As grocery shoppers work to digest Amazon’s massive acquisition of Whole Foods for $13.7 billion, the digital storefront recently scored a victory that aims to reinforce the company’s growing investments in brick-and-mortar retail.
Amazon was awarded a patent May 30 that could help it choke off a common issue faced by many physical stores: Customers’ use of smartphones to compare prices even as they walk around a shop. The phenomenon, often known as mobile “window shopping,” has contributed to a worrisome decline for traditional retailers.
But Amazon now has the technology to prevent that type of behavior when customers enter any of its physical stores and log onto the WiFi networks there. Titled “Physical Store Online Shopping Control,” Amazon’s patent describes a system that can identify a customer’s Internet traffic and sense when the smartphone user is trying to access a competitor’s website. (Amazon chief executive Jeffrey P. Bezos is also the owner of The Washington Post.)
When that happens, Amazon may take one of several actions. It may block access to the competitor’s site, preventing customers from viewing comparable products from rivals. It might redirect the customer to Amazon’s own site or to other, Amazon-approved sites. It might notify an Amazon salesperson to approach the customer. Or it might send the customer’s smartphone a text message, coupon or other information designed to lure the person back into Amazon’s orbit.
As Amazon increasingly bridges the online-physical divide, regulators should be on the lookout for potentially anti-competitive behavior, said Jeffrey Chester, executive director of the Center for Digital Democracy.
“Amazon knows younger consumers increasingly want home delivery of grocery products and online ordering. But there are huge privacy issues,” he said. “Amazon has created a largely stealth Big Data digital apparatus that has not gotten the scrutiny it requires.”
Just because a company wins a patent doesn’t necessarily mean it’ll use it. Sometimes companies file for patents to ensure they have the option to put the idea into practice later, or to keep other companies from implementing the concept. So, a system such as the kind Amazon’s envisioning might never be rolled out. And even if it is, chances are shoppers could still get around the system by staying off the in-store WiFi.
Amazon didn’t immediately respond to a request for comment.
But the patent takes on even greater significance as Amazon has expanded its brick-and-mortar ambitions. It has launched more than a half-dozen physical bookstores, with more on the way. And with the purchase of Whole Foods, Amazon will gain control over more than 465 physical grocery stores. Which gives Amazon an enormous stake in making sure that its customers don’t look for better deals right from its own baking aisle.
The possible tie-up between Whole Foods and Amazon could vastly expand the types of grocery products consumers can buy from the online giant, with significant implications for its highly valued Amazon Prime customers, said Tom Caporaso, chief executive of Clarus Commerce, an online commerce firm.
“Amazon has now made the leap towards making quick and inexpensive grocery delivery possible for Prime members across the entire U.S., and now has a food distribution network that rivals some of its biggest competitors,” Caporaso said. “With 80 million loyal Prime customers, Amazon has an opportunity to take a larger percentage of the household budget and bring more consumers into its Prime ecosystem.”