What they know: Part 3 – Amazon

Things they know

In our bid to stay connected, our lives have been splashed over the internet like a milkshake gone bad. Free services by large tech corporations collect our personal data in return for said services. Over time, we’ve become used to this arrangement and seem to ignore the sheer level of integration they have had with our online personas.

This series aims to remind us about ‘What they know’

For Part 1 of this series, click here: What they know: Google

For Part 2 of this series, click here: What they know: Facebook

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“In general, we collect as much information as possible such that we can provide you with the best feedback”

Werner Vogels – CTO, Amazon.

One of my B-School professors used to love discussing case studies. He mentioned the famous ‘Target teen pregnancy’ case study once. If you haven’t heard, here’s the TL; DR (Too Long; Didn’t Read) version.

A man, loyalist of the Target superstore, received some coupons that were related to pregnancy and post pregnancy. To his surprise, he asked around and found that his teenage daughter was ordering products that centre around said topics and Target’s algorithm had matched her interests with coupons for baby wipes, diapers and strollers.

This story is known to a lot of marketing students. But although it was true, it does leave out some parts. You can read the ‘story behind the story’.

Target’s targeting algorithm next to Amazon is like comparing a 4-seater Cessna bi-plane to a B52 Stealth Bomber.

Amazon loves your data. More than your parents love you.

Okay maybe that’s a bit harsh.

Amazon loves your data way more.

After several tries, Amazon became a $1Trillion (that’s 1 followed by 12 zeroes) company in 2020. Each year they surprise with things like PrimeAir – their drone delivery service and Amazon Go, a high tech supermarket, that allows shoppers to buy groceries without ever having to wait in line for a cashier. These are innovations that come out from the founder’s belief of ‘fast delivery’ and ‘convenience’.

These innovations are also based on another thing: data.

LOTS AND LOTS OF DATA

When you set up an account, you enter your personal information by default, but you may not realise how extensive Amazon’s data collection is. Every time you use Amazon products and services, Amazon gathers a huge amount of data from your behavior on the platform.

Are they listening to me now?

It depends if you have a listening device at home. Or an Amazon account with Voice permissions.

Here’s the Rapid-fire on what they know:

1. Personal Details: Name, Age, Address, Postal code
2. TV & Movie preferences and history
3. Book preferences and history
4. Music preferences and history
5. Your Amazon wishlist + Cart + ‘things you’ve browsed repeatedly’
6. All the addresses you’ve sent items on
7. Favourite gift items
8. Payment account details

And if you have an Alexa

9. Voice signature
10. Family names
11. All smart devices at home
12. Electricity consumption patterns

The thing is, individually, this data might not be that impressive. But collating it in massive quantities brings out some interesting results.

Big Data: Naam to suna hoga

When data is chunked together, insights are easy to squeeze out of them. This network effect allows Amazon to take macro decisions like which warehouse to restock with new brands of coffee if they’ve seen an uptick on coffee consumption in certain zip codes.

The thing is though, they use it EXTREMELY efficiently. Keeping conspiracy theories around “Mr. Bezos and his plan to dominate the world from a secret moon base” aside, let’s take a practical look on how macro data helps their business strategy.

1. Content: Through Amazon Music, PrimeVideo and Kindle Unlimited, Amazon offers a cheap subscription to amortize the cost of expensive future decisions. Essentially, when they know Jai likes watching spy thrillers and 90s cartoons on PrimeVideo, they know that targeting relevant content to him is going to be a piece of cake.

Goal: Time. Keep me there as long as possible so Amazon becomes by default entertainment platform

2. Retail: If isn’t obvious already, they retarget ads to you. You like a rubber ducky for 50 rupees but don’t buy it? They’ll be after you on virtually every website you visit like a highly caffeinated salesman. Although this doesn’t happen much in our country, I’ve been told that you could actually be referred to “higher margin products – on purpose” allegedly.

Goal: To make you buy everything from Amazon. Plain and simple, really.

3. Retail 2: Nope. Not a glitch in the matrix. This is one of the tactics I respect as a business practice. See what works in which market and make some of your own under your name. Almost every retailer does this today – generic or in-house brands, they’re called. Amazon just dials it up to 11. What started with just batteries has now become a multi-product stable called AmazonBasics. Products are cheaper than most big brands and customers are suggested these products when browsing. Sale of these products leads to increased margins i.e. higher profit. i.e another 0 in Mr. Bezos’ savings account. (hehe, like HE needs a savings account)

Goal: To deliver similar experiences of products for cheaper prices.

4. Databases: Amazon loves collecting databases. Know IMDB? That site that gives you movie related info? Owned by Amazon (They also own BoxOfficeMojo). Heard of an Alexa Ranking? The platform that allows you to see data for different popular websites? Owned by Amazon. Goodreads? The platform that details the largest collection of books in the world? Owned by Amazon.

Goal: To know about every user’s entertainment needs  + To invest in projects that vibe best with customers through rankings

So what now?
Well, honestly, it’s tough to answer this. Unlike other platforms, Amazon actually does add a lot of value to a lot of us. The convenience element has been hard sold so well (especially after the lockdown), it’s a bit difficult to get out of the eco-system.

Still, here’s a couple things you can do:

1. If you own an Alexa, you can manage and delete your recordings
2. If you shop a lot from Amazon, you can switch-off ad personalisation

Try being selective with your order sets, don’t put in multiple addresses linked to you (on any 1 name/account) and ideally, don’t put in more than 1 payment method for transactions.

Be curious. Be safe.

See you next week.

The views and opinions published here belong to the author and do not necessarily reflect the views and opinions of the publisher.

Jai Bahal

Jai Bahal - Co-Founder @ NAVIC
NAVIC aims to educate, inform and train students, professionals and entrepreneurs about the future of communications. NAVIC has collaborated with SCoRe for its flagship course: EVOLVE – A first of its kind curriculum that discusses hyper-relevant subjects like Meme Marketing, Trolls and Bots, AI in communications and more.