How is personal data collected and processed?
- Is personal data shared or sold to third-party vendors?
- Types of personal data collected
- Real reasons why personal data is being collected
Businesses can be fined up to CAD 100,000 per violation.
Brazil’s LGPD
Companies must incorporate detailed disclosures about the processing of user data in their privacy policies under the LGPD (Brazil’s General Data Protection Law).
The details:
- It must be made accessible in a way that is obvious, sufficient, and noticeable
- It should be simple to find throughout your website or app.
The maximum penalty for a violation of the LGPD is 50 million Brazilian reals, equal to 2% of the company’s annual revenue.
App store requirements (Apple, Google)
Apple’s App Store, Google’s Android Play Store, and many others have specific requirements for meeting an appropriate privacy policy.
Apple’s App Store
This Guideline on Apple’s website clearly articulates what Apple’s App Store needs in its Privacy Policy.
Privacy Policies for Android Apps
Google’s Developer Policy Center clearly articulates what information a business must provide in its privacy policy if you have an app.
Good and not so good Examples of E-commerce Privacy Policies
OnBuy
Why it’s good?
- The readability is good. Doesn’t strain your eyes.
- Topics are laid out clearly.
- Simple language. Understanding doesn’t take much time, even if you scan through it.
Cazoo
Why it’s good?
- Minimalistic design.
- Demonstrating transparency upfront as they describe data they collect from consumers.
- Copy is straightforward, personable, and relatable.
Snackpass
Why isn’t it good?
- Major points aren’t highlighted above the top. Bullet points would be much helpful.
- Readability could be better. It will take some effort on the part of the reader.
Jungle Scout
Why isn’t it good?
Please take a look at the image again!
Conclusion
With more and more businesses collecting data to produce more personalized content, products, and services, Privacy policies will only help companies to demonstrate trust and transparency to their consumers.
Informing consumers about how their personal information will be collected, used, and protected by a business will create a positive brand image.
Demonstrating a commitment to privacy and helping businesses comply with applicable laws and regulations makes a company a responsible leader.
A well-crafted privacy policy is crucial for maintaining customer trust, protecting sensitive information, and fostering a positive relationship between businesses and their customers.
