As e-commerce companies collect an ever-growing volume of customer data, they take on new risks. From payment card information to customers' addresses and birthdates, e-commerce companies have custody of an array of financial and personal information they must protect and keep safe from cyber criminals.
In this environment, you must do everything in your power to prevent a breach. The economic impact of data security breaches can be costly to your e-commerce company, both financially and in terms of your reputation. With the potential to damage the perception of your company, a data security breach can precipitate shifts in consumer behavior and their loyalty, advocacy and engagement with your brand.
Security threats in the e-commerce industry
E-commerce companies face a variety of security risks. Cloud-based customer data management (CDM) and customer relationship management (CRM) platforms can offer an entry point for hackers, especially if these systems don't have robust security protocols or connect to networks that don't have strong endpoint security. Hackers can also target mobile apps with malware. If these applications—and the devices that house them—lack strong authentication or data encryption methods, it doesn't take a lot of heavy lifting for hackers to gain unauthorized access to your company's valuable customer data or proprietary data. According to the 2020 Verizon Data Breach Investigations Report (DBIR), almost 25% of all data breaches involved cloud solutions, and 75% of cloud-related data breaches involved an email or web app server.
E-commerce companies are also vulnerable to a host of other cyber security attacks, including denial-of-service (DoS) attacks that can shut down your website, automated bots that attempt to use stolen credit card numbers to complete transactions, and e-skimming attacks in which malware is installed on checkout pages to steal customers' personal information.
The impact of data security breaches on consumer behavior
In a world where consumers have become increasingly privacy-focused, a data breach can have a significant impact on your customer relationships. Research indicates that Americans have mixed feelings when it comes to confidence in corporations as stewards of their personal data—both in terms of companies' use of data and their willingness to be transparent about mistakes. At the same time, 81% would stop doing business with a company online after a data breach.
This means that when a data breach occurs, it can break the trust consumers have in your company and whatever faith they had that you would keep their valuable personal information safe.
Broken trust can have a profound and lasting ripple effect. Consumers may be less likely to do business with your company in the future or flock to a competitor who hasn't experienced a breach. They may also be less likely to recommend your product or services to family and friends, especially if there are thousands of companies who compete in your category and provide the same offerings at a more competitive price.
Cyber attack impacts have become more common, but this doesn't mean your company can't be proactive in protecting your data and systems. Doing so can reduce your reputational, financial and operational risks, especially when you consider that the average data breach costs a company $3.86 million and takes 280 days to contain. That's valuable time and dollars that could instead be invested elsewhere to drive more sales and revenue and improve your customer experience.