Disruptive Amazon Fresh stores tackle customer identity problem
Amazon Fresh isn't a physical store, it's an online shop, according to Jonathan Haywood, Head of Operating Model Redesign, Loyalty & CRM at Holland & Barrett.
Over the past few weeks, Amazon has opened two locations in London.
In a LinkedIn post, Haywood notes that Amazon Fresh is doing a good job at disrupting some of the classic problems retailers face, including customer identity.
“For pureplay retailers, identifying customers is pretty easy. Cookie data stored from browsing and mandatory passing of data when a customer places an order (you always give your name, address, email), allows pureplays to get a good feeling for the simplest of customer metrics like frequency of shop, retention and conversion,” he writes.
Bricks and mortar retailers, however, do not have this luxury and so revert to the common options for "capturing customers": footfall counters, loyalty cards, e-receipts, beacons, app check-in, linking bank/payment card data, using third party loyalty schemes etc.
“None of which get you to full data coverage, all of which cause some level of friction for a customer and create more left field data sources to cram into a customer master dataset or single customer view, creating complexity for architecture and governance,” Haywood says.
“Of course, all of these options allow a brand to offer more propositions to customers, but if we were really honest with ourselves, data capture is king and high participation rates is the key metric for healthy data capture techniques.”
Amazon, therefore, has created a bricks and mortar proposition that looks and acts like a shop, with some differential customer propositions that draw people to it (no queuing etc).
But underneath all that, it’s an online shop that guarantees 100% customer data capture. “I can't think of another bricks and mortar store where you're not allowed to enter unless you've downloaded the app, filled out your personal details and synced your bank details.”
Haywood adds: “Bravo Amazon, in a single flick of the wand you've resolved physical store customer data capture. Some might argue that "not everyone will want to download the app”. Amazon will argue that not everyone wants a loyalty card or an e-receipt.”
He says that, over the next few months at the Amazon Fresh London outlets, we will see a rapid rotation of inventory, not only predicated on top sellers, but on repeat rate, basket expansion and anchor/destination SKUs for some of the smaller customer cohorts.
“What's really exciting is the camera data they can harness. Suddenly they've got physical browsing and conversion rate data at individual customer and product level in store,” Haywood comments.
“It is in all aspects of data, an online shop, with all of the additional data facets only online can give, (if only they knew the shop the customer last came from).”
He concludes: “Commentators/critics were initially wondering whether the Amazon Go concept was a gimmick.”
“I think everyone agrees this is here to stay and I would completely agree, but not because of the operational savings for checkout staff or perceived queue time benefits for customers. It'll be the data Amazon are after.”
“We all know that companies do best when they stick to what they know, focus on their core offering and don't branch out too far. I'd argue that through data, Amazon are doing just that.”