Sep 7, 2021

What Ecommerce Business Owners Need to Know About Owning Their Data

Data ownership is an important topic for ecommerce businesses to understand and work into their long-term marketing strategies.

Shanif Dhanani

Data ownership is an important topic for ecommerce businesses to understand and work into their long-term marketing strategies. As privacy features and regulations change the norms of data collection, relying on the right kind of data and storing it in-house is essential for business success going forward.

What are the different categories of data?

Zero-party data is the information that your customers voluntarily give you, like their email addresses and phone numbers. First-party data is information that your company collects about customer behavior on your own website or app. This includes scrolling, clicks, adding to shopping carts, and any other type of engagement with your site. Ecommerce businesses looking to own their data should focus on zero and first-party data because these are the areas of data collection that businesses can directly control.

Third-party data is collected by an outside company that doesn't have a direct relationship with the consumer. This data is aggregated to provide information like user behavior across different apps and websites, as well as demographic information and information about users' interests. Ecommerce businesses can then use this information to target Facebook and Google ads directly to likely customers. Third-party data is extremely useful for advertising, but relying on it exclusively leaves your business reliant on the outside parties collecting it and their policies.

What does it mean to own your data?

Owning your data means relying on the zero and first-party data that you collect and storing that data in-house, as opposed to letting an outside company keep control of your customer data. While relying on third-party services to manage your data can make building your business easier at the beginning, doing this can make data management more difficult in the long run.

Owning your data allows your business to perform more specific analysis in order to understand your customers better and invest in better quality targeted advertising. Good data ownership practices allow businesses to collect consistent data over multiple years and work with different tools in order to get the best insights to direct their advertising efforts.

What are the benefits of owning your data?

Recent steps by major tech companies, specifically Google's plans to eliminate third-party cookies and Apple's iOS update that allows users to stop apps from tracking them elsewhere, are limiting the collection of third-party data going forward. These changes have important repercussions for ecommerce companies that depend on this data for marketing, as it largely won't be available as the changes take effect. If you own your data, your business is not dependent on the decisions of outside companies. Basing your marketing plan on zero and first-party data that your business stores in-house ensures that you can continue collecting information and targeting ads regardless of whether Google chooses to collect third-part cookies.

Owning your data gives you the most possible control and flexibility over what data you collect, how you analyze it and what programs you use. When you rely on a third party service to manage and leverage your data, you leave yourself open to interruptions in your marketing strategy, such as what many ecommerce businesses are facing today with Apple's recent iOS privacy changes. When you own your data, you're able to leverage what you already know about your customers to target them with high-converting marketing campaigns. For example, Apteo lets you automatically segment your customers and personalize your messaging to them based on their previous behavior, purchase history, and demographics.

What are the risks of not owning your data?

If your business does not own its data, changes like Google's move away from third-party cookies can derail your advertising strategy. Many ecommerce companies rely on targeted Facebook and Google ads to bring in customers. In this situation, losing access to third-party data could easily mean losing access to your customers. Owning your data allows your business to identify and target ads to likely customers using the information it collects itself, without being affected by other company's policies.

Another concern surrounds the growing number of privacy regulations companies need to comply with, like Europe's GDPR and California's CCPA. Complying with these regulations is much simpler when your business's data is kept in-house.

How can you take control of your data?

Start by collecting, storing, and analyzing all of your customer data using a high-quality tool that you trust. Then, shift the focus of your long-term marketing strategy towards making decisions and finding and connecting with customers based on zero-party and first-party data, rather than third-party data. Apteo's unique platform provides both data analytics and marketing guidance to help your business take ownership of its data.

About the author
Shanif Dhanani
Co-Founder and CEO, Apteo

Shanif Dhanani is the co-founder & CEO of Apteo. Prior to Apteo, Shanif was a data scientist and software engineer at Twitter, and prior to that he was the lead engineer and head of analytics at TapCommerce, a NYC-based ad tech startup acquired by Twitter. He has a passion for all things data and analytics, loves adventure traveling, and generally loves living in New York City.