How Does Amazon Use Your Data?
Data and privacy have become greatly talked about topics in the last decade. However, its only been recently that apps and websites have had to ask you whether or not you are happy to receive targeted ads, based on your data.
Amazon is one of the big companies under fire for data use.
Amazon collects your data, and uses it to their own advantage. They can collect data on every customer who uses their site, while theyre using it. They collect information on what you buy, what you look at, and even the address you use for shipping. You might be wondering why they need that last one, but, in truth, Amazon can take a guess at your income level by knowing your address.
The collection of Amazon user data only serves to strengthen their sales ability, traffic, and success. But how do they use this data they collect specifically, and what can you do to turn this to your advantage?
In order to have a successful business, Amazon not only needs to attract new customers, they also need to keep customers coming back.
Though Amazon was reasonably unique as an online marketplace for a long time, there is a growing level of competition, as more companies offer next-day delivery, cheaper prices, and a wide variety of products.
There is also a growing unrest with Amazon as a corporation amongst the younger generations. Gen Z are considered a problem for Amazon, as they are more likely to shop in an in-store location.
So Amazon has to tempt their customers back in a smart way. And whats smarter than using their data to target them perfectly?
With Amazon user data, they can construct what is called a 360-degree view of their customers as people. This means they can fit their customers into a demographic, such as employed female aged between 18-45, living in a rented apartment, with an income of under $25,000 who have recently had a baby. Then, Amazon can recommend exactly what the customer wants and needs by looking at others in this niche what they buy and what they review highly.
If you use Amazon, you are likely familiar with the emails they send recommending you products. If you ever think its incredible how they recommend you just what you want, its because theyre collecting your data and making assumptions about you based on it.
This collection of your data allows Amazon to tempt you back to buy from them again and again, boosting their sales and revenue. And, it works. 35% of Amazons annual sales are made through this method by using targeted recommendations to encourage impulse purchases.
Amazons wealth of user data means it is the perfect place to put ads. Amazon knows its users buying habits exactly; they know which ads will work.
Their information is so specific that they can target you with ads exactly when you need them. For example, if you bought soap from Amazon, Amazon knows when you will begin to run low on soap based on the information they know about the product. Enter new companies running ads for their soap, convincing you to buy it, just when youre running low on soap.
For obvious reasons, plenty of companies want to get their ads up on Amazon, using their data on you to target you to buy their products or services.
Due to their data collection, Amazon is such a good place to advertise that it is the third-largest digital ad platform in the US. It is even close to taking on Google and Facebook, which have always been assumed to have a duopoly on online ads.
Amazon claimed 8.8% of digital ad spending in the US in 2019. Their net sales that year in advertising sales was $2.72 billion.
And all from the collection of your data!
Amazons prices change all the time. You might have seen this for yourself. One day you check the price of a vinyl record, and its $25; the next, its $23.47.
The reason for this is that Amazon collects data on how many times you visit a product and whether or not you buy it. They can use this data to tweak the price and convince you to buy it or get more money for it when you finally do buy it.
This is called price optimization and accounts for growth in Amazons income between 2016 and 2019 of 143%.
Amazons frequently changing prices not only mean they can make more money on your purchases, but it also means they can increase traffic to their site.
If you are frequently checking in on products to see if the price has dropped, you boost Amazons traffic. Plus, there is also always the possibility that, while you are on the site, checking the price of an item, Amazon can tempt you into buying something else.
What should you do about Amazons use of your data?
Plenty of people feel uncomfortable about Amazons use of their data and want it to stop. This is a fair reaction, but there is another angle to view their usage from. Tapestri believes that you should make money from your data, not big corporations like Amazon.
It is Tapestris belief that the consumer should be the focal point in the data supply chain. In their view, consumers should be compensated for the use of their data especially considering how valuable data is to corporations like Amazon.
If this sounds good to you, check out Tapestris website and learn all about the app that allows you to make money from the sale of your data to companies like Amazon.