• by Ray Schultz , Columnist, February 9, 2023

Ecommerce brands can easily combine technologies to achieve marketing efficiency.  For instance, they may use Google Analytics to track behavior and Mailchimp for email marketing and integrate those tools.

But that interdependence may not work when a negative shock occurs, the authors claim. What kind of shock? GDPR, for one. 

In that case, those “very interdependencies are an obstacle on the path toward compliance,” the authors write in How GDPR Changed European Companies’ Tech Stacks in Harvard Business Review (HBR). “Their efficiency has become a liability.”

The issue also affects U.S. firms facing the California’s Privacy Rights Act, Virginia’s Consumer Data Protection Act and the Colorado and Connecticut Privacy Acts will become operative on July 1, 2023.

The research authors conducted an empirical study of 400 companies. 

Firms that had “built their websites for efficiency, electing tightly integrated services from closely linked suppliers, suffered disproportionately when GDPR came into force,” they write. “In contrast, companies that deployed new combinations of technologies not extensively used before performed much better.”

Case in point: “An EU-based firm that used YouTube and WordPress may have adopted Google Analytics to track its customers’ activity. The three components are interdependent, so that the firm faced more complex and costly adaptation to GDPR.”

In contrast, firms that spread the components across multiple clusters performed better after GDPR…than firms which did not increase their dispersion,” the study states. 

There are several approaches that work well in a stable environment, but not in the face of negative shocks. 

One is increased use of local interdependence. Another is reliance on a single component cluster. Then there are those that depend solely on central components. 

The HBR articles notes that a firm like Expedia can choose digital components from firms like Google and Meta. 

“Expedia is affected not only by the interdependence between Google’s and Meta’s components but also by the interdependence between Google’s components and other components that Expedia has not chosen,” the authors write. 

They add, “Those interdependencies influence the functionality of Google’s components (e.g., whether Google Analytics can properly draw data from Shopify’s shopping cart solution), as well as Expedia’s options (e.g., whether Expedia could benefit from adopting Shopify).”

The research was authored by Natalie Burford, Andrew Shipilov, and Nathan Furr.