Amazon craves data on shoppers’ habits
NEW YORK - Why is Amazon spending nearly $14 billion for Whole Foods? One reason: People who buy yoga mats and fitness trackers on Amazon might also like grapes, nuts and other healthy items at the organic grocery chain.
In short, the deal stands to net Amazon a wealth of data-driven insights into how shoppers behave offline — insights that are potentially very lucrative.
To be sure, there are plenty of other benefits to the combination. Amazon will derive steady revenue from more than 460 Whole Foods stores; it can also introduce robots and other automation technologies to cut costs and improve the bottom line. But ultimately, Amazon wants to sell even more goods and services to both online and offline shoppers — including stuff they might not even realize they need.
Amazon has been quiet on its specific plans so far, but analysts are enthusiastic about the possibilities.
“This will be a fun time for Amazon,” said Ryne Misso of the Market Track retail research firm in Chicago. “They are introducing a whole new set of shopper profiles that span grocery stores and durables.”
Amazon is a pro at using data on past shopping and browsing to prod you to buy more. The home page, for instance, offers quick access to recently viewed items and suggests products “inspired by your shopping trends.” Amazon sends emails about price cuts on items you’ve searched for but haven’t bought — yet.
Brian Handly, CEO of the mobile analytics firm Reveal Mobile in Raleigh, North Carolina, said that while Amazon doesn’t necessarily have better artificial-intelligence capabilities than its rivals, it has scale in the number of shoppers and variety of businesses it has.
Whole Foods can help by giving Amazon a better understanding of what people do at physical retail stores, where 90 percent of worldwide retail spending still happens, according to eMarketer.
Amazon could learn whether a particular customer tends to come once a month to stock up or make smaller, shorter visits more frequently. Wi-Fi hotspots in stores might collect unique signals emanating from smartphones to figure out which aisles customers spend the most time in — same with sensors on product shelves, something Amazon is currently testing at a convenience store in Seattle.
“They will break that data down to build stories about their consumers,” Misso said.
All this might feel creepy, but it’s something Amazon already does well online.
Larry Ponemon, who runs the Ponemon Institute privacy think tank, said he personally would find tracking of his self-described unhealthy eating habits “very creepy.” But he doesn’t expect any consumer backlash because Amazon and Whole Foods have both earned a high level of trust and loyalty.