Whole Food’s grocery stores combined with Amazon’s data and digital expertise is an amazing story. Most of the early analysis has focused on how Amazon will bring new life to the in-store retail experience. What many have overlooked is the access that the acquisition provides to the data and behaviors of affluent consumers that Whole Foods caters to and how this data might be used to improve customer experiences and increase profits both online and offline.
Data is In the DNA
Amazon has always focused on a different type of customer experience that reached beyond low prices. The Amazon experience is streamlined. From millions of products, Amazon helps their customer find the right one through powerful onsite search, product recommendations, and community driven product reviews. Once the purchase is made, customers can check out with a single click and get their items fast, even the same day. These innovations were driven by data that showed Amazon how to improve the customer experience to maximize conversion rates online.
As many have speculated, Amazon will likely bring a data-driven focus to Whole Foods to streamline and improve the experience in stores. With e-commerce representing only 8.5% of US retail sales in the first quarter, brick-and-mortar stores are clearly not dead, but they must evolve and even become part of the digital experience to thrive over the long term. A critical part of this transformation is the use of data to improve customer experiences continuously. For grocery, this means extending the store through online ordering, home delivery, and order online for in-store pickup options, but also by creating a more efficient in-store experience through locally optimized selections and store layout optimization.
The Convergence of Online and In-Person Customer Experience
What many have missed is the opportunity that Amazon likely sees in the data that Whole Foods collects about customers and purchases. Whole Foods customers are high-value consumers with high disposable incomes. By offering discounts to Amazon Prime members, Amazon will be able to use the Prime membership to connect in-store purchases to online behavior and vice versa. There are likely connections in this new data set that Amazon plans to mine to understand trends and to further personalize experiences for individual shoppers. For example, your grocery cart could tell Amazon what offers you might be interested in when you visit Amazon.com.
The winners of future in retail will be the companies that seamlessly integrate digital technologies like streamlined online selling, machine learning, and mobile devices into their experience and use the data being generated to drive a better and more integrated customer experience. In this world, data is the competitive advantage and the more data that a company can gather and continuously make sense of the bigger their advantage will become. Amazon is the largest online retailer for a reason, and now they have a chance to show that their methods and their focus on data can drive a digitally enabled retail to the next level.