By Nish Bhutani, Founder & CEO – Indiginus
As published in the Mint on Sunday on December 3, 2017
The convenience of online shopping comes at a cost to our privacy that most of us are willing to accept. This acceptance, though, is aided by a lack of awareness of the data being collected.
When you visit an e-commerce site or app, the e-shop, and its partners, put the equivalent of a 007-style electronic bug on you, to try and follow your every move and track you down. Let’s take a look at this web of surveillance, which can be a handy convenience, or a nefarious tool, depending on your point of view.
There’s no such thing as a free cookie
You walk into a shop, a real shop on a street (to think that for millennia, that clarification was unnecessary), and browse through a few aisles without purchasing. You leave without a trace. The fading memory of a bania shopkeeper or a never-viewed recording on CCTV, are the only imprint you leave behind.
Not so online. Even without logging in, you have left your scent. A small file, called a “cookie”, is deposited by the website onto your computer or mobile. Or, if you are on an app, an identifying code from your device is recorded by the online merchant.
Your unique scent is mapped to your browsing activity—which aisles you lingered at and which items you pulled out of shelves—so when you come back, the items are tantalisingly placed at the entrance, aka the home page, for you to purchase.
When I worked at Saffronart, the high-end online auction house, a friend emailed me once, impressed that “Saffronart is advertising everywhere!” The truth is, Saffronart was advertising everyone, not everywhere—everyone who visited our website, that is.
But my machine is not me
While your cookie or device ID is less fallible than the bania shopkeeper’s memory, the experienced shopkeeper beats online tracking in some ways. For one, he remembers you, the person.
Cookies and device IDs identify your device. It’s why Flipkart and Amazon will re-target you with books and soaps, but not with sexual wellness products, as they don’t really know if they have reached you, or your pet dog, using your browser.
So, companies need another way to identify you, the person, no matter which device you are on. For the local shopkeeper, your face uniquely identifies you, and once they strike up a conversation, so does your name. Online companies also need an identifier—a key—that is associated with you, and only you. Most often, that is your email address or mobile number.
When you register on sites or apps using your email address, mobile number, or Facebook or Google account, the online merchant has the key to identifying you across devices. Now, all kinds of magic are possible—personalization across devices, for instance—the equivalent of a shop window featuring only those items that are of interest to you.
You can start by browsing on your desktop at work, and open the merchant’s app on your evening commute, to pick up exactly where you left off.
Your email address may also be handed over by the online store to Facebook, to target you with ads related to your shopping history, as also to find and target people similar to you. All your likes, comments and pages of organisations you follow, along with your birthday, employment history, family details and friends’ circle, add up to a juicy set of data for marketers.
If you are a good customer for an e-store, they want more people like you. This is why Facebook’s “look alike” campaigns are popular with marketers, keyed off your email address.
The shops are in cahoots!
You take a Sunday afternoon stroll through the mall. You are being watched closely, through CCTV cameras, which send the video feed to a control room. You pick up an expensive lotion from the Body Shop, free from animal testing, and in the control room, your profile starts to build, not just through observation, but also AI-driven inference: likely female, high income, educated, English speaking.
As you keep walking, advertising billboards within the mall change to match your profile—Kum Kum Bhagya promos give way to House of Cards. You step into a baby shop and the profile gets richer: young, married with small children, looking for baby products. Magically, as you step out of the baby shop, you are guided to child-friendly restaurants.
This sci-fi like scenario is played out daily in massive numbers, in real-time, on the internet. The imaginary control room above is run on the internet by specialized advertising businesses, called “ad networks”—including those run by internet giants Google and Facebook—and “data management platforms”.
They work with multiple sites and apps to collect as many as a hundred types of data about you as you browse. This data, used continuously to refine the promotions you see on the internet, includes, for instance, your location (for local advertising), and your device model (bought that shiny new iPhone X? Expect more luxury offers, and fewer discount promos).
This data, collected by partner firms of e-stores, does not identify you personally—it excludes names, emails or phone numbers—but there is some justifiable concern that with such rich data, it may not be hard to connect it to individuals.
Back in 2006, a Princeton researcher demonstrated that Netflix users could be identified by cross-referencing their ostensibly anonymous ratings with IMDB, another movie website. Data associated with your mobile phone can also be revealing—shared photos, for instance, that have location data embedded in them.
