The basic principles of data governance in e-commerce

Companies use data governance to improve operations, ensure compliance and create competitive advantage. This cheat sheet describes what it is and how it works.

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Today’s big data boom means that the e-commerce industry, more than ever, depends on data to develop customer relationships and improve revenue. However, the data must be secure, reliable, compliant and fit for purpose. This is where data governance comes in.

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What is Data Governance?

Data governance describes a consistent approach for e-commerce businesses to collect and use data. It details the accuracy and quality of the data, how it should be used and who can use it. With automated and intelligent data governance tools, data governance begins with inventorying and classifying available data.

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Once the data has been selected, organized and presented, the focus is on creating policies to manage the use of the data as well as establishing data stewards. These data stewards provide hands-on governance of certain data sets and become the subject matter experts to consult when questions about the data arise. The data governance initiative will then track data quality to reveal gaps in e-commerce coverage. Data quality metrics also help identify and catalog new sources of data and inform data stewards and other stakeholders of changing data usage patterns.

How does data governance work in e-commerce?

Today, data drives the success of online retail and e-commerce. High-quality data is needed to enable these industries to make critical and accurate decisions quickly. E-commerce companies are also capturing a lot 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. Properly implemented data governance initiatives ensure that these stakeholders have access to the data and that the data is of high quality.

Governing and integrating these data sources into e-commerce means teams can generate actionable insights into customers, trends, products, regions and more. This information has a huge role to play in:

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

Why is data governance important for e-commerce businesses?

Visibility, relevance and consistency

Digital POS has a huge influence on today’s shopper. For example, online reviews go a long way in influencing customers. Customer journeys have also evolved over time. There is more data to record for e-commerce businesses.

Data such as customer purchases, shipping details, inventory, etc. are linked and must be updated seamlessly across multiple platforms and systems. This responsibility falls to various teams that can ultimately introduce data silos or irrelevant and outdated data.

An effective and unified data governance system helps e-commerce businesses manage this distributed data efficiently. Such a system ensures that data remains relevant and consistent across platforms and avoids data silos. This gives these companies greater visibility to scale up their operations.

Limit data exposure

Data must flow seamlessly across the entire ecosystem of players in the e-commerce and retail industries. Even though data restriction can limit the efficiency of most industries today, the flow of this data can raise safety and security concerns. Security breaches involving sensitive customer data often destroy relationships between customers and brands.

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

Manage data inconsistencies

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

Inconsistent data impacts sales, revenue, productivity, and overall strategy. However, a robust data governance system leverages data pipelines to help curate, modify, and thoroughly validate raw data. E-commerce businesses benefit from 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 increases the overall efficiency of e-commerce businesses. Different teams can easily find the correct data and generate insights faster. They can also get much more accurate answers faster.

Data quality

Data governance continuously tracks data quality and usage metrics. These metrics help e-commerce businesses better understand how different teams and stakeholders are using data.

Better business information

E-commerce teams can highlight areas of underperformance, gain competitive advantage, and uncover new revenue streams using analytics.

Improved decision making

With data governance, businesses can quickly make accurate decisions using high-quality data. Staff can access the correct data under the right controls to ensure privacy and compliance are maintained.

Ownership, Responsibility and Accountability of Data

For teams to use data assets effectively and appropriately, they need data governance to help them capture and share data ownership, responsibility, and accountability. In addition, the staff knows who the experts are to contact in case of questions and problems.

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