AI Raises Privacy Issues For SMEs And ECommerce

With the capability to access unprecedented levels of data on customers—the equivalent of more than 26 trillion DVDs of data are generated each year globally—it is time for New Zealand SMEs, retailers and eCommerce sites to have a conversation about the challenge of leveraging data to enhance customer experiences while maintaining trust and respecting privacy.

Mark Presnell, Managing Director at Convergence, an eCommerce tech integration firm in Auckland, says research tells us that the world will generate about 147 zettabytes of data in 2024. Given New Zealand’s population size, he estimates Kiwis generate more or less 1.62 petabytes of data per day.

“AI is fuelled by data, so this is a massive opportunity that few retailers and eCommerce sites are taking, but it is also imperative that those who are will be respectful of a person’s privacy. I think 2024 is an important time for us to address the difference between adding value and invading privacy.

“Data on customer insights, behaviour and preferences offers an unprecedented opportunity to connect and engage customers in a way that builds business success, but it should not be used clumsily or exploited because that’s not good for the business and it’s not good for the customer.”

Presnell says New Zealanders have all largely surrendered much of their privacy to live in a digital society, but nevertheless, smart retailers and eCommerce sites will see the need for customer awareness, acknowledgement, and permission to use their data in exchange for a more personalised approach.

He says generative AI can personalise communications and offerings to create meaningful interactions. Understanding specific customer preferences, such as those of a left-handed golfer, allows for tailored product recommendations rather than irrelevant promotions.

However, personalisation must provide real value. If a customer purchases an eBike, follow-up communications might include information on local biking tracks rather than a relentless push of service and parts.

Presnell says that research suggests half of retailers and eCommerce sites struggle to access and integrate data, while customers have ethical concerns.

“Retailers and eCommerce sites should explore integrating various data sources—such as their point-of-sale software, CRM and inventory management—to provide data insights and improve AI accuracy,” he says.

There is a significant portion of Kiwis who worry about AI producing biased results. Transparent AI practices are essential to build customer trust.

“Ensure that customers opt-in to data collection and usage, and that they understand and agree to how their information will be used. I am aware that there is legislation around this, but I would suggest your average SME retailer has very little understanding of the legislation.”

Three Tips for Ethical Data Use in Retail:

1. Ask for Permission

Ensure customers are aware of and consent to data collection. Use clear opt-in tick boxes and avoid using cameras for anything other than security purposes without explicit consent.

2. Personalise Thoughtfully

Use the data to offer genuine value and provide useful information that aligns with customer interests without always trying to make a sale.

3. Maintain Transparency

Clearly communicate how customer data will be used. Build trust by ensuring data is only used for its intended purpose and is kept secure.

Retailers need to focus on integrating various data sources to improve AI accuracy and personalisation, but make sure your approach is ethical and transparent," Presnell says.

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