With New Patent, Amazon Will Collect As Much Customer Data As Google

A day after Amazon announced it would jump head-long into the bricks-and-mortar grocery business by agreeing to buy Whole Foods Market for $13.4 billion, reports from earlier this week about a new patent issued to the company are starting to make more sense. The patent, which was first reported by the Verge, is for wireless technology that can effectively block customers in Whole Food’s retail locations from “showrooming." "Showrooming" is the practice of using retail locations to test out products before buying them online - a practice that Amazon, by making it easy to comparison shop on a smartphone, helped pioneer.

In its report, the Verge focuses on how the technology will help the company solve a problem that Amazon itself helped create – a problem that has plagued virtually every other traditional retailer.

"Systems and methods for controlling online shopping within a physical store or retailer location are provided. A wireless network connection may be provided to a consumer device at a retailer location on behalf of a retailer, and content requested by the consumer device via the wireless network connection may be identified. Based upon an evaluation of the identified content, a determination may be made that the consumer device is attempting to access information associated with a competitor of the retailer or an item offered for sale by the retailer. At least one control action may then be directed based upon the determination.”

But the technology described in the patent also raises serious concerns about the company’s plans for vastly expanding its capacity to collect and store customers' data. As MarketWatch’s Theresa Poletti reports, with this added capability, Amazon may soon be gathering as much data on its consumers now as Alphabet’s Google Inc.

Stephen DiFranco, an executive-in-residence at the Plug and Play Tech Center in Sunnyvale, Calif., offered a few disturbing hints about the scope of Amazon’s data-collection capabilities in an interview with MarketWatch.

“[The technology] 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 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 while some customers might balk at the prospect of shopping in a store where literally every single action and preference is being recorded, investors don't seem to mind.

Whole Foods’ Market’s largest competitors lost a combined $32 billion in market capitalization yesterday after the announcement. Sell-side analysts have long been calling for a stronger management team to step in and take control of Whole Foods after years of chronically weak earnings and sluggish stock performance. Amazon’s stock also climbed 2.4% on the news, helping it slough off broader weakness in the FAAMG contingent.

Amazon, which already operates a grocery-delivery service in select markets, announced its plans for entering the bricks-and-mortar grocery business late last year when it opened its first small-format grocery store. At the time, the company said it could envision expanding to 2,000 stores. One of the store's most widely publicized features was its use of automation and AI technology to eliminate check-out lines and allow customers to freely walk out with their purchases. But following the latest revelation about Amazon’s big-data tactics, investors should hope the ecommerce giant also plans to address the more prosaic flaws plaguing Whole Food’s business: Namely, that, as stagnant wages and rising rents force consumers to cut back on spending, the “Whole Paycheck” image will likely continue to alienate shoppers.

Comments

a Smudge by an… noless Mon, 06/19/2017 - 02:07 Permalink

Naw, this doesn't come close to the info Google can gather. This Amazon thing only responds to your behavior in their store. Google knows nearly as much as Amazon will inside their own store.

I don't even see how this was patentable. Various businesses and institutions have been redirecting traffic from a requested source to an "approved" source since "proxy servers" were all the rage. I think this puts us right around 1995.

In reply to by noless

HenryKissinger… (not verified) NurseRatched Mon, 06/19/2017 - 05:35 Permalink

If I don't bring a cell phone to the store will they still let me in?you woudl be directly sent to the TSA/Homeland room for cavity search... and "enhanced" interrogation...or you can volunteer to get an RFID tag under your skin, then it is ok, you will even get an AMAZON PRIME free suscription for a year if you get the TAG

In reply to by NurseRatched

jaxville DavidC Sun, 06/18/2017 - 22:31 Permalink

  I use Amazon to check for new releases from artists I enjoy as well as to seek out new products.  That is about it.  I haven't bought a thing from them in over a year now.  If Amazon was the last retailer of food, I would garden or starve before buying from them.  Rather spend my money locally or find the actual distributor or manufacturer of something I am interested in.  Why should some book banning kike get one nickle from my pocket?

In reply to by DavidC

GooseShtepping Moron Sun, 06/18/2017 - 20:50 Permalink

That's it. I'm done with Amazon. I won't be renewing my Prime membership as it was largely a waste of money anyway. You supposedly get free two-day shipping but the items take 4 or 5 days to arrive anyway. Now I won't be shopping there altogether.

