Over the last few years (if not decades), many small and big businesses have been accused of not taking care of customer data and exposing it to third-party companies. There are not one or two occasions where aggressive marketers targeted users with spam campaigns, and customers cried for change. And the European Parliament heard their calls and introduced GDPR.
Unfortunately, many ecommerce stores playing by the rules were also hit by the new law. As if there weren’t many things to care about. Adding one more was never going to help.
If you’re a European business or driven by the advancements in the EU market, this article is for you. We will see what GDPR means, why it is that important and even ways to take advantage of the situation.
What is the GDPR?
GDPR is the acronym that stands for “General Data Protection Regulation,” and it is a law that concerns all European citizens. The initial idea was approved in April 2016, but GDPR took effect on the 25th of May 2018.
An important thing to note about the latest data protection act is that it concerns all types of collecting data – regardless of it being data on paper or digital records.
It is a general law that doesn’t target a single area or type of business. Since its launch, every single bookstore, hospital, ecommerce business, government institution, etc., should comply with the processing data rules for European Union citizens.
Why is the GDPR Important?
GDPR is highly important in digital commerce, as online stores process data daily. Lots of data.
As we mentioned earlier, the GDPR law was passed because of multiple customer complaints heavily targeted with spammy campaigns to which they have never subscribed.
Among the most critical things that happened after the introduction of GDPR is that customer data can no longer be sold and mishandled. If there were a way to escape massive financial charges in the past, authorities would now sanction data breaches regardless of whether they are intentional.
To define the importance, though, we might need to take both perspectives to see the bigger picture.
GDPR for Customers
May 2018 was a revolutionary date for each European Union citizen, as the new law gives customers an extra bit of data security and control of their personal information. Nowadays, users can decide if they want their IP addresses (location) to be tracked and which companies to share data with.
When the European Parliament passed the GDPR law, it gave customers the option to provide or deny access to their private data; the right to be erased from a database if they have changed their minds; and most importantly, the right to have control of their data at all times.
And it’s not valid just for online companies, and the GDPR applies to all types of data, whether digital storage or paper.
GDPR for Ecommerce Stores
Ecommerce businesses weren’t that happy with the introduction, as they needed to change their existing means of data processing. For example, each company nowadays should have a dedicated data protection officer. All company executives who have access to private information will now have to follow strict GDPR requirements.
It’s also important to know that every ecommerce store selling goods and services with European citizens has to be GDPR-compliant, regardless of their location (it has an extraterritorial effect).
But apart from storing personal data more stringently and turning each customer service agent into a data controller, there is nothing to be terrified of. Let’s see some of the benefits of GDPR to eCommerce stores.
What are the Benefits of GDPR to eCommerce Stores?
It’s easy to get agitated at new regulations. But after every pesky situation comes a great opportunity. Four years after introducing the general data protection regulation, many experts think that the new law benefits businesses that play by the book.
If you’re a legitimate ecommerce business, you surely know how bad it is to compete with scammers. They know all the tricks of black hat marketing and often target customers with exceptional offers that don’t exist and offers that you have no chance of matching.
Scammers put a dark stain on the whole ecommerce industry and its reputation. Although GDPR hasn’t put an end to cruel practices, as some people will always find loopholes in regulations, it has significantly raised customer awareness and made shoppers more conscious.
Instead of paying for ads that will reach everyone who enters your website, you will only reach out to those willing to share their data. And if users are proactive, they most probably have some initial interest that you could use.
That’s especially valid for email marketing, where people need to enter their email data first to start receiving email offers from you.
GDPR law could potentially save you thousands in terms of marketing costs (provided that you follow the rules, of course).
That’s odd at first sight, but you can promote your ecommerce store by stating how strong your data protection policies are and how customers’ personal data is safe with you.
A report shared in TechRepublic states that 47% of respondents fear their data can be hacked, so promising a safe user experience will be welcomed with open arms.
What Does GDPR Compliance Mean?
GDPR compliance means that every business that trades with European citizens must follow a specific set of rules to avoid getting penalized.
We might repeat it, but the idea behind enforcing GDPR in the first place was to take customers to the driver’s seat of their personal information. Let’s see some important facts.
1. Every Country Should Follow GDPR Procedures
While this has been a law passed in the European Union, it applies to all EU member countries, including Great Britain. While the government has the full right to waive the rule after Brexit, it still occurs.
Another thing to mention is that every institution processing personal data should follow the GDPR protocol, which means even government and local authorities should enforce this policy.
2. GDPR Applies to All Kinds of Personal Data
To avoid any loopholes, the GDPR law makes no exception for the data that has been collected. Every type of personal data should be protected, including:
Personal Information (Full Name, Email Address, Phone Number, Current Location, etc.)
Data regarding genetic and health conditions
Any biometric data
Website data (IP address, cookies, etc.)
Any information associated with an individual, like specific nicknames, etc.
And here comes the interesting part – sexual orientation, political views, and racial/ethnicity information are also considered personal data.
What Are the Requirements?
Companies and non-profit organizations have to adhere to strict rules to avoid charges. Some of the most important things they need to do are the following:
Ensure 3rd party services are also GDPR-compliant: according to Art.6(1B) of the GDPR law, every single service provider of yours should also be compliant.
Assign people with access: another essential thing is to check which employees from your company will have the right to store and collect data. Typically, people who are not in direct contact with customers (like janitors and office managers) should not have access to the database.
Have a dedicated data protection officer: if you process large amounts of data (although there is not a clear explanation of how much is “large”), you should hire a DPO who will: implement the GDPR policies, oversee how the company complies with them, train employees on how to process personal data, and answer questions from data subjects, in case of a request.
What Does Your eCommerce Shop Need to Do?
For all ecommerce companies to stay GDPR-compliant (including you), there should be some actions to take.
