Why Does Amazon Buys Data Directly from Consumers?

With Amazon’s new Consumer Panel, which turns buyer data into a pay-to-play commodity, consumer data, which has always been at the heart of Amazon’s business strategy, is now being institutionalized. Make use of sales data from thirdparty retailers.

Amazon’s latest attempt to obtain access to customer purchase data patterns is the Amazon Shopper Panel, which was just released. Every month, users will be rewarded for submitting photos of at least 10 paper receipts from non-Amazon owned locations ($10 for 10 receipts).

The program was launched against the backdrop of additional scrutiny of Amazon’s usage of customer data. In July, Jeff Bezos appeared before Congress, and he may face similar parliamentary scrutiny in the EU as a result of his mishandling of third-party sales data.

To justify its investment in consumer information procurement, Amazon issued the following statement: Amazon deals with businesses of all sizes to provide them with the tools, insights, and data they need to succeed in our marketplace. However, their shop is only one part of the problem. Customers frequently visit Amazon to read about and discover items before buying them elsewhere. In truth, Amazon only accounts for 4% of all retail sales in the United States.

As a result, brands frequently turn to third-party consumer panels and business intelligence, as well as a variety of segmentspecific data suppliers, for extra data. Many organizations utilize opt-in customer panels to acquire consumer feedback and purchasing information, and they are well-established. These companies compile statistics such as average sales price, total units sold, and revenue for tens of thousands of the most popular goods across several retailers.

HOW DOES AMAZON USE CUSTOMER DATA?

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Amazon intends to use this ‘customer research panel’ to enhance and optimize the following: Amazon Prime video programming caters to a wide range of user preferences.

Amazon.com offers a wide range of products.

Amazon-Whole Food Market has a wide range of products and services.

Advertising algorithms that increase consumer-product compatibility will be informed by marketing trends and preferences.

Amazon has increased expenditure on building its advertising department, which grew 44% year over year in the first quarter of 2020, reaching a new high of $3.91 billion in advertising revenue.

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CONCLUSION Amazon has recognized the importance and power of customer data, particularly when obtained from third parties, as a firm that has witnessed exponential development. Amazon has just recently chosen to come forward and openly seek for and reward consumers for their purchase data owing to legal entanglements.

Amazon will pay a premium price for these consumer insights, which will offer Amazon an ROI beyond computation, at $1 per receipt, and millions of Amazon customers are expected to opt-in to the initiative. Understanding consumer preferences and aspirations are critical to success in a variety of industries, including retail, entertainment, and marketing, and Amazon understands this.

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