Whole Foods offers Amazon more opportunities beside food

Amazon’s bold acquisition of Whole Foods signals that it intends to be a major player in the grocery sector, but the $13.7bn deal also brings other opportunities for Amazon to exploit its technological advancements.

Enhanced data

Amazon is a leader in collecting, storing, analysing, and processing online consumer data to improve personalised shopping experiences for consumers. For example, the ecommerce giant uses predictive analytics to evaluate previously purchased items, products on consumers’ wish lists, and products consumers have reviewed, to recommend additional items that are suitable for that user on their homepage or through personalised emails.

Despite having a wealth of online data on consumers, the Whole Foods acquisition will enable Amazon to broaden the data it can use through gaining a much better understanding of offline consumer shopping habits within Whole Foods’ 460-store portfolio.

Amazon was awarded its patent ‘Physical Store Online Shopping Control’ on 30 May 2017, which details a system that prevents consumers from comparing prices instore by watching online activity conducted over its Wi-Fi network (if the consumer chooses to connect). The patent also allows Amazon to capture consumer’s location in real time and the collection of consumer data, including (but not limited to) account numbers with other retailers (such as loyalty account details), consumer profiles, and historical purchase information.

Amazon could potentially use this concept in Whole Foods stores to gain a greater understanding of how frequently each consumer shops in store and to track shoppers’ physical navigation to understand the aisles and categories that they shop most frequently in. Amazon will have the potential to target and market products while consumers walk down a certain aisle, for example, via sending a text or email notification of newly stocked products or ranges. This will enable the ecommerce giant to use Whole Foods stores to build consumer profiles just as they do online, as its point of sales checkout systems will log purchases against traffic patterns. 

However, despite the potential benefits this level of consumer information can offer, consumers can bypass this by either not being connected to instore Wi-Fi or by using a cellular network, which limits the amount of data that can be captured for analysis. Moreover, if consumers are continuously bombarded with notifications, or shopping assistants abuse how they track consumers’ movements instore, shoppers may perceive this as an invasion of privacy, putting them off purchasing products instore in the future.

Potential to trial wallet-less payments in the future

Amazon unveiled its physical self-service grocery concept store Amazon Go in Seattle in December 2016. The 1,800ft² store holds a wide range of grocery products, such as ready-made meals, fresh bread, and locally made chocolates. The store tracks consumer purchases through computer vision and machine learning technologies.

Despite the store blurring the boundaries between the online and offline world, it is currently in a beta stage and can only be used by Amazon employees. Once the Seattle store is capable of going public, as Amazon continues to test out the technology and irons out the issues experienced, there may be an opportunity to integrate its own Go concessions within Whole Foods stores in the future.

These concessions would likely be located near the entrance of Whole Foods stores as shoppers would be able to simply tag their smartphone to enter, select on-the-go food items they want to purchase and then walk out of the store without needing to wait in line. Once consumers leave they will automatically be charged on their Amazon account.

Push consumers towards replenishment technology

With the acquisition, Amazon will gain a greater food and grocery proposition and will be in a much stronger position to push this through its artificial intelligence (AI) devices Amazon Echo and Amazon Dash Wand, especially as grocery items are highly suited to regular replenishment and online orders. Consumers could potentially use these devices to order food and grocery items from Whole Foods (users can only use these devices to purchase directly from Amazon currently) either for instore collection or home delivery.

In addition, there will also be an opportunity for Amazon to allocate shelf space for its AI products instore. This will further boost the popularity of devices such as Amazon Echo and encourage consumers to use these for wider everyday use.