Commentary
Amazon Starts Disrupting Grocery Store Loyalty Programs!
- by Cory Treffiletti , Featured Contributor, August 30, 2017
Amazon and Whole Foods was a shock to many people (myself included), but now that the dust has settled, it’s clear this marriage is step towards the disruption of another age-old category — grocery loyalty programs.
Amazon just announced that, starting in September, Amazon Prime customers will get discounts at Whole Foods. That means your chia seed-encrusted, kale-covered, organic tuna salad sandwich will be a little bit less expensive if you’re an Amazon Prime customer, further expanding the litany of benefits you get for being a paying member of the world’s most important loyalty program. This is probably just the first of many benefits customers will see from this merger, and it opens the door to so many other great customer benefits.
What it also does is radically change the way you look at loyalty programs. To date, most grocery store loyalty programs have been focused on discounts at the register in exchange for some basic information that allowed for online and in-store targeting and delivery of coupons. This category of shopper marketing has been evolving quickly over the last 10 years from end caps and online to further delivering value to customers. Growth has come because of the wealth of data that is aggregated through these programs, but no program has ever really had the breadth and depth of insight that Amazon Prime has. Prime customers provide insight into all kinds of purchases across all categories and channels.
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Amazon Prime effectively has the single most robust view of the customer of any company in the world, even beyond that of companies like Walmart, Target and Safeway. Each of these companies routinely works with other companies to share data and activate insights but Amazon has a self-contained program with more info and more opportunity and a channel that extends beyond its borders into all areas of the web. So what does that mean for their customers and how does that affect your loyalty program experience?
Loyalty cards offer short-term value but they could offer more long-term benefits now as well. What about insights derived from inferring lifestyle choices and offering benefits on health insurance or life insurance based on this information? What if Apple partnered with Amazon to provide insights from the Health Kit to be used alongside the purchase info that Amazon has and the two companies share those insights to create more loyal and healthy customers? You could quickly get beyond the confines and category of the grocery store and expand loyalty to be an entire lifestyle of loyalists across multiple categories and connections.
Amazon certainly knows this and is finding ways to use these insights constructively. It is a notoriously quiet company so it isn’t likely to broadcast what it has planned down the line, but it is also a collection of really smart people and they know what they’re doing. They don’t take action for the sake of action; it’s always calculated and smart.
There was a funny meme posted by The Onion a couple of weeks back that essentially joked about how Amazon will eat everyone’s lunch over the coming years. They may, in fact, do that, and at the same time give you a discount on said lunch. They even make the lunch for you, deliver it to your door and eat it right there in front of you.
It’s going to be a fun run to watch!
For Amazon, the in store discounts could also be a way to maintain loyalty, and renewals, to Prime. After awhile, some membership churn would be expected as people consider if they use Amazon online enough to justify the Prime fee. The in store discount, used widely by other retailers, can be a reason for someone on the fence to join Prime or renew.
And Cory, one more thing - you folks at Oracle are well positioned to follow this. Your Datalogix people must be all over this.
This article goes pro-Amazon very fast. And really does not address, what (if anything) will currently outdated grocery loyalty programs do to change into consumer-centricty. (albeit years late to the game).
I use Ralphs(kroger) and Vons/Pavilions(safeway) the most... but both are appaulingly untargeted and unstrategic. The title, "Just For You" is complete misnomer. Neither program taps into account profile data, since they dont ask for any lifestyle info. Their account is just contact info... years worth of missed data. Therefore they miss the boat on targeting to lifestyle, life stage, family type, health/diet restrictions and the changes over time based on products purchased and offers used.
Basics of data are not attempted in these loyalty programs (built in yester year, and left as set-it-and-forget-it). So, obviously, cool things are inconceivable to these companies who are supermarket-only in scope. Nothing in my online shopping cart (if they even have one) tell me how much added sugar is in the items I've picked, and marry that data to my Fitbit data to say how many hours of cardio are needed to burn off. Or how about an elderly person's glaucoma medication picked up at pharmacy, maybe a reco to get tested for diabetes. You know, helpful info! Guess i'm just tired of wading through irrelevant coupons, which all expire on (same old, same old) Tuesdays at midnight.
The competing programs, all developed as either custome or off the shelf solutions from other vendors, will either be upgraded or die. Welcome to the world of software.
Au contraire. Amozon econimically saves time, amplifies the consumer experience with wider options, delivers value, more effeciently, to customers. What's not to like? It's all about the economies of scale, about focusing data to benefit all around. Competition is a good thing. There is nothing wrong with grocery brands failing, falling short, even vanishing. Adapt or give it up, I say. -mnh
Who do you trust to squeeze your tomatoes ? Invest in cardboard, too. Recyclable as they may be, people are not recycling and trash companies on down and up are not recycling. The backup of delivery trucks in front of buildings and stopping traffic on small streets is uncalled for. The more, the not merrier. Again, this is not efficient shopping and harmful to the economy; just a lazy convenience with the exception of the elderly, etc.