As Amazon.com Inc. gears up for a much bigger brick-and-mortar retail presence with its $13.7 billion deal for Whole Foods Market Inc., it comes armed to fight the monster it created: online price comparisons.
The practice of using a smartphone to check for better prices, mostly on Amazon AMZN, +2.44% while in a physical retail store, has turned many brick-and-mortar stores -- from booksellers, electronics stores to department stores -- into showrooms for looking at products or trying them on in person, and then buying them online. It is also killing much of retail.
See also: What killed retail may also save it.
In late May, Amazon was granted a patent called “physical store online shopping control,” which, using a store’s Wi-Fi, will block requests sent to competitor websites. The patent says: “In the event that requested content is determined to be associated with or potentially associated with a competitor or an item of interest, one or more control actions may be directed on behalf of the retailer. In this regard, online shopping control may be provided on behalf of the retailer.” The patent, first reported by the Verge earlier this week, initially baffled some, but now makes sense.
In addition, the technology will let Amazon make more offers to customers while they are physically shopping, on their smartphone. However, if they access the internet using their own data plan and not a store’s Wi-Fi network, they could probably work around the blocking technology.
Stephen DiFranco, an executive-in-residence at the Plug and Play Tech Center in Sunnyvale, Calif., said that Amazon will also be able to monitor customers’ browsing on the store Wi-Fi.
“It will also triangulate your position in the store, market to you while you are in the store, and understand your behavior in the store,” said DiFranco, who previously worked at Broadcom’s Internet of Things business and led the sale to Cypress Semiconductor CY, -1.72% “If they can collect the same kind of info that they can get while I am surfing on their site, they are going to be able to deliver the same value, the same experience that I get on their site...The company that knows more about the online behavior of me, will now own this same science...while I am in the Whole Foods WFM, +29.10% retail environment.”
The positive aspect, he said, is that it will result in better, more convenient shopping experiences for consumers, with their preferences and habits known. It has the ability to turn into a real assistant for shopping. “You passed the milk, you always get milk,” your smartphone may tell you while shopping.
DiFranco said that by combining the data Amazon already has about its current customers, plus far more frequent data that comes from grocery shopping, will turn it into an even bigger giant with vastly more data. “This is jet fuel in retail analytics that no one else will have.”
But it’s also scary to realize that Amazon may soon be gathering as much data on its consumers now as Alphabet’s Google Inc. Amazon is making a huge bet that it will be able to succeed in the tough arena of brick-and-mortar retail if it is armed with better technology and huge amounts of data.