- Less than 10 percent of retail sales in the U.S. occur online, according to eMarketer.
- Amazon gets more information on physical in-store shoppers, which it can use to target its loyal customers.
- It can also sell the data to other advertising partners so they can target customers better.
Amazon's deal with Whole Foods may give it something that has remained a mostly mystery to the Internet retail giant: Information about the behavior of people who shop in stores.
This matters because brick-and-mortar, while wounded, is still overwhelmingly dominant. By 2019, e-commerce will still only make up 9.8 percent of U.S. retail sales according to eMarketer. While Amazon may have a lot of online sales data, it lacks information on brick-and-mortar shopper behavior.
Amazon does have a few physical stores like Amazon Go grocery stores and Amazon Books bookstores. But with the $13.7 billion Whole Foods purchase on Friday, it will now get insights on consumers at 431 Whole Foods real-world locations. A Jeffries report on the deal noted one of Amazon's motivations was receiving "greater data and touch points with its consumer to help broaden the data set it can utilize," in particular real-time information and better profiles of its loyal users.
"They can certainly get a lot of data online, said Matthew Davis, co-founder and vice president of marketing at mobile marketing firm Reveal Mobile. "What they don't have yet is how their customers are shopping in offline locations and purchasing goods in the offline location."
Retail shoppers act differently from online shoppers, said Larry Light, CEO of marketing consulting company Arcature. Whole Foods customers want the experience of buying at the store, where Amazon's typical online shopper may be more into efficiency, he noted.
"Amazon's strength is using modern technology to serve its customers better," Light said. "The underlying driver is a passion for customer focus and understanding what the customer needs are. Anything that can add to that database can help them be more effective."
The data can be used to recommend certain products when customers pull up their mobile app or they may get a push notification with a suggestion on their phone when they walk into a Whole Foods store, Reveal's Davis said.
The data can also valuable for advertising, said brand marketing technology firm You & Mr Jones CEO David Jones. Whole Foods stores are in more affluent areas in neighborhoods that skew younger, according to The NPD Group. About one in four millennials bought an item from Whole Foods last year, the report noted. Amazon could use the data for itself, or sell the information to other companies.
"The typical Whole Foods buyer is more affluent," Jones said. "It is in the kind of space where the world is going, more natural and organic. It is a very desirable demographic."