Why digital identity is fundamental in personalised e-commerce

E-commerce is growing rapidly, with Juniper Research predicting its global value will increase from $14.8 trillion in 2024 to $26.2 trillion by 2028. This expansion is being accompanied by an increased emphasis on the customer journey and experience, omnichannel, and personalisation. 

Simultaneously, new security threats are constantly emerging, with e-commerce businesses viewed as attractive targets. In response, integrating Identity and Access Management (IAM) into your e-commerce strategy becomes imperative to ensure your business remains a trusted and preferred brand among consumers. Building the insight, experience, and expertise to anticipate and prevent malicious attacks is fundamental in safeguarding against potential risks. 

In this article, you’ll gain insights into the value of prioritising IAM to strengthen your brand's resilience and maintain a secure online environment for your customers. We’ll provide advice on some of the potential security threats you must prepare for and discuss governance and compliance requirements. You’ll also learn about increased possibilities through digital identities and personalisation in e-commerce. 

 

Personalisation is a key factor in driving e-commerce success. New developments such as AI-driven product recommendations, tailored content and bespoke marketing campaigns continually push the boundaries of customisation. These advancements all revolve around the strategic use of digital identities.  

According to McKinsey research, companies who implement personalisation strategies witness a significant impact on consumer behaviour. The study discovered that 76% of consumers are inclined to consider purchasing from companies utilising personalisation, and 78% are more likely to make repeat purchases and recommend such businesses. This translates to a 40% growth advantage for e-commerce businesses who prioritise and implement personalisation. 

The rising identity security threats 

The incredible growth in e-commerce has been accompanied by a rise – in number and sophistication – of potential threats to identity security. The most common risks involve:  

• Excessive data collection and storage increases the attractiveness of businesses as targets for cyberattacks.    

• Vulnerabilities in recommendation algorithms may compromise user privacy by allowing unauthorised access to personal information.   

• Phishing attempts involving use of deceptive emails, messages, or websites that appear legitimate to trick customers into providing sensitive information.   

• Social engineers may impersonate your business by mimicking your staff or sending fake surveys or offers to access customer data.   

• Insufficient security measures increase the risk of data breaches and unauthorised access to personalised user profiles.  

• Synthetic accounts and stolen credentials are further adding to the risks, which also include the breach of privileged accounts utilised in managing your e-commerce infrastructure. 

According to recent Verizon research, 83% of breaches incorporated an external factor, with 95% driven by financial motives. Fraud remains a major challenge in e-commerce. While customers are typically reimbursed, e-commerce businesses continue to suffer annual losses running into billions of US dollars due to fraudulent activities. Research by Juniper and Verizon underlines this concern, revealing that losses from e-commerce online payment fraud reached $41 billion in 2022, with projections exceeding $48 billion globally during 2024. Of these incidents, 49% involved stolen identities and 12% were initiated through phishing attacks.  

 
The key priorities you should focus on 

The significance of digital identity in nurturing personalised and secure e-commerce is clear, but what should be the key priorities for your e-commerce business?  

1. Prevent misuse of personal data 

Misuse of data can occur in various ways, with the most sensitive involving the mishandling of personally identifiable information (PII), encompassing all data linked to individuals. This information needs not only to be visible but also available for the customer to manage. Upon website registration, personal information is shared, prompting queries about the stored data, its usage, and who holds access to these details. 

 Safeguarding personal data begins even before the customer signs up. This involves refraining from requesting, collecting, or extrapolating unnecessary information, which can add complexity to governance and compliance. Strict adherence to GDPR regulations, especially the right to be forgotten, is crucial for preventing the misuse of personal data and avoiding fines or sanctions. 

2. Prioritise identity protection 

In digital channels, identity proofing and fraud detection are integral components of a solid cybersecurity strategy. They not only shield user identities but also prevent unauthorised access and serve as protection against a spectrum of fraudulent activities. Ultimately, these measures contribute significantly to nurturing a secure and trusted online environment. 

A thorough and holistic approach involves a comprehensive examination of both customer information and behaviours throughout the entire journey. Effectively preventing fraud is key, particularly during customer registration and identity verification. The strategic integration of digital identities serves to strengthen and streamline the user journey, creating a more cohesive, user-friendly, and automated experience. The implementation of identity and access management (IAM) plays a dual role in ensuring security and elevating the overall user experience, emphasising the essential connection between information and the user journey in e-commerce. 

3. Consider omnichannel aspects 

Effective identity and access management is fundamental for delivering a seamless user experience across both single and omnichannel environments, as well as building a foundation for personalisation. By addressing IAM challenges, businesses can better understand their customers and partners, create cohesive experiences within and across channels, and ultimately elevate overall satisfaction. 

 
Insight: In digital channels, identity proofing and fraud detection are integral components of a solid cybersecurity strategy. 

 

 

How to succeed:  

• Ensure a smooth customer journey, including recommendations, by adopting an omnichannel approach.   
• Strategise on linking digital identities to digital information and physical stores, nurturing personalisation, and facilitating easy recognition across all channels. 
• Extend your consideration to include resellers handling your products, particularly if you’re in B2B. 

Gartner research reveals that 87% of B2B purchase decisions are influenced by millennials who favour a self-service experience. By 2025, an anticipated 80% of all sales interactions are projected to take place in digital channels. 

4. Educate and take ownership 

E-commerce businesses must take ownership of identity security and, to a greater extent, educate customers. Considering that customers often reuse their digital identities across various platforms, a single breach can have widespread repercussions, causing significant damage. Prioritising identity security becomes a critical imperative. 

Simultaneously, striking a balance is essential in determining how much "burden" to place on customers, recognising that convenience remains vital in a competitive market. You could easily lose customers to a competitor making it easier to shop. To succeed in e-commerce, you should actively enhance identity security while concurrently raising awareness among your customer bases. 

 
In conclusion 

Personalised e-commerce is here to stay, enriching the customer experience like never before. To prevent potential identity security threats, it i’s key to incorporate identity and access management (IAM) into your e-commerce strategy. Make sure your business takes a proactive approach.