Those of us who have visited Amazon’s new ‘Fresh’ stores have been impressed by the ‘Just Walk Out’ technology.
It does make you wonder why we still patiently (or impatiently) queue up to pay for things in stores. Hundreds of customer studies have consistently shown that the biggest customer frustration when shopping (or in hospitality venues) is the paying part. Why wouldn’t technology make lives easier in this department, when technology makes so many other things easier?
Foodservice has had ‘pay and go’ technology for a while. Convenience shopping is meant to be quick. This brings ‘frictionless’ into physical retail.
You need to be an Amazon Prime customer to get access to the store. There are over 10 million Amazon Prime customers in the UK. Future store openings will surely be in places with a high density of Prime customers.
But the biggest advantage Amazon has is not necessarily the technology. They have that now. And it will improve. No, the biggest advantage Amazon has now is data.
The power of data
Amazon can link my food purchases to non-food purchases I make on the Amazon website, building up an even better understanding of me.
- I buy a BBQ on a Monday for delivery on the Thursday – Amazon sends me incentives to buy burgers, beer, sausages
- I buy gym equipment/sports equipment – they ping me offers on healthy foods too
- I buy toys or items for a pet – they send me offers for dog/cat food
Amazon has all transactions logged to a specific individual – their name, address, email address, telephone number (offers can come through multiple sources), interests and a pretty good guess at their age.
Knowledge and data becomes the biggest competitive advantage in the food industry, not price, not range, not NPD, not promotions, not home delivery.
Amazon will know what food products I buy on a regular basis. Amazon can send me offers to keep me loyal… or to encourage me to ‘trade up’.
Endless opportunties
It also knows what products are typically bought with other products. If I buy product A, but not product B, when most people like me buy Product B with A, then send me an offer to try Product B. This offer voucher will be paid for by the manufacturer of Product B.
If I suddenly stop shopping at the Amazon Fresh store it can check if I am ok (they will know if I am on hols because I will have bought shades and sun cream from them)…. that I am not bedridden (they could paracetamol in a courier via Amazon Pharmacy). Incentives are sent to re-engage me.
It can link meal occasions to events – so if you download a movie, Amazon can offer linked deals of food and drinks. Amazon can even offer food and drinks based on the type of movie downloaded. Amazon will get it occasionally wrong, but machine learning will mean it will learn from mistakes.
Amazon knows what its customers are reading too so if a customer buys cookery books, it can offer a discount on food and kitchen equipment, cook books and the food required to cook the recipes.
It ‘saves’ your purchases so that you can ‘repeat purchase’ again in one easy click.
Amazon could be capturing so much of a household’s shopping that it could reach a stage where consumers pay a subscription direct debit of £150 pcm and it covers music, food, TV/movies, reading material/books. It is the ultimate in subscription lifestyles – you pay a fixed fee, and Amazon delivers everything.
The opportunities are endless. But it all comes down to data.
Tom Fender is development director at TWC
