Amazon, one of the largest online retailers, is thriving on the recommendations that it gathers from consumer data. The company relies on sophisticated algorithms to analyze consumer behavior and purchase patterns that it can use to tailor what it offers to a particular buyer.
There is no doubt that Amazon is using consumer data to drive sales and attract potential customers to its platforms. However, it remains under debate how “ethically” the company is performing this task. For example, you must have heard of Amazon collecting user opinions through the shopper panel. This is sort of an online review aimed at understanding how buyers want Amazon to improve and it is one of the many ways through which the company is gathering consumer insights.
Is there more to this? Definitely! Amazon is driving sales through a recommendation system as well. When you visit the Amazon website or open its mobile application, you will notice that the platform automatically starts making suggestions about the products that you may be interested in buying. These recommendations are based on the purchase history of a particular buyer and many other factors.
Now you may be wondering how Amazon is collecting the information that it is using to drive personalized ads and marketing messages. Moreover, the biggest concern is that: Is this even legal?
There are a lot of parameters that Amazon must take into consideration to ensure that it does not land into hot waters concerning illegal use or access to consumer information. Although no such case has been reported recently, many still consider it ethically wrong to collect and use buyer’s data and argue that it violates privacy rights. Moreover, there are strong reasons to believe that the algorithms Amazon uses to analyze the data may perpetuate biases and create unfair competitive scenarios for other similar retailers in the market.
How Is Amazon Keeping Consumer Data Collection Legal and Safe?
Amazon is, afterall, a leading name in the work of e-commerce. It knows the bits and pieces for collecting and utilizing consumer data. Therefore, the company takes a number of steps to ensure that the practices it follows for gathering consumer information are not illegal.
The company has always been transparent about its data collection strategy. Moreover, its privacy policy clearly outlines what type of data is collected and how it is used. It also offers consumers to opt out of this program completely if they do not feel safe.
Once the data has been collected and stored, Amazon takes necessary steps to protect it. The company relies on up-to-date encryption to prevent unauthorized access to user data. It also ensures that data is only retained for a specific period of time (as long as it is necessary) and then permanently deleted.
Currently, Amazon is strictly adhering to two of the basic data protection laws i.e. General Data Protection Regulation in the European Union and the California Consumer Privacy Act in the United States. As per these laws, Amazon has to obtain explicit consent from the consumers before it can collect any of their information and must delete the data immediately if the users choose.
Is Consumer Data Really Helping Amazon?
Amazon is able to shape offerings to consumers as per recommendations using the data that it collects so we safely say that it is helping the e-commerce giant a lot.
Moreover, Amazon can make more informed decisions about how to price a particular product and how to market it after looking into the consumer data. It can look into the demand and supply gap as well as other factors to adjust prices to better match with what the customers are willing to pay. This leads to larger volume of sales and higher profits for the company.
In conclusion, the collection of consumer data and its subsequent analysis helps Amazon drive sales and improve its offerings to the clients. The company is now employing advanced machine learning technologies to analyze consumer behavior on the website and keep track of their purchase patterns. Although there are certain ethical concerns related to this matter, there is no doubt that Amazon has successfully used data-driven marketing strategy to make its name stand out in the long list of online retailers around the globe. Since the company’s approach to data collection takes into account transparency, compliance and security, it is helping Amazon stay out of any legal trouble and continue to use consumer data to boost sales.
