Understand the basics of data governance in e-commerce


Enterprises use data governance to improve operations, support compliance and create competitive advantage. This cheat sheet outlines what it is and how it works.

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The big data boom of today means that the e-commerce industry is dependent, more than ever, on data to develop relationships with customers and improve revenue. However, data needs to be secure, trustworthy, compliant, and fit for use. This is where data governance comes in.

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What is data governance?

Data governance outlines a consistent approach for e-commerce businesses to gather and use data. It details the data accuracy and quality, how it should be used and who can use it. Through automated and intelligent data governance tools, data governance starts with inventory and classification of available data.

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Once data is selected, organized and presented, the focus shifts to the creation of policies to manage data usage as well as establish data stewards. These data stewards provide hands-on governance of certain datasets and become the subject-matter experts to consult when questions about data arise. The data governance initiative will then track data quality to expose gaps in e-commerce coverage. Data quality metrics also help to determine and catalog new data sources and notify data stewards and other stakeholders of the changing patterns in data usage.

How does data governance work in e-commerce?

Today, data determines the success of both online retail and e-commerce. High-quality data is required to enable these industries to speedily make critical and accurate decisions. E-commerce businesses also capture lots of sensitive consumer data, from payments to patterns, reiterating the importance of data governance in terms of regulation and compliance.

E-commerce businesses collect data from many sources, including web analytics, email and marketing tools, online transactions, surveys and more. This information is consolidated and consumed by the relevant stakeholders. Correctly implemented data governance initiatives ensure that these stakeholders have access to data and that the data is of high quality.

Governing and integrating these data sources in e-commerce means that teams can generate actionable insights on customers, trends, products, regions and more. These insights have a huge part to play in:

  • Informing gaps to adapt to consumer and market trends
  • More effective customer retention and engagement
  • Optimization of pricing, inventory and labor allocations
  • Informing innovation as well as new and untapped market opportunities

Why is data governance important for e-commerce companies?

Visibility, relevance and consistency

Digital outlets have a huge influence on the client of today. For instance, online reviews go a long way toward swaying customers. Customer journeys have also advanced with time. There is more data for e-commerce companies to record.

Data such as customer purchases, shipping details, inventory and more are interlinked and need to be updated seamlessly all through multiple platforms and systems. This responsibility is placed on various teams that may ultimately introduce data silos or irrelevant and obsolete data.

An efficient and unified data governance system helps e-commerce companies efficiently manage such distributed data. Such a system guarantees that data remains relevant and consistent across platforms and prevents data silos. This gives these companies greater visibility to escalate their operations.

Limiting data exposure

Data should seamlessly circulate all through the ecosystem of stakeholders in the e-commerce and retail industries. Even though restricting data may limit the effectiveness of most industries today, the circulation of such data may give rise to safety and security concerns. Security breaches involving sensitive customer data often destroy relationships between customers and brands.

What data governance systems give e-commerce brands are security features such as two-factor authentication, data encryption and tokenization to help limit the accessibility to sensitive data.

Dealing with data inconsistencies

The data repositories and warehouses kept by e-commerce companies may suffer from data inconsistencies. A change in one repository means that all the other repositories need to be updated to reflect the same change, which may become complex and overwhelming over time.

Inconsistent data impacts sales, revenues, productivity and overall strategy. However, a robust data governance system takes advantage of data pipelines to help curate, modify and thoroughly validate raw data. E-commerce businesses resultantly enjoy better data visualization and easier, faster and more accurate data analysis.

What are the benefits of data governance for e-commerce?

Overall performance

By improving efficiency and saving time, data governance raises the overall efficiency of e-commerce companies. Various teams can easily find the correct data and generate insights faster. They can also get much more accurate answers faster.

Data quality

Data governance consistently tracks data quality and usage metrics. These metrics help e-commerce companies gain visibility into how various teams and stakeholders are using data.

Better business insights

E-commerce teams can highlight areas of subpar performance, gain a competitive advantage and discover new revenue streams using analytics.

Improved decision-making

With data governance, companies can arrive at accurate decisions speedily using high-quality data. Staff can access the correct data under the right controls to ensure that privacy and compliance are maintained.

Data ownership, responsibility and accountability

For teams to be able to use data assets effectively and appropriately, they require data governance to help them capture and share ownership, responsibility and accountability of data. Additionally, staff know who are the experts to be contacted when questions and issues arise.

Data governance is proving to be a necessary component of e-commerce today. Correctly implementing a robust data governance solution will position e-commerce companies for new opportunities, greater security and customer confidence, more sales and e-commerce growth.



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