Data helps marketers understand customers better and create personalized experiences. Using information from different sources gives you a complete picture of your customers and reveals opportunities you might miss otherwise.
As customer behaviors change and privacy rules get stricter, businesses need to be smart and responsible about how they collect and use data.
This article explains three types of data: first-party, second-party, and third-party. You’ll learn the benefits of each type and why collecting your own data is so important. We'll also look at how Shopify's unified customer data model helps businesses segment customers in useful ways to create better, more relevant shopping experiences.
Understanding first, second, and third-party data
When brands want to deliver a seamless, unified experience, each data category serves a purpose:
| Data type | Definition | Example | Benefit |
|---|---|---|---|
| First-party | Collected directly from customers | Signups, website visits, purchase history | Highly accurate |
| Second-party | Shared partner data | Joint campaigns | Extends reach |
| Third-party | Bought from vendors | Market reports | Broad audience data |
- First-party: You collect this information directly from your customers—what they buy, how they shop, and their preferences. It's reliable and respects privacy rules.
- Second-party: Comes from working with other trusted businesses. It helps you understand similar customers and creates opportunities to work with these partners.
- Third-party: It gives you a big-picture view of markets and trends. It helps you find new potential customers.
The secret is to collect, unite, and process all three data types in a single unified system such asShopify. This ensures that whether customers shop online, in your physical stores, or through partners, everyone is working with the same accurate information, and no insights are lost in gaps between data collection systems.
Here is more information about each type.
First-party data
Definition
First-party data is information your business collects directly from your customers. It includes data from your online store, in-store purchases, loyalty programs, and other customer touchpoints.
A report from Deloitte found that 61% of high-growth companies are shifting toward first-party data for their personalization strategies. Since first-party data is relevant and accurate, it helps you predict future purchasing behavior.
Examples
- Website activity: What pages customers visit, what they click on, and what they interact with on a retailer’s website
- Purchase records: What customers buy, how often they shop, how much they spend
- Customer engagement: Email signups, survey answers, customer service conversations
- Multiple channel data: In-store purchases, pick-up information, mobile app usage
Benefits
- More accurate and trustworthy since you collect it yourself
- Gives deeper insights into customer preferences and behaviors
- Lets you create personalized experiences across all shopping channels
- Gives you direct control over data storage and privacy protection
Usage
- Segmented marketing campaigns: Email sequences or remarketing ads that address specific customer cohorts.
- Product development and merchandising: Use real-time customer feedback and sales patterns to optimize inventory, product assortments, and pricing strategies.
- Customized experiences: From tailored website homepages to personalized shopper journeys in physical stores, first-party data powers seamless experiences that elevate brand loyalty.
- Analytics and forecasting: Integrate first-party data into advanced analytics tools or data lakes, enabling more accurate demand planning and business intelligence.
Second-party data
Definition
Second-party data is another company's first-party data that they share directly with you. For example, a streaming service might sell customer data to a customer electronics retailer to help them find people likely to buy smart TVs.
Shopify Audiences is a key feature that works with second-party data concepts. It pools anonymized shopping data across participating merchants to create "lookalike" audiences of potential customers with similar buying behaviors.
Examples
- Partnerships: A high-end fashion retailer might share anonymized customer purchase data with a luxury hotel chain to identify overlapping customer segments.
- Co-branded initiatives: Two complementary brands—like a sports apparel company and a fitness subscription service—share data to launch joint marketing campaigns or loyalty programs.
- Data sharing: A new coffee brand might target customers who have purchased similar specialty coffee products from other Shopify brands.
Benefits
- More trustworthy than third-party data because you know exactly where it came from
- Helps you reach new customers while still following privacy laws like GDPR
- Creates meaningful partnerships with brands your customers already like
Usage
- Team up to target the same customers across both businesses
- Create special deals or products that work for both companies' customers
- Use a local partner's knowledge when entering new countries or regions
- Find potential customers similar to those who shop at complementary businesses
Third-party data
Definition
Third-party data is collected from many different sources and sold by data companies. It's like buying a general market report rather than getting specific information directly.
Third-party data has some limitations, like broad consumer pools and information that becomes quickly outdated. It’s also becoming harder to use as privacy regulations tighten and ad platforms phase out cookies.
But, combined with first- and second-party data, it can be helpful to reach the right customer base.
Examples
- Basic information like age, gender, and income level from data sellers
- Internet browsing habits collected across many websites
- General market trends and research from industry reports
Benefits
- Covers a huge number of potential customers
- Helps fill gaps in your understanding of big market trends
- Useful when you need a broad view of what's happening
Usage
- Running large advertising campaigns to find completely new customers
- Adding extra details to your existing customer information
- Comparing how you're doing against competitors or the overall market
The importance of collecting first-party data
As fewer websites track users across the internet, companies need to collect first-party data directly from their customers instead of buying it from others.
Here's why this is important:
- More accurate customer data: Information collected directly from a company's website, app, or loyalty program shows exactly what customers want, not what someone guesses they might want.
- Better personalized experiences: When a business knows what products someone has looked at or which emails they've opened, they can send more relevant offers. For example, a customer who often looks at running shoes might get early access to new shoe releases.
- Building trust: When customers share their information directly with a business, they know what they agree to. Being clear about data usage builds trust and keeps companies out of legal trouble.
- Smarter follow-ups: Companies can remind customers about items left in shopping carts or suggest products based on what customers have looked at before.
In simple terms, collecting first-party customer data gives businesses better information to create personalized experiences that customers appreciate, while respecting privacy choices.
Little Words Project started as a digital-native bracelet maker and quickly expanded into brick and mortar.
Once they began welcoming customers into their physical locations, the team recognized a huge missed opportunity: they were not capturing the same level of first-party data from store visitors as they’d gotten from online shoppers.
