Cookie-less eCommerce and data-privacy go hand in hand. In this post, the CEO of Empathy, a data-privacy-first solution, lets you in on the secret of zero-party data.
If you have shopped recently in a store, your experience might have been something like this.
You browse the shelves and find what you like. Let’s say it’s a white t-shirt. A wardrobe staple that you can find in almost any shop. You check the size and hold the t-shirt in front of you.
Would it be a good fit?
You check if there’s a pair of jeans that might be good with it. A normal, every day shopping experience.
But now, imagine this.
You notice something weird from the corner of your eye. Someone is staring at you, taking rapid notes in a little book.
You glance around and check again. Yes – you’re pretty sure someone is observing you.
You hesitate. Should you leave?
But you decide to find out what is happening, so you walk over and smile at the observer: “Hi, can I help you?” you ask.
“Oh hey”, the observer says. “Don’t mind me. We’re just taking some notes for marketing purposes. You might have seen the sign at the entrance of the shop?”
You remember seeing a little banner walking in, something about “consenting to share information to personalize the shopping experience.”
You take a glance at their notebook. In it, they have noted your gender, age, how long you’ve been looking around, and your clothing size. You see more information written down, but you have had enough. You leave the clothes and quickly leave the shop.
Walking back to your car, you reflect on what just happened.
This is a story about how third-party tracking works.
The observer is the retailer, making sure to collect as much information on you as possible to use in their shop. And to sell to other shops that you might want to visit.
It’s weird and creepy, but luckily, customers are noticing these concerning practices. And as retailers realize that their data tracking systems are scrutinizing, they are looking for privacy-friendly alternatives to collect customer information.
Enter: Zero-party data.
For brands to succeed in the future of eCommerce, zero-party data will be the make-it or break-it factor.
Empathy.co focuses on privacy-first technology and has extensive knowledge of zero-party data. Today, I’ll explain these concepts in more detail.
Third party vs. first party cookies to understand zero-party data
To understand zero-party data, we need to make a clear distinction between third-party and first-party cookies.
- Third-party cookies are tracking codes from different sources. For example, from advertisers or social media platforms, placed on a website where the advertiser or platform can then track what you do.
- First-party cookies are created by the website you are visiting to save valuable information, such as passwords. They also offer the merchant insights into shopping behavior, such as products clicked, time spent on the website, and how often a person visits.
To compare this with a real-life shop, first-party cookies are the shopping assistants that try to understand what customers are looking for. They then use this information to offer a better experience.
If a website only uses first-party cookies, no information about a customer’s visit is shared with other websites.
The user can interact with the shop; looking for products or paying for items, without information being exchanged with anyone else.
So, what’s the issue with these cookies, and how does zero-party data come into play?
What is zero-party data?
As we steer away from third-party cookies, companies, and advertisers are looking into new, sustainable ways to collect necessary data and help shoppers during their online journey.
- Zero-party data consists of asking shoppers questions to build a profile, better understand their needs, and optimize their experience. To do so, the website uses tools like questionnaires, quizzes, or contact forms to gather information in a transparent and trustworthy way. The information gathered is then used by the merchandiser to guarantee that you find the products or services that you are looking for.
For example, imagine a questionnaire in an online shop during the holidays. It asks if you’re looking for a gift.
If so, is it a gift for yourself or for a loved one?
Depending on your answer, the results can then be used to update the catalog and show you product recommendations relevant to your search.
In short, zero-party data takes information directly from the customer to facilitate their purchase journeys.
Zero-party data is the future of a privacy-first world
Many laws similar to the EU's GDPR law are now being implemented worldwide. The General Data Protection Regulation is composed of four principles:
- Privacy by design
- Fair data collection
However, recent data breaches, like Cambridge Analytica, have shown the vulnerability of online privacy, especially because of third-party cookies.
While big companies are implementing changes to protect personal information, it becomes clear that the future of the internet is human-centered and privacy-first.
