Retailers must balance data privacy with personalization

online shopping data privacy

by VPNHaus | 06/29/2018

The retail industry is increasingly moving online. In its figures for 2017, the U.S. Census Bureau cited national online retail sales at $119 billion.

Meanwhile, the Facebook privacy scandal has raised consumer awareness of online data security issues to unprecedented levels. Protection of online data is now one of the most important criteria driving consumer choice.

A growing number of retailers around the world are working hard to preserve the delicate balance between supplying a more personalized service to customers while doing everything they can to protect their privacy.

Retailers commonly have a multi-layered strategy for safeguarding connections that handle transactional data. One of the most effective ways to protect online privacy is to encrypt all communications using professional-standard virtual private network (VPN) software.

Growth of Online Retail

In recent years, online retail sales have been growing steadily at the expense of traditional outlets. According to figures from analysts at eMarketer ecommerce sales accounted for 9% of sales in the US and 17% in the UK in 2017.

The rise on online sales combined with a slowdown in consumer spending is having a marked impact. In the UK in particular, as many as 40 big name stores are reported to be struggling.

Industry observers are attributing the increasing popularity of online retail to a number of factors from price and convenience to greater choice and availability of more personalized services. In this respect, online leaders like Amazon are the model that the next generation of retail entrepreneurs are looking to emulate.

Security Concerns

However, a series of high profile online data breaches at retailers in the US and the UK along with the recent Facebook scandal have thrown the spotlight on data privacy like never before.

In an Internet survey by the Centre for International Governance Innovation (CIGI), more than half of the participants admitted to being more worried about online privacy than 12 months ago.

Another survey - this time conducted by The Harris Poll on behalf of IBM - found that 78 percent of Americans believe effective data privacy is important, yet only 20 percent have complete trust in the organizations that manage and store their information.

In fact, 75 percent of respondents said they would not buy products from companies if they could not be trusted on data security.

Privacy as a Selling Point

Ironically, there is a willingness among consumers to share more data with major retailers where there are tangible benefits - such as a more personalized service.

A good example is Nestlé’s award-winning bespoke packaging campaign for Kit-Kat which saw customers willingly sharing email addresses, photographs and home addresses in return for personalized packaging.

In fact, new data protection laws like the EU GDPR should help to renew public confidence in online shopping. Consumers will expect retailers and other major brands to take much greater care of their data going forward.

Encryption Secures Retail Privacy

Preserving the delicate balance between data privacy and customer personalization requires a multi-layered security strategy.

One of the best technologies for protecting data privacy available to retailers is VPN software. Retailers commonly have large networks comprising a mix of point-of-sale (POS) terminals, transactional websites, Cloud-based applications and customer databases.

Data encryption is a sure way to preserve the privacy of information as passes between these systems. Larger retailers may also deploy professional centrally managed VPN software that gives IT staff centralized control of encrypted connections across many hundreds of remote systems. Dependent on the scenario, the VPN solution could be located on premise, in the data center, or in the cloud.

In summary, the ability of retailers to protect their customers’ data is fast becoming an area with potential to make a serious impact on their competitive edge.

When used as part of a multi-layered security strategy, a professional VPN encrypts all personal data passing between its systems thereby shielding the content from hackers and other unauthorized surveillance.

As the retail industry evolves and comes to terms with new data protection rules a retailer’s privacy record will become one of its most critical selling points.