Tech Bytes & Insights

AUTHORS

Brandon_Mills-10924_headshot_small
Brandon Mills
Manager,
ZS Associates
Jason_Bell_11099_headshot.jpg
Jason Bell
Associate Principal,
ZS Associates
John_DeSarbo_thumbnail
John DeSarbo
Principal,
ZS Associates
Kyle_Heller_thumbnail-1
Kyle Heller
Associate Principal,
ZS Associates

Latest Posts

The ‘Big’ Reason Why Amazon Bought Whole Foods

Posted by Brandon Mills on Mon, Aug 07, 2017

shutterstock_195236759.jpg

In case you haven’t heard, Amazon is buying Whole Foods for $13.7 billion in cash. The common initial reaction to this news (mine included) was that this was just Amazon being Amazon—another example of Jeff Bezos and his company being the great digital disruptor by extending its reach into yet another traditional industry. Amazon started with books and then moved on to one industry after another. Now it was apparently time to take on the grocery business.    

As I sat around with friends and coworkers debating what Amazon had up its sleeve, one thing became clear: Amazon is all about big data. Amazon has an unparalleled data store of online consumer buying behavior for its estimated 300 million users, which it feeds into its best-in-class recommendation engine to increase average order value. It also feeds this data into its other offerings, like its Dash buttons and Prime membership, to increase customers’ frequency of purchases. 

However, how consumers spend money online and in store can differ dramatically, and Amazon doesn’t yet have a grasp of its users’ offline buying behavior. So it’s Whole Foods to the rescue. More than 60% of Whole Foods customers are also Amazon Prime members, according to a survey by Morgan Stanley. Another survey found that over 80% of Whole Foods shoppers also have bought on Amazon in the past year.

By acquiring Whole Foods, Amazon got its hands on bricks-and-mortar behavioral data and grocery category data that has eluded the e-commerce giant for so long. Amazon now can combine the two data sets to get a more complete picture of buying preferences, and then expand that picture through better tracking of in-store behavior and spending. I won’t pretend to know exactly what Amazon plans to do, but there are numerous options for how the company can leverage the integrated Amazon-Whole Foods data asset through data science and machine learning to drive profitable growth:

  • Sell more stuff online. Amazon can use insights from what and how consumers buy in stores to improve its targeted recommendations and promotions when those consumers are shopping online.
  • Sell more stuff in stores. Consumers tend to be more impulsive when they’re shopping in stores—a fact that Amazon can use to its advantage by being smarter about what products it stocks in stores and where it puts those products, and even by pushing real-time promotions using beacons and sensors.
  • Sell more stuff later. Just as it does online, Amazon will be able to track in-store customer activity to understand what customers have viewed, and for, how long, and whether or not they made a purchase—all of which will fuel their ability to retarget consumers later.
  • Identify high-value customers. Both Amazon and Whole Foods are known for attracting consumers with higher incomes and more discretionary spending, so linking the two together will provide even greater opportunities to cater to these high-value customers.
  • Identify at-risk customers. Knowing more about online and offline buying behaviors will let Amazon better identify customers who are more likely to churn based on their recent activity so that the retailer can tailor targeted promotions to them to keep them active.

So, how can your business achieve the growth potential that Amazon has unlocked? To get started on the journey to creating a more complete customer—or in the B-to-B world, partner—data asset, consider these questions:

  • What information do I have access to today?
  • What additional information do I wish I had?
  • How might I capture or acquire that data without compromising the customer experience?
  • What actionable insights would I like to gain from the data, and do I have the capabilities and tools to generate those insights?

Many of my clients have struggled with similar issues around customer data visibility, and while we don’t all have $13.7 billion in cash lying around to buy a solution, it doesn’t mean that there isn’t one within our reach.


RELATED CONTENT 

BLOG POST: Three Lessons From Amazon Prime Day for B-to-B Sales and Marketing Leaders

BLOG POST: The Evolution of Buyer Behavior in B-to-B Technology


 

Topics: big data, Sales data, High Tech, Amazon, B-to-B, whole foods, online retail, e-commerce

Click here to subscribe to Tech Bytes & Insights
AUTHORS
Brandon_Mills-10924_headshot_small
Brandon Mills
Manager,
ZS Associates
Jason_Bell_11099_headshot.jpg
Jason Bell
Associate Principal,
ZS Associates
John_DeSarbo_thumbnail
John DeSarbo
Principal,
ZS Associates
Kyle_Heller_thumbnail-1
Kyle Heller
Associate Principal,
ZS Associates
SUBSCRIBE

Get 'TECH BYTES & INSIGHTS' Updates

Subscribe to receive email notifications whenever new blog posts are published.

×

Subscribe by Email

Search by Topic

see all