Amazon’s market share rose to 50% by the end of 2021. It collects around 1 exabyte of purchase history data from their consumer base. And they use Big Data technology to optimize your experience, their supply chain and more.
When you go to buy something online, chances are you are buying from Amazon. The company is among the leading e-Commerce platforms. Their market share came in at around 47% in 2020 and rose to 50% by the end of 2021. Amazon built its company off of the ‘everything under one roof’ model. They offer everything from online shopping, Amazon Pay, Amazon Pantry, Amazon Web Services, and so much more.
With so many options for consumers it can be easy to be overwhelmed with all the products and services. How can consumers find anything when tasked with combing through millions of products? The answer is Big Data. Amazon leverages consumer data to drive sales, personalize product feeds, and implement dynamic pricing.
In order for Amazon to make data driven decisions, they have to collect it first. All in all, Amazon collects around 1 exabyte of purchase history data from their consumer base. To put it in perspective, 1 exabyte is only about 10,000 miles short of reaching the moon. They have a wide pool to collect from considering that Amazon Web Store fields about 1.1 million requests a second. Still, purchasing information isn’t the only type of data they collect.
In broad terms, Amazon gathers consumer information from three main places. First, the data you provide when you use it’s services. Second, the data it finds automatically. This can be information about your phone type, location, etc. Lastly, it gathers information from third parties. This is anything like credit checks, purchase info, and returns.
While these are the general methods, there are more nitty gritty details about data collection laid out in Amazon’s 4,400+ word privacy notice. It notes that Amazon may automatically collect your IP address, login credentials, computer location and errors when logging in. Beyond this, Amazon can also collect your app preferences, cookie details, and URLs that you click. It even knows if you hover over a product, when you scroll, and when you click.
The point of all this data collection is simple. It’s to sell you more things. Amazon puts your personal information to work to personalize your product feed. On a larger scale, it uses this info to get a general picture of shopping trends, top sellers, and consumer behavior. This data is working for them. The Amazon Web Store represented around $13 billion of the total $21 billion in revenue brought in my Amazon in 2020.
So, Amazon has the data, but how did they get it? The reason why they are the leaders in storing, processing, and implementing data is because they have some of the most effective data collection programs. Moreover, the company uses predictive analytics for targeted marketing. This in turn, increases customer satisfaction and boosts consumer loyalty. Here is how they do it:
1. Personalized Recommendation System. Amazon pioneered the use of a specific software to tailor personalized recommendations to consumers. It is called the Collaborative Filtering Engine (CFE). The company generally adheres to the principles of behavioral analytics. And it drives 35% of annual sales for the Amazon Web Store. As a system, the CFE works by analyzing the purchasing patterns of customers from recent buys, wishlist items, and shopping cart saves. It also pulls information from products that have been reviewed and rated by the consumer as well as their most searched products. All of this information trains the CFE algorithm to make better predictions about user likes and dislikes. It will even recommend additional and relevant purchases to customers. For example, if you buy a dog leash, it might recommend a collar or dog tag.We all know Amazon is notorious for it’s speedy delivery times. Now, Amazon customers can get same day delivery shipped to their door in as fast as five hours. This is made possible through Amazon’s licensed anticipatory delivery model. Essentially Amazon utilizes consumer data to predict what they are going to buy and when. They then estimate when they will require them. The predicted items then get shipped to a stockroom determined by consumer location so they will be ready to fly out of the door when a user orders them.
While Alexa is the classic virtual assistant, Amazon also offers additional virtual assistants such as the Echo and Echo Show. All of these products include speakers and/or a camera. These are used for several purposes like getting weather alerts, news updates, or even ordering cat food. This is all a simple voice command away. Still, what many of us don’t realize is that our voice commands are being recorded. These audio recordings are taken in and uploaded to Amazon’s servers. The explanation from Amazon is that it helps train speech recognition to be more effective. However, for many customers this quickly becomes a privacy concern. Amazon stores the order information and uses it to predict future purchases for that specific user. These will then be suggested on the Echo home screen.
Here is how it works: the feature is enabled when a user places their first order and enters their shipping and payment info. If they choose One-Click ordering, then they have 30 minutes to decide on a purchase in the future. After that, the product is automatically charged and shipped based on the user info.
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