A recent New York Times article about Blippy and Swipely had this to say about the potential threat these firms pose to Amazon:
Data about its customers’ buying history is one of Amazon’s secret weapons. If customers start publishing their Amazon purchase history on sites like Blippy and Swipely, other retailers could peek at that data and take away Amazon’s edge.”
My take: This comment reflects a fundamental [:)] misunderstanding of Amazon’s competency, as well as a general misconception about data.
Having the data isn’t Amazon’s competitive strength. Any firm can obtain transactional data about consumers, and there are plenty of retailers that offer multiple types of products, and therefore, theoretically, have the ability to see customers’ purchase history across a range of product categories.
Amazon’s competitive strength is (or has been) its ability to use the data. To determine in real time, while a customer is interacting with the firm online, what other products may be relevant, or at what price level the customer might respond to.
Having access to Amazon’s customer purchase history does another firm little good if that firm can’t analyze the data and respond at the right time.
This is analogous to something that’s a bit closer to the world that I follow, the financial services industry. Despite having offered online bill pay for years now, the percentage of banks that use bill pay data to identify and drive customized marketing offers is in the single digits. More recently, with the increased utilization of debit cards, the ability for a bank to understand the purchase patterns of its customers is greatly increased.
All of this relates to a concept I’ve been hawking for a few years now: Sense-and-respond marketing.
Having data helps marketing sense (i.e., better understand propensity to buy, where a customer is in the decision life cycle, etc.). But without the ability to respond (which might be an offer, or it might simply be guidance in resolving a question or issue), the data only goes so far.
If Amazon is sweating the Blippy threat, it’s only because they’re smart enough to not underestimate any potential threat to their competitive advantage. But other firms have a long way to go to replicate what Amazon can do, if they had the data handed over to them.
Reminds me of this very relevant scene from Seinfeld:
“See, you know how to take the reservation. You just don’t know how to hold the reservation. And that’s really the most important part of the reservation, the holding. Anyone can just take them.”
RESERVATION = DATA
TAKING the reservation = COLLECTING the data
HOLDING the reservation = USING the data
As you say, Amazon is smart in understanding what Blippy could do to their business model (latest issues notwithstanding). Not that Blippy by itself could do something, but with an API, they will attract other players who may have a better understanding of what to do with data (Google for ex)
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Re: “But without the ability to respond (which might be an offer, or it might simply be guidance in resolving a question or issue), the data only goes so far.”
Agreed! The amount of data piling up at, for example, primary financial institutions is extraordinary while the demonstrated ability of those same institutions to use that data to say, cross-sell their own products is, based on the number of different credit cards in peoples’ wallets — limited!