Amazon snapping up one of the biggest grocers in America – Whole Foods shows the online retailer’s appetite for calculated risks. With this buyout, Jeff Bezos has also scored another major win. Besides getting a toehold into physical stores and making it a direct competitor to Wal-mart, Amazon got an added bonus – data.
Industry experts point out that one of the key highlights of the acquisition is that Amazon had lacked information on a brick-and-mortar shopper behavior. While the online retail giant has access to petabytes of online sales data, the company knew little about the behavior of an in-store shopper. The Whole Foods buyout for $13.7B purchase has given amazon valuable customer data.
Here’s why Whole Foods acquisition was in some parts driven by data:
- Tech companies are hungry for data. Case in point — social media behemoth Facebook teamed up with Dunnhumby, a grocery-data firm, to use the data to understand how Facebook advertising lead to purchases. In the same vein, Jeffries, provider of global equity research, noted that one of the major reasons was getting access to “more data and touch points with its consumer to help broaden the data set and better profiles of its loyal users”
- Whole Foods is pegged as a yuppie grocery store with urban locations and upscale shoppers. With this data at the fingertips, Amazon will birth a synergy between e-commerce and physical stores, build richer profiles of its own customers, leading to better targeting its loyal customers
- Analysts hint that Amazon could leverage data analysis and automation to pull in more upscale customers to stores, thereby bringing the operational costs down
- By marrying data from Whole Foods’ Loyalty program, Amazon can attract more shoppers with targeted deals (push notifications)
- Most of the shopping could get digitally enabled and the future would also see Amazon peddling its gadgets – Kindle and Fire from the physical stores
- Industry experts point out that currently, Google & Facebook are sitting on a wealth of data and lead the race in online advertising. With this acquisition, the online retail king can also sell the data to other advertising partners to help them target their customers better
Amazon will redefine retail landscape with technology
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Amazon-Whole Foods purchase will herald in a new wave of technology in the retail landscape. Seattle’s Amazon Go store has already tested check-out free shopping experience. Amazon Go said goodbye to check-out lines by offering a check-out free shopping experience, thanks to deep learning and the use of sensors to track what people bought in the store. With this technology, amazon could offer a seamless, frictionless shopping experience ruled by bots and algorithms.
According to research analyst Gary Bourgeault database did play a huge impetus behind the deal. By and large, Amazon walked away with three core things by clinching this deal – data, physical footprint in urban locations and a toehold in the grocery market, given Amazon’s struggles with Amazon Fresh. Amazon is a leader in cloud computing, voice-based assistants and ecommerce – by adding Whole Foods to its portfolio, it has added another solid revenue stream that will bolster the ecommerce biz.
The acquisition is in line with Amazon’s vision of businesses being driven by data, writes Bourgeault. The key is the gigantic database, that helps identify products that consumers would buy in person. “and instead of taking years and a lot of money to develop it, just buy a business that lines up with the vision its data is providing for the company?