WestVillageIdiot GooseShtepping Moron Sun, 06/18/2017 - 21:10 Permalink

I use Amazon only as a last resort.  I used to use them quite a bit, but I found I was too frequently receiving junk.  The most blatant instance of this was when I ordered Mach3 razor blades.  The blades that arrived looked like the real thing, were in the same packaging, but were definitely not the blades I am used to.  The blades that I received for Amazon were hardly sharp to begin with, and dulled almost immediately.  There is no question that these blades were not of the quality that I get when I buy blades at a store like Target or Wagreens.  That pissed me off.  I have had other items that were clearly not quality controlled.  I would rather pay more, pay in cash, and not be tracked.  That puts me in the minority among the people I know.  Then again, I have found time and again that running outside the herd is almost always the right way to run.  The herd will hate you when you choose not to go along with the herd.  The more wrong the herd is, the more they will hate you for not joining them. 

In reply to by GooseShtepping Moron

TheRunningMan WestVillageIdiot Mon, 06/19/2017 - 09:19 Permalink

I'm with you on that.  I prefer to to buy local, though I occasionally use Amazon when I can significantly exploit them for price or if I need an item quickly that cannot be obtained locally.  It does seem that the Amazon pricing advantage has been diminishing over time and I can often beat them at local retailers.  So far I have not encountered any counterfeit items...sounds like I have been lucky!  The trouble with herds, if your not the one out in front leading, you'll follow the ass in front of you right off a cliff.  

In reply to by WestVillageIdiot

Herdee Sun, 06/18/2017 - 20:49 Permalink

Pay cash as much as possible. Uncle Sam wants to know what you wipe your ass with while your on the toilet. Nice bunch of government perverts.

TeethVillage88s Sun, 06/18/2017 - 20:50 Permalink

What would John Locke Say?
What would Adam Smith say?

- What would last 200 years of Enlightenment Philosophy Say about US Govt, US Central Bank, Western Europe, Western Europe Central Bank? WB, IBF, BIS?

- Calvinism? (Hard Work forever no matter the Govt or Religion? I'm totally guessing here)

TeethVillage88s Centerist Sun, 06/18/2017 - 21:36 Permalink

-GooseShtepping Moron is an 'old-timer' on zerohedge... I'm not sure what he is saying here or if it is on the mark.

- Age of Enlightenment was a time of Invention, Industrial Advancement, the spread of information, the spread of science

So you can see how I an caught in the middle

What could he have meant?

- Enlightenment could have been led by an Elite, a people with Titles and Lands, a people who wanted bigger profits, bigger revenues, more sovereignty, more power as individuals who already had a big taste of lands, wealth, revenues

Well?

- Every time is full of people who are businessmen, the business class, the capital class, the entitled class... those granted favors by the Kings, lords, barons, or others like the church

Don't forget that State Capitalism is very dominant today, Crony Capitalism, Quid Pro Quo Legislation,...

In reply to by Centerist

warsev Sun, 06/18/2017 - 21:01 Permalink

In other words, Fry's Electronics, Best Buy, et. al are screwed. "We match internet prices" will take them to their graves. When I'm in Fry's I frequently go online on my phone to get the Amazon price, which Fry's will match. Sometimes saves bucks. Now, Amazon can offer a price that will seriously undermine Fry's every time. Wow. This means the end of internet price matching in bricks-and-mortar stores.

truthalwayswinsout Sun, 06/18/2017 - 20:59 Permalink

I am going to give you deep deep inside information on Amazon. Amazon has had nothing but trouble for the past 2 years in running its core business.  They can't keep the computers up and they can't figure out how to fix things. Simple program fixes a first year computer science major can do in a day take months and months to fix.It took 5 months to fix an upgrade they did on the print routines for shipping products after they are sold; they screwed up the update and it broke the system. It is just one line of code that needed fixing but it took 5 months; so to ship you had to jump through hoops and instead of taking 10-15 seconds to ship it took 2-3 minutes per order.They recently have been ripped off massively in scams related to selling on Amazon. They then decided to fix the issue and if you do a certain type of upgrade they make you do a more complete identification application. The only problem is you go from selling to being totally cut off from selling and the people who do the application are incompetent and in India so you cannot reach them with problems. They claim it takes 3 days to approve you but that keeps being pushed out to 10 days a few seconds after you apply. Oh and when you talk to them about why not do the application first and let the vendor keep selling and when the application is approved then do the upgrade and don't shut anyone down; there is no comment.Their entire online catalog is capable of being manipulated and destroyed if someone desires to do so. They have been told about it but refuse to address it or fix the issues.There is a lot of hype but the real Amazon is getting worse- very worse- and hardly a week goes by when another work around must be done because IT JUST DOESN'T WORK.Hype them all you want, they are falling apart at the seams.

GooseShtepping Moron truthalwayswinsout Sun, 06/18/2017 - 21:09 Permalink

It sounds like you work for them or contracted with them. I have never worked for Amazon, but my experience in retail and my ability to discern what's going on behind the scenes leads me to conclusions similar to yours. There is no way Amazon's business model is anything other than junk. They are destroying well-established retail practices and replacing them with garbage, to the detriment of all.

In reply to by truthalwayswinsout