THINK TankJanuary 30, 2020

THINK Tank: How Much Privacy Are Consumers Willing to Sacrifice for New Tech?

The Breakdown: In the midst of 2 class-action lawsuits, Amazon’s Ring is reporting its best sales ever.

Last December marked video surveillance company Ring’s, biggest sales month to date.

Ring’s online sales in the US grew 180% last month compared with 2018. 

The news comes amid a slew of reports highlighting the Amazon-owned company’s problems with hackers along with growing public concern over the issue of privacy.

We attended NRF earlier this month and data and privacy seemed to still be on the top of everyone’s mind this year—Former Speaker of the House Paul Ryan was even there to speak on the matter.

Q: As the world becomes increasingly more connected, how much privacy are consumers willing to sacrifice for new tech and convenience?


 

The Weigh-In: Carol Spieckerman and Haniff Brown

 

Carol Spieckerman: Well, unfortunately, I think the question assumes that consumers are still in the driver’s seat. I think the problem is that a lot of consumers don’t know how much privacy they’ve already sacrificed and how far things have gone beyond permission and how many decisions have already been taken out of their hands. So to me, the Ring story, yeah, it’s interesting by itself, but it really is more than just sort of a cautionary tale about privacy and transparency. For one thing, it does speak to something I’ve been talking about for a while, the growing scrutiny around Amazon in general because one of the doggone unfair things about Amazon is it’s not just a retailer. It has so many other pieces in its portfolio, so many other business models and it has its tentacles extended into all kinds of things.

 

Carol Spieckerman: So for them, Ring isn’t necessarily a profit center. Of course, it’s just a blip in their overall story. But it is a critical link to things like facial recognition and other capabilities that Amazon is harnessing for government contracts and all kinds of things. So, to me, this isn’t just a consumer privacy issue or even a data privacy or transparency issue. It’s quickly evolving into having concerns about tracking and even surveillance. Not to be an alarmist, but you may have seen that the New York Times has actually been doing a series on that and how far all of this has already gone—and it extends way beyond just concerns about retail.

 

Carol Spieckerman: So I think on the consumer side of things, unfortunately, I think it’s going to take more of a form of backlash and reaction as consumers gain awareness of what’s already happening—more than it’s going to be proactive decisions, or let’s just say that any proactive decisions that consumers make, which, frankly, might be sort of meaningless or a little bit too late. And I don’t mean to be doomsday about it, but I think things have progressed beyond what a lot of folks realize. That’s not to say that retailers don’t need to give a nod to transparency, they don’t need to play along with that from an image perspective in the retail space.

 

Carol Spieckerman: But I want to hear from Haniff, because you were saying that you had some really interesting statistics on how new generations of shoppers are perceiving all that, and that’s really going to dictate where it goes next.

 

Haniff Brown: Yeah. Well, I do agree with you that part of the issue is that a lot of us don’t know how much data is being collected and where data really lives. So I’m founder and CEO of Fit:Match, and we basically are an online, offline sort of omnichannel technology platform that uses biometric data that we collect in very sort of high experienced AI fit shops across the country at the retail level. So we actually focus 99% of our time and effort on understanding data and providing through a value exchange biometric data of our customer base very privately and safely to brands. And those brands now have incremental information on the customers that we provide them with to target them based on biometric data.

 

Haniff Brown: If you really think about it, when a brand spends dollars advertising on Facebook and Google, they really don’t know anything about on the biometric side in terms of the body shape, the fit profile, the fit preferences of the customers they’re targeting. And so we’re using data to ease that friction so that the brands can actually target people based on their fit.

 

Haniff Brown: And so we’re seeing some really interesting stats and behaviors. And one of the biggest things that we’re seeing is a generational gap. Typically, our average customer today is 22 to 24 years old and she, because it’s majority women right now, she has sort of grown up in an environment where there’s not a mistrust of technology, where there’s not concerns or so forth around data protection. And so we’re getting very little friction from the Gen Z/millennial market.

 

Haniff Brown: And one of the biggest things is that they’re saying, “Look, if I can interact with this platform for three to five minutes out of my life and you guys are going to connect me in this very unique way to brands, that’s a value exchange and I’ll sign up for it any day of the week.” And when you frame it like that to them, there is basically no friction. And for us, we have to be very upfront around the data we collect, the fact that they’re signing up and giving us this data. But the biggest takeaway for us that is once there’s a real perceived value exchange, issues around data and data privacy and protection—especially for that Gen Z/millennial market—really isn’t as massive versus other generations and age groups where there I think is still a larger mistrust of data and technology.

 

Carol Spieckerman: That’s interesting. So you’re saying the awareness is there. It’s not like they’re blindly saying, “Oh yeah, I trust you. This is cool. I’m in.” You’re saying they’re very aware and they’re still opting in.

 

Haniff Brown: Exactly. So we expected about 30% to opt-in. We’re seeing numbers at 80 to 90% based on the demographic are opting in. But they understand by opting in, they expect the value exchange, right? So it’s one of these things that if that value exchange isn’t perceived clearly by them, then yes, there are issues around, “Well, what am I doing? Am I giving too much? What will you use it for?” Once you can clearly articulate that, you can break down a ton of barriers in terms of what they’re willing to sacrifice and their perception of data transparency.

 

Carol Spieckerman: Well, I think too though, when you’re looking at your business as kind of a very self-contained ecosystem, that’s one thing. And I love your terminology, talking about value exchange. I think that’s something that every retailer should just really be thinking about, like, what are they truly giving of value back for what they’re asking? But when you look at a platform like Amazon to where it goes so much further and there really isn’t the full awareness of how far it goes, I think that’s where the scrutiny is really starting to flare up and perhaps for good reason, because again, Amazon is not just a retailer. So when you’re talking about Amazon, it goes way beyond just a conversation about retail and privacy.

 

Haniff Brown: I totally agree. They don’t like to be surprised is sort of my biggest takeaway is that yes, they know that that’s happening. They’re signing up for it, they’re signing up for Ring security at home, all that stuff. But the minute that you say to them stuff like, “Okay, well, we’re actually using it to track something else,” that’s when the red flags go off and then they start to perceive the entire system negatively.

 

This conversation first appeared on the Jan. 27 episode of the Retail Rundown.