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Evolving data privacy trends transforming the future of digital commerce Share via

During the pandemic, many companies have significantly increased their focus on the online channel to reach out to new shoppers. Therefore the risk of violating data privacy regulations has also increased manifold. As the companies grow their digital footprints and the governments remain committed to tightening consumer privacy regulations, digital commerce will have to keep evolving to be compliant and align its operations to avoid any adverse impact of the rule breach.

On the other hand, the consumers’ expectations from the brand they entrust their data with will be sky-high, as the level of data security awareness has remarkably gone up amongst online shoppers. Cisco’s 2020 Consumer Privacy Survey revealed that around 30 percent of consumers accepted having abandoned the companies over data practices, while most shoppers said they care about data privacy. As a result, companies operating in the digital space will also have to understand the fine line they have to tread regarding data privacy and customer loyalty.

Global data privacy scenario

The European Union’s General Data Protection Regulation (GDPR) which came into force in 2018, has sparked many countries to introduce data privacy legislation to protect online users’ interests. The United Nations Conference on Trade and Development (UNCTAD) said that 128 out of 194 countries had legislation to secure data and privacy protection. In addition, the organization found out that 55 percent of nations in Asia and Africa have adopted such legislation to safeguard online shoppers from excessive data collection. Furthermore, experts believe that governing bodies across the globe will strengthen their data and privacy regulations in the coming years. Gartner says that by 2023, 65% of the world’s population will have their personal information covered under modern privacy regulations, up from 10% at the beginning of 2020.

Impact on digital commerce

In the digital age, we have often heard this saying that data is the new oil, as by getting access to tons of customer data, online companies have grown their businesses manifold.

This data is helping the brands track the shopper’s consumer behavior and preferences and target them with personalized offerings. While companies collect consumer data left, right, and center, often without ever using all of those details and storing them forever in their systems, it has increased the risk of cyberattacks and the shoppers’ data getting compromised.

According to Identity Theft Resource Centre, 2021 will be the record-breaking year for data breaches. By the end of September 2021, 1,291 violations have already come to light as opposed to 1,108 breaches in 2020, the establishment said. Furthermore, if we look at the online retail business, Fortinet, in its recent study, found that in the past 12 months, 30 percent of the retailer have lost critical business data to cyberattacks, while 42 percent of retailers admitted to having a degradation in brand awareness after the incident.

With more robust regulations and heavy penalties coming to the fore, e-commerce companies have started to make heavy investments to systemize their approach to compliance. Research has found that many digital organizations are investing in automating their data privacy technologies that can respond to privacy requests, categorize data according to their sensitivity and help the companies be within the regulatory framework. For example, a 2021 study by Cisco said that the privacy budgets of organizations doubled in 2020 to an average of $2.4 million.

Apart from automation, the likes of e-commerce marketplaces and online retailers have started appointing chief privacy officers or data protection officers, whose primary responsibility is to deliver data compliance and customer satisfaction. By the end of 2022, Gartner said, more than a million organizations will have appointed a privacy officer, a much higher number than in the pre GDPR era. However, while businesses are trying to fall in line with the changing privacy laws, many establishments are still finding ways to manage consumer data effectively.

Additionally, digital-first companies have now started to identify and capture only the necessary data to serve customers and avoid collecting unnecessary information to mitigate the risk of being penalized by one regulator or another. This step will also help the firms manage and delete the customer data whenever they request it. Personas, the data management platform from ArabyAds that enables its partners in the MENA region to unify audiences to forecast consumer behavior across connected devices, is regional data privacy compliant and follows the principles of GDPR.

In the coming times, we will see top organizations in the online space becoming more transparent about the data handling with their customers, which will overall create a much more sustainable business proposition.

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