Amazon Is Now Buying Data Directly From Consumers

Consumer data which has always been at the heart of Amazon’s business model, is now being institutionalized with Amazon’s new Shopper Panel, turning buyer’s data into a pay-to-play commodity
3 min read
data buying by amazon

Leverage third-party merchants’ sales data Amazon’s new program: the Amazon Shopper Panel, was recently launched as Amazon’s newest attempt to gain access to consumer purchasing data trends. Users will be compensated for sending in pictures of at least 10 paper receipts of purchases made at non-Amazon-owned establishments on a monthly basis ($10 for 10 receipts).

The program was rolled out against the backdrop of increased scrutiny of Amazon’s use of consumers’ purchase data. Jeff Bezos testified in Congress in July, and may be facing similar legislative review in the EU due to misconduct in using third-party sales data.

Amazon put out the following statement to explain its investment in consumer data procurement:

‘Amazon works with brands of all sizes in order to help them gain tools, insights, and data to enable them to be successful in our store. But our store is just one piece of the puzzle. Customers routinely use Amazon to discover and learn about products before purchasing them elsewhere. In fact, Amazon only represents 4% of U.S. retail sales. Brands therefore often look to third-party consumer panels and business intelligence, and many segment-specific data providers, for additional information. Such opt-in consumer panels are well-established and used by many companies to gather consumer feedback and shopping insights. These firms aggregate shopping behaviors across stores to report data like average sales price, total units sold, and revenue on tens of thousands of the most popular products.’

Source: Amazon Advertising

What will Amazon do with consumer data?

Amazon plans on leveraging this particular ‘consumer research panel’ in order to improve and optimize:

Amazon Prime video content offers options tailored to consumer sensibilities. product variety and selection.

Whole Food Market product varieties, and offerings.

Marketing trends and preferences that will inform advertising algorithms that improve consumer-product suitability.
Amazon has increased spending on developing its advertising department, growing 44% YoY in Q1 of 2020, hitting a record of $3.91 billion in earnings from advertising dollars alone.

Summing up

As a company that has experienced exponential growth, Amazon has always understood the value and power of consumer data, especially when collected from third-parties. It is only now, due to legal entanglements, that Amazon has decided to come forth and openly ask and compensate consumers for their shopping data. At $1 a receipt and millions of Amazon users slated to opt-in to the program, Amazon will pay a hefty price for these consumer insights, which will provide Amazon with an ROI beyond calculation. Concretely understanding consumer preferences and desires is the key to success in everything from retail and entertainment to marketing, and Amazon knows it.