Minimize Data Collection
To ensure your store will stay compliant with the new regulations, it will be best to minimize data collected from customers. Your customer service, marketing, and sales teams will most probably be the ones that will need more personal information from customers.
You have to provide them with all the data they need to work with, but make sure that people who churn or are unsuccessful leads are erased from your database to avoid issues in the future.
Restrict Access to Databases
To avoid data theft, you should restrict the access of anyone who won’t operate with personal data. This includes creating a company access hierarchy and protecting information with hard-to-guess passwords and reliable antivirus software.
Provide a Proper GDPR Education to Company Executives
Most companies of large size deliver dedicated training to their employees, but even if you are a small business, ensure you provide all the necessary information before they start processing customer data.
Hold Your Employees Accountable
Many companies force employees to sign non-disclosure agreements (NDAs) to ensure there won’t be data leaks. If you’re a business owner, ensure you have secured a clause that will hold employees accountable in case of a data breach, whether caused intentionally or due to negligence.
Check all Service Providers
One crucial task is to check all service providers – including payment processors and cloud services. The GDPR law clearly states that all data controllers (you) should ensure any third-party data processors are also compliant.
React Quickly in Case of a Breach
If a data breach happens, you should notify supervisory authorities within 72h after the incident has happened and you have identified it. Another vital thing to do is let all affected customers know immediately. Reporting to customers and authorities should be thorough, including the date and time of the incident, what type of data has been stolen, why it happened, etc.
Creating a compliance policy is not a challenging task to do, and all you need to remember is that you should follow honest and transparent business practices. But let’s see the GDPR compliance checklist.
GDPR for eCommerce Checklist
1. Use Clear and Plain Language When Asking for Consent
When asking for consent, ensure you use simple language and avoid using words that can be misinterpreted.
2. Do Not “Help” Users with Shortcuts
By “assisting” users, I mean ticking the checkboxes for them, assuming things, and navigating them. Any of these things can be considered an “opt-out” policy, which is banned. According to the GDPR rules, consent should be “freely given, specific, informed and unambiguous.”
Collect Only Necessary Information
According to the GDPR law, you should only be collecting data required to run your operations. Any unneeded fields you should skip. For example, if you don’t sell alcoholic beverages or any products that are forbidden for non-adults, you should not ask for the date of birth.
What is GDPR’s Influence on Your Marketing Strategy?
Data minimization will take its toll on your marketing strategies, without a doubt. Due to security concerns, some customers will prefer not to share their personal data. As a result, your analytics tools become less accurate.
Another huge factor to consider is that under GDPR, you should collect only necessary data, which means that the law can indirectly impact customer demographics one more time. This will eventually make client profiling less accurate.
The only way to adapt to that change is to win users’ trust to gain their trust that you are a reliable ecommerce business. The best way to achieve it is by providing better content.
Non-compliance with the GDPR could potentially lead to severe penalties. Of course, this is a delicate matter, and no one can decide how much money the organization will pay in case of data breaches.
Many things are taken under consideration, like:
Magnitude and nature of the data breach: how much information was leaked, number of people affected, what type of data has been stolen, how much damage it caused to users, and how much time it took to resolve the issue?
Cooperation with authorities: did someone notify the supervisory authority as soon as possible, and did the organization fully cooperate with authorities to resolve the issue as quickly as possible?
Previous records of GDPR infringements: did the company have previous records of mishandling personal data, and how long ago did it happen for the last time?
Precautionary measures: did the company ensure it had protected customers’ data before the breach?
Potential benefits from the infringement: did the company or any company executive benefitted from the data infringement?
In the worst-case scenario, companies can be fined up to €20 million or 4% of the global annual revenue (whichever is higher).
Currently, the world record holder is Amazon with a €746 million fine, followed by Whatsapp, Google, and Facebook.
Make a Transition Towards “Cookie-less” Marketing with Verfacto
Being GDPR-compliant does not have to come at a cost of ineffective acquisition or retention strategies that third-part data otherwise fueled. Ecommerce businesses can leverage first-party data to create high-converting and personalized experiences for their customers.
If you’re an eCommerce store looking to lead the change, enable Verfacto’s cookie-less marketing with first-party data access for effective customer targeting, as well as measurement and attribution of your campaign successes.
With Verfacto, eShops can be empowered with owned data that can be accessed, implement and incentivized to create prioritized and personalized marketing, all without tampering with customer consent.
The GDPR took effect in 2018, but has already made dramatic changes to how ecommerce businesses manage their stores and process data. The good old practice of operating with a lot of information has narrowed down to only the essential details needed for communication, basic marketing purposes, and transactions.
But unlike the popular opinions that took over social media after GDPR was introduced, this EU law helped customers build more trust with reliable organizations that have delivered their promise to do business without abusing customers’ data.
GDPR applies to websites, too. For your webpage to be GDPR-compliant, you need to add specific cookies and accurately explain what type of data you would like to receive from the customer and why you want the details.
According to the GDPR privacy law, customers might decline to permit you to collect their personal data for marketing or analytic purposes. To store data from your users, you should collect their explicit consent.
Ecommerce stores rely heavily on data collection and analysis. Since most digital businesses rely on online marketing, not accessing information from all visitors can critically impact the outcome.
A simple example: if 40% of people aged 50+ don’t provide data consent and just 5% of the younger audience do not accept cookies, numbers can mislead marketers that the primary audience consists of younger demographics, and neglect older audiences.
If EU citizens have access to your website, you should be GDPR-compliant. The regulation is enforced every time an organization requests any information classified as personal data, regardless of whether there is a sales intent.
Since websites can collect IP addresses and the last fall under “private information,” this triggers the GDPR law.
The only way to avoid complying with GDPR is to block access to European Union customers for accessing your website.