Amazon's $13 billion bid to buy Whole Foods is a big-data deal that begs the question: What's the future of the digital grocery store?
Talk about augmented reality! Perhaps the most strategic aspect of a loaf of bread these days is its digital personality as a machine-learning client. That’s one of many intriguing questions people are asking in these days of the Internet of Things.
Amazon showed its deep thinking about these issues in an earlier tech announcement of a supermarket without a checkout line. The web giant is known for thinking big, focusing on how to grow its ever-expanding business more than how to make it profitable.
In this case, it seems that activist investors Jana Partners added some motivation by putting pressure on the Whole Foods board, according to a Reuters report. Jana reared its head in 2015 when it tried to get Qualcomm to split up its chip and patent businesses. The mobile SoC vendor wisely kept its divisions together but did go through a gut-wrenching reorg.
The Amazon/Whole Foods combination makes sense in some ways. The two companies seem to have a similar customer base of upwardly mobile, digitally savvy consumers. In its race to grow, the online retailer has been expanding its brick-and-mortar presence.
I suspect that a deal of this size at least initially just adds heft to an already big holding company. But long-term, I can imagine techies at Amazon looking at ways it could make the upscale grocer more smart and connected, especially to the Amazon data farms.
The use cases for a digital grocer are often described in terms of consumer convenience. Smart refrigerators automatically order favorite foods when they are low, delivered someday by drones. In such futuristic scenarios, the only thing humans seem to need to do is eat, like the characters in the movie ‘Wall-E’.
But the motivations for the vendor are more about owning the customer and increasing sales. With the rise of web services, we’ve become almost immune to privacy concerns when our vendors are mining our every transaction for insights.
Today, we jokingly call the upscale grocer Whole Paycheck. If the Amazon deal goes through, we might have to come up with a broader, more ominous nickname.
Amazon is increasingly seen as a rival to the brick-and-mortar giant, Walmart. Interestingly, both have significant data-mining operations. My neighbor is an engineer at Walmart Labs, a hefty operation that opened up several years ago with offices across the street from YouTube.
It’s a strange time. Will Google feel forced to get into groceries? Will Facebook beat a path to 7-Eleven? There’s no shortage of ideas for how IoT and the cloud could transform our lives — hopefully for the better. I’d love to hear yours.
— Rick Merritt, Silicon Valley Bureau Chief, EE Times