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Ethical Guidelines for the Use of E-Commerce Data

Frankie Wallace by Frankie Wallace
February 10, 2022
in Data, E-commerce, Industry Opinions
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Ethical Guidelines for the Use of E-Commerce Data

Ethical Guidelines for the Use of E-Commerce Data

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Data is the backbone of e-commerce. From financial to customer information, data represents the ability of a commercial operation to succeed in the digital economy. However, with big data comes big responsibility.

Every data point collected from a consumer represents a potential risk. With cybercrime up between 300% – 400% since the emergence of the COVID-19 pandemic, these aren’t risks e-commerce businesses can afford to ignore. Nor is the damage to your reputation should customers feel like their data is being exploited. To better protect themselves and their customers, e-commerce businesses must follow strict ethical guidelines for the use of customer data.

These ethical guidelines are vital for online businesses as they strive for customer loyalty and positive advertising. Understand their importance before implementing them in your e-commerce operations.

Why is ethics essential in e-commerce?

E-commerce revolves around data. That’s because this collected information explains how customers shop, what they look for in an online experience, and any potential pain points involved in the process. This is all vital information that empowers business benefits like:

  • Greater customer satisfaction
  • New business opportunities
  • Enhanced sales

These features of big data are why companies across industries are adopting data-driven cultures. However, without ethical applications of consumer data, you run the risk of negating any potential benefits. Ethics are necessary for supporting trustworthy e-commerce endeavors that cultivate customer loyalty long-term.

In fact, handling customer data ethically will make all the difference when it comes to generating business insights in the future. That’s because 79% of survey respondents said they were more likely to provide their information only to brands they trust. Since e-commerce businesses rely on this information to formulate effective marketing, trust is vital to success. But cultivating this trust requires careful navigation on social media and other platforms.

That’s where strict ethical guidelines come in. Embracing a framework for ethical data usage can support customer trust and success. This translates to your success. But what ethical guidelines should you follow?

Ethical guidelines to follow

With data applications so nebulous in scale, it can be difficult to know where to start with tightening up your protocol. Fortunately, regulations adopted by governments and businesses across the world offer helpful tips for cultivating customer trust through an ethical business model. The General Data Protection Regulation (GDPR), for instance, is a European Union law that provides a set of important ethical principles to keep in mind when collecting customer data.

As you explore a safer, more ethical approach to data usage in your e-commerce business, consider these principles as a set of ethical guidelines that can improve customer trust:

1. Transparency

This is one of the most important aspects of ethical data collection. A transparent data policy ensures that customers are informed of what data is being collected and for what purpose. In doing so, trust is cultivated between customers and businesses. That’s because no one wants their data used to harass them with uninvited offers or, worst case, to commit fraud. By stating your data policy outright, you hold yourself accountable to your customers who will expect you to act accordingly. From here, you can build a reputation as a trustworthy e-commerce platform.

2. Honesty

But transparency is only ethical if your claims are honest. Honesty in data use is key to building greater trust with online shoppers that have other options to choose from should the experience you provide disappoint them. When Volkswagen got caught misleading customers about vehicle emissions, for example, the consequences included upwards of $30 billion in fines and legal fees. These are costs most e-commerce businesses cannot afford. Instead, honesty is an ethical and safe approach.

3. Relevancy

Then, online marketers must maintain relevancy with the data they collect. This means assembling only the data that they will apply to improve their service offerings. Relevant data collection is more ethical data collection since the assembled information presents less risk to customers. With the help of Customer Relationship Management (CRM) software, you better track your most relevant metrics while automating security practices like encryption and de-identification.

4. Security

Finally, an ethical approach to e-commerce data collection makes security a priority. Data loss can be devastating. With an average cost of $4.24 million per data theft, the consequences can disrupt lives and livelihoods. An ethical approach to security leverages a business’s best tools  for protecting data. These include:

  • Cloud data back-ups
  • Trusted security software
  • Encryption

These four principles can serve as a framework for implementing data more ethically. From transparency to security, your customers will appreciate features that consider the integrity of their time, data, and finances. On top of all the online fraud out there on the web, e-commerce customers have to be more careful than ever, and only an ethical approach will suffice. Follow these ethical guidelines to build a thriving e-commerce business. You’ll need ethics to maintain enough customer trust to stay competitive in today’s highly digital economy. These principles will strengthen the performance of your e-commerce activities

Image Source: Pexels

Tags: Datadata insightse-commerceethicsGDPRIndustry OpinionsPersonal Data
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