Inside the shop
Leaving our privacy concerns aside for the moment, let’s direct further attention at what happens inside the shop. As you move from browsing, to picking up an item, to asking questions, to trying it on, the shop records your every move.
In online parlance, you are moving down the shopping funnel, with the checkout process as your ultimate destination. As you browse and search, the e-store records your detailed preferences—item categories, brands, colours and sizes—for personalized marketing through its website, app, emails and SMS.
The path from entering the e-store to purchasing is closely monitored for “drop offs”—the percentage of people who did not make it to the next stage in the shopping journey. You pause a bit longer than average, and the stress of the e-store is palpable, as it pops up a “Can we help you?” chat box, to remove any doubts and keep you engaged. Unlike a shop on the street, it doesn’t know immediately if you have turned around and left.
How upset would a shop owner be, if you picked up a basket of goodies, approached the cash counter, and then left the shop without explanation, leaving your shopping basket behind. What happened? Did we do something wrong?
An online shopper’s level of commitment is far lower, of course, so abandoned shopping carts are all too common. Nonetheless, this is a notable let-down for the e-store, hence the personalized reminders via pop-ups, emails and SMS, imploring you to finish your purchase.
What’s the price this minute, for me?
Pricing is far more dynamic online than we may realize. In the offline world, we have long been familiar with fluctuating airline prices, based on supply and demand.
Online selling, however, has taken pricing to a new level of science and dynamism. Fluctuating price tags in a physical store would be evocative of a haunted house, and create an interesting game of which customer gets which price. But there are no such constraints online, as you have little insight into the price offered to another shopper.
Besides supply and demand, your online habits can drive pricing as well. Everything from the aforementioned iPhone X, to the stores you visit, your spending patterns and modes of payment, add up to a dossier that can result in individualized pricing at some e-stores.
In some ways, this is no different from the baniashopkeeper, upon seeing the well-to-do madam, tightening his bargaining parameters. The distinction is that online, it happens more often and efficiently. Most online retailers, including travel sites, have a “No Fixed Price” policy—and some of them change prices on an individual basis.
So, where does an online shopper hide?
Whether you accede fully to this tracking or not, is down to your level of trust in “The Man”—the big corporations, laws and law enforcement and the capitalist order. It also depends on the convenience you seek while on the internet.
Cookies, for instance, help websites remember you, so you don’t have to login on every visit. They are also largely harmless, as long as you are comfortable that other users of your computer or, less likely, your phone, will have a view into your browsing activities.
There are some steps you can take for greater privacy. Cookie-based tracking can be temporarily turned off by “going incognito”. All web browsers have a mode—called “incognito” in Chrome, “private browsing” in Safari or Firefox—which automatically deletes any cookies when you leave a website.
This means you won’t be targeted around the internet based on what you saw in incognito/private mode. It also means that websites you visited and images you viewed will not be saved in your browser history. All you need to do is open a new incognito or private browsing window, before you start browsing.
Apple’s mobile devices, and newer versions of its Safari browser, place certain default restrictions on the use of cross-site cookies—the kind that allow advertisers to follow you around the internet, or target you based on your interests. Alternately, you can change your browser settings to block these cross-site cookies (often referred to as third-party cookies).
As alluded to earlier, cookies apply only to websites, not mobile apps. To restrict being targeted across the internet based on your app usage or location, you can opt out of ads personalization by changing settings on your Android, or iOS phone.
In the final reckoning…
The reality is that to use the internet, including its many free services, you pay with some loss of privacy. The convenience of readily available products and information comes at a cost that most of us are quite willing to accept, though admittedly, this acceptance is aided by a lack of awareness of the data being collected.
Real world shops come with their own problems—a lack of price comparison, sales pressure from the bania, and of course, the inability to instantaneously defect to a competitor for a better experience.
There is little doubt that the internet has benefited consumers vastly in terms of lower prices, access to goods even in remote areas, and greater selection. Cross-site tracking and advertising carry benefits for the consumer too, as the ads are more relevant to your needs, and serve as reminders for an important purchase that you may have forgotten to complete.
More importantly, efficient and targeted advertising translates into lower marketing costs for retailers and presumably lower prices for consumers.
Welcome to the Matrix. It can feel a tad creepy at times, yes, but you know that resistance against its many pleasures and benefits is futile.
Nish Bhutani runs an education and consulting company specializing in digital strategies and transformation.
His fortnightly column in the Mint on Sunday, Digit Spinner, addresses the digital capabilities of consumer businesses.