Amazon made major headlines with their $14 billion acquisition of Whole Foods and here is the primary reason behind that big purchase.
Earlier this month Amazon acquired Whole Foods for just under $14 billion to get the popular grocery chain and its customer base under their wing. On the surface, this move looked like it was a significant one because it presented a major inroad for them to take over a new section of the e-commerce world. While Amazon Fresh gets off the ground, it would be Whole Foods to boost the coffers and attempt to lower prices at Whole Foods all the while avoiding any drastic job cuts.
But taking it to the next level, Amazon’s acquisition of Whole Foods is more about gathering customer data than anything else, according to data scientist at Dataiku, Kenneth Sanford, via CNBC.
Sanford explains that Amazon should be able to use the customer data it already acquires through its site, Alexa and Echo and use the data it gets from Whole Foods customers in order to provide even more quality service for the consumer.
Through this data acquisition, Amazon should be able to create a grocery store list for the consumer based on past behavior. Instead of running low on milk or eggs, Amazon can use the data acquired to predict when the consumer will run out of various products and order and ship them automatically to the consumer.
It’s like having a personal shopping assistant doing all the work so you never have a situation in the morning where you have the cereal but you don’t have the milk or you have peanut butter but you don’t have the jelly.
"“They’ll be able to say, ‘I know you have these three things in your cabinet, I’ll send you these two additional things, based on the fact that you haven’t had it in three weeks and you liked it last time,'” Sanford said. “They’re going to be able to create meal bundles at a level that, say, [the] Blue Apron’s of the world could never really do,” he added."
Unlike most products people purchase on Amazon, groceries are easier to predict. You can tell when someone who buys a gallon of milk will need another gallon. Compared to predicting when someone will need a new iPhone case or pair of pants is a bit tougher to predict.
All of this leads to enhancing the user experience for the consumer and increasing the chances that they will be a frequent buyer and loyal to the brand.
That’s why Amazon shelled out $14 billion for Whole Foods. It wasn’t just for the stores, it was for the people inside the stores.