But how can merchandisers still guarantee enjoyable online experiences while targeting their audience with personalized recommendations?
Zero-party data might just be the answer everyone is looking for.
Why do retailers need a zero-party data approach?
Data has become a currency in the digital world, where you can access certain goods or services by giving up your privacy ownership and consenting to be tracked.
However, this approach to data is being more and more scrutinized by the government and customers alike. And those protests have set the zero-party data movement in motion.
Zero-party is, as some have called it, ‘straight from the source’. You won't depend on third-party data if instead, you ask the customer to share their data with you directly.
Companies are starting to see the value of this. With the rise in privacy awareness, zero-party data is a way into the future of ecommerce.
Because with a zero-party data approach, you:
- Increase your growth rates to up to 10% and boost your revenue.
- Build trust with shoppers and ensure brand loyalty. (In fashion, 66% of shoppers do not trust the brands they buy or use.)
These two points show us the path to discovering how zero-party data can be a pillar of success for your online business.
1. Zero-party data can increase your growth rates, and revenue
Online shopping is booming, with is no end in sight for that growth.
According to a recent report, the ecommerce market has the opportunity to increase from $3.3 trillion in 2022 to $5.4 trillion in 2026.
While the number of online shops keeps growing, pushed forward by customers’ demand, merchandisers face the challenge of having to stand out from the crowd.
If you’re looking for a way to beat the competition and fuel your revenue growth, zero-party data is a solution to explore.
A recent report by global management consulting firm McKinsey looked into the business benefits of healthy data practices, such as:
- Ensuring online privacy
- Having clear & ethical data practices,
- Offering trustworthy AI-powered products and services
The report focused on 1300 business leaders in 3000 customers surveyed globally by McKinsey on the importance of digital trust in ecommerce.
Results show prioritizing trust online is 1.6X more likely to boost revenue and can lead to an EBIT growth rate of up to 10%.
While the eCommerce rocket soars higher and higher, digital trust might be the perfect way to ensure your bigger slice of the pie.
2. Zero-party data fosters 1:1 relationships with customers and builds trust
Customers are increasingly becoming aware of the implications of data breaches. With the growing importance of privacy, they are making more conscious decisions.
At Empathy.co we recently launched our Retail Trust Index, highlighting exactly how online shoppers in the UK feel about intrusive data practices and the safety of their personal data.
Crobox Product Finders is an example of a zero-party data tool for eCommerce.
Results show that:
- 50% of shoppers are already changing their online shopping habits in an effort to protect themselves.
- Nearly 70% agree that cookies and online tracking are intrusive.
- Over 60% would prefer to shop in-store to avoid such practices.
Moreover, it’s not just in B2C that customers are pickier about brands they want to shop at.
56% of B2B shoppers are more likely to switch brands when it’s unclear how their data is being used. 65% would stop buying if a brand violates their digital trust.
It’s clear that customers want to turn away from the creepy guy that might be following them around and focus on privacy-first data.
The future of zero-party data: A note from Empathy.co
At Empathy.co, we have gained the trust of leading companies that share our vision of privacy-first technology that puts the customer at the core.
By starting from what your customers actually want and are willing to share, you can work your way back up and build a platform that is 100% adapted to their needs and expectations.
Zero-party data is a way to empower your customers in their shopping choices. It creates online experiences that guarantee trust, understanding, and joy at every step.
And what about retailers? The time has come to personalize the ecommerce experience by putting relevant products in front of your customers while respectfully taking their preferences into account.
Angel Maldonado has spent the last 20 years passionately developing and executing Commerce Search and Discovery solutions. Having studied Computer Information Systems at Liverpool University, Angel started his career working for Autonomy, where he helped clients on pioneering enterprise search projects for seven years before founding Empathy.co.
As the founder of Empathy.co, Angel drives forward the product vision, innovation and ethos of creating a company with truly organic values. Privately held with no external investors, cash-flow positive and fast growing, Empathy is free to focus on product, innovate and relentlessly pursue customer success.