By implementing an email-capture process and integrating it with their existing Shopify ecommerce data, Little Words Project achieved the following:
- Over 20% increases for in-store email capture rates (up to 95% at some locations)
- Significant improvements in personalized marketing and targeted follow-up
- A single, holistic view of each customer’s purchase history across channels
This improved Little Words Project's customer relationships, providing valuable insights that increased loyalty, helped bring back past customers, and encouraged more word-of-mouth recommendations.
Using their customer data instead of information from outside sources or marketplaces, Little Words Project gained better control and accuracy when analyzing shopping patterns and sending offers or new product announcements.
Shopify's core customer data model: The key to great customer experiences
Shopify unites all your customer information in one place. It tracks how people shop with you online, through emails, on social media, and in physical stores. This complete picture helps you understand who your customers are and what they want.
With all customer information in one place, brands can:
- Group customers based on what they actually do: Shopify lets you sort customers using details like what they've bought, what they look at, how much they spend, and more. This helps you create messages that feel personal for each group.
- Find opportunities using ShopifyQL: ShopifyQL is a tool that helps you quickly search through customer information to find useful patterns. For example, you could find customers in a certain target locality, such as the state of California, who bought hiking gear more than once in the past six months, then create special offers just to attract them during prime hiking season in the region.
- Create personal experiences for many customers at once: Once you've grouped your customers, you can give them special discounts, set up automatic marketing messages, and suggest products they might like. This makes each customer feel important, even if you’re marketing to thousands at once.
Reach more people with your customer data
Shopify Audiences
Shopify Audiences uses data from millions of Shopify store purchases to help you find the people most likely to buy your products.
This makes your ads up to twice as effective, getting you more sales for each dollar you spend. The algorithm constantly updates your audience lists with fresh data, cutting your customer acquisition costs by as much as half and helping your business grow faster.
Happy Hippo, a company that makes bath products that started in a kitchen in Canada, saw great results using Shopify Audiences. When they used it to help find similar customers on Facebook, they got $4.70 back for every $1 they spent on ads. Even better, 86% of these customers were brand new to their store, showing how good the tool is at finding new buyers.
“Shopify Audiences is a huge benefit for Plus merchants. It has helped lower customer acquisition costs so our investments can stretch much further with Facebook ads.” Adam Biel, CEO and Lead Product Designer at Happy Hippo
Shopify Segmentation
Segmentation lets you group your customers based on who they are and how they shop. By understanding different customer groups, you can send them messages that feel personal and relevant.
With Shopify’s powerful segmentation tools, you can:
- Create unlimited customer groups without restrictions
- Watch as your segments update automatically when customer information changes
- Target your best customers with special offers that drive more sales
- Use ready-made templates to build segments in just two clicks
- Filter customers by location, purchase history, email behavior, and more
Brands see real results, like Airsign, who saw 30% of targeted customers make a purchase after sending personalized messages to specific segments.
Shopify Collabs
With Collabs, you can find new creators who love your products, easily send them samples, and track all the sales they help generate. The app even handles payments automatically through your regular Shopify billing system, saving you from having to track everything in spreadsheets.
The healthy ramen brand immi shows how powerful these partnerships can be. Using Shopify Collabs, they built a community of 432 ambassadors who genuinely loved their products. These partnerships generated over $200,000 in sales and more than 4,400 orders.
What's interesting is that their best-performing affiliate had just 10,000 Instagram followers, proving that finding creators who truly connect with your brand matters more than how famous they are. With Shopify Collabs, you’ll be able to find those big fans, no matter their size.
Marketing automation
Our marketing automation tools bring together your customer data, automatic messages, and marketing plans in one system.
Whether you're sending automatic emails, creating popups tailored to specific visitors, or sending text messages, everything works together smoothly. Each interaction with customers is consistent and based on what you know about them.
By using Shopify's unified customer data system, you'll be able to create memorable, relevant experiences for your customers—no matter how they choose to shop with you.
Shopify's marketing toolkit includes everything you need to grow your ecommerce business: email marketing, lead-capture forms, automated workflows, customer segmentation, and live chat that converts browsers into buyers. All these tools share the same data, making your marketing more powerful and saving you valuable time.
For example, when someone fills out a "Join our mailing list" form, you can automatically send them a welcome email with a discount, greatly increasing the chance they'll make their first purchase. Or you can set up a system that sends personalized messages to customers who browsed specific products but didn't buy.
Collect, manage, and use customer data better with Shopify
Effective marketing relies on using different types of customer data. Your own first-party data is the most valuable because it comes directly from customers.
Shopify's unified customer data model seamlessly integrates all three data types. This makes it easier to group customers, personalize their experiences, and make smarter marketing decisions. Using Shopify’s tools, you can build stronger customer relationships while respecting privacy rules, helping your business grow even as the market changes.
FAQ on 2nd party vs 3rd party data
What is the difference between second-party and third-party data?
Second-party data comes directly from trusted partners who share their first-party data with you. Third-party data is purchased from external vendors who collect information from different sources you don't have a direct relationship with.
What is an example of second-party data?
A second-party data example would be when a travel booking site shares customer vacation preferences with a luggage brand to target people planning trips. Another example is when a coffee roaster and a gourmet food company exchange customer purchase histories to cross-promote their complementary products.
Who is considered a 2nd-party payer?
In the context of data, a second-party payer would be a business partner who pays for access to your first-party data, or vice versa.
What are 1st, 2nd, and 3rd parties?
- First parties are businesses collecting data directly from their own customers through websites, purchases, and interactions.
- Second parties are trusted business partners who share their first-party data with you through direct agreements.
- Third parties are external data vendors who collect and sell information from various sources without having direct relationships with the consumers or businesses involved.
