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[24 comments]

Why Amazon is OK and Google is not

February 11, 2014

Through a special arrangement, what follows is a summary of an article from Retail Paradox, RSR Research's weekly analysis on emerging issues facing retailers, presented here for discussion.

From purely the consumer's perspective, two events came up in the news lately that have led me to the conclusion that, in general, consumers think Amazon is okay and Google is not.

One involved the buzz of stories around "anticipatory shipping" Amazon's patent — basically, using predictive analytics to anticipate consumer demand by pre-staging packed orders closer to where Amazon believes the demand will come from.

Some might argue that being able to deliver my pack of Sharpie markers the next day under my Prime subscription — simply because Amazon knows me well enough to know that in the next two weeks I have a high likelihood of ordering Sharpie markers — could border on "creepy." But somehow, Amazon received no blowback for this use of customer data. Why? Because it increases the convenience factor in ordering from them. They're using my data to get me the things I want faster.

Contrast that with the general response to Google's acquisition of Nest Labs, the maker of internet-connected smoke alarms and thermostats. Even though Nest immediately emphasized that its user data will only be used to improve Nest products, the user response appeared to be deep disquiet with the idea that Google just got access to data about when they're home and when they're not.

As a consumer, I share their concern. It's disconcerting to think that a company that values data so highly now has access to a whole new level of data about me. Google already knows a hell of a lot about all of us, and if you have an Android phone, they know even more.

So why is Amazon okay and Google not? I think it's because Amazon is using data to make my life as a customer more convenient. When they make my life more convenient, I tend to give them more of my business, and theoretically Amazon will make money from that.

Google offers services that are convenient — free Gmail, Google Docs, Google Drive, etc. — but in return they are making money by selling my data to literally the highest bidder. Maybe they are not explicitly selling my data, but using what they know about me to solicit advertising money from businesses trying to reach people like me. What's missing from that equation is my vote in what I want to receive.

Is this merely a difference in perception? Maybe.

But for retailers watching the battle of these behemoths — and who's winning the perception war and who is not — it's worth noting that even though these two companies are basically doing the exact same thing for the exact same profit motives, for consumers, one is OK and the other is not.

Discussion Questions:

Do you agree that Google is sparking more privacy concerns from consumers than Amazon? If so, what does the apparent difference say about the willingness of consumers to share their data? What lessons should retailers draw in seeking to tap shopper data?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

Which company, Amazon or Google, do you think consumers trust more with their personal data?

Comments:

I think the reason is that Amazon's motives are clear. They just want to sell more stuff.

Google's motives are sometimes hard to understand. After all, why would they drive around grabbing residential WiFi passwords? (Note: they were convicted for doing this and received the equivalent of a parking ticket in fines.)

Those kinds of activities don't engender trust, and when you add to it that they'll be monitoring the temperature in your house...well....it's a cause for concern. On the surface it seems like they're trying to understand your tastes better (she keeps the heat awfully low, for example), but it's still borderline creepy.

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Paula Rosenblum, Managing Partner, RSR Research

No. Amazon is in the World's wallet. They know purchase habits, spend fluctuations per person, names and addresses of the people you send gifts to, and much more. This is a real paradox to some. To me, Google is a place I trust more than Amazon. Amazon = take my money. Google = How can I help?

Let's be real people - you use technology and you will have your usage of technology tracked. If all this tech and privacy stuff bothers a person then they need to unplug their computers, drive old cars, and smash their cell phones.

Let's face the reality - privacy worries are over blown noise. Follow the best steps to protect your key info - SSN, card #s, etc. - by paying attention to where you share this info leveraging strong passwords.

Other than that , let this issue die off. It is getting old as retail becomes renewed.

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Tom Redd, Vice President, Strategic Communications, SAP Global Retail Business Unit

Absolutely. If you use information about me to help me and make my life more convenient, most consumers are fine with that. When you use my information primarily for your own benefit, consumers don't like that nearly as much.

Use information to help your customers and you should be rewarded.

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Bill Davis, Director, MB&G Consulting

I'm more concerned about Amazon, frankly. They may just want to sell me more stuff, but I wish they'd stop. Example: if I search for something/anything online, that exact item will come up in an ad on any site I look at after my search. And all those ads are from Amazon. Dude, leave me alone.

I have a DVR to stop ads on the telly, but I have no such tool to stop Amazon from hyping whatever to me all day long. That's wrong. What is Google doing that comps that kind of intrusion?

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Lee Peterson, EVP Creative Services, WD Partners

I think Nikki hit the nail on the head. Amazon has built more credibility using the consumer's personal information to give them a better experience than Google has.

Consider where you'd put a company like Facebook on that spectrum. I suspect most consumers don't have confidence that Facebook is using their personal information for their betterment, Google is somewhere in the middle, and Amazon is trusted.

Moving forward, this "trust equity" that brands are building (or not building) will be a key corporate asset.

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Jason Goldberg, VP Commerce Strategy, Razorfish

Let's see ... Google takes a picture of my home from space that my county uses to help assess my property taxes. Google drives down the street and takes a picture of my house so anyone can find it and see my neighborhood. Now Google buys Nest labs so that they can "help" me monitor my home, when I'm home and maybe even what's in my home.

Amazon monitors the patterns of what I purchase from them so they will have it in stock and ship faster.

What's wrong with this picture of the future? I can choose whether to purchase from Amazon; I can't get big brother Google out of my life even if I try.

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Chris Petersen, PhD, President, Integrated Marketing Solutions

Nikki's conclusions are spot on. It's all about doing the right thing for customers. Google used to develop products that customers wanted and valued and then figured out how to monetize them. Google has apparently been seduced by the data and has now "jumped the shark" with regard to customer services.

Quantitative data is invaluable in understanding the consumer and shopper landscape. It becomes invaluable when you leverage that insight to provide better service and value to your customers. The opposite is true if you use that insight to simply further your own agenda. The digitally empowered consumer will discover your true motivation and share their disgust with the world.

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Adrian Weidmann, Principal, StoreStream Metrics, LLC

There is no doubt in my mind that Amazon wins because they deliver value, every day. Google, Facebook, and other personal-data-driven entities often intrude on the user's experience often without the user's expressed permission.

The consumer is becoming more savvy and enjoys being in control of their user experience. Amazon understands that and operates accordingly. Google appears to be of the mind they know what is best for their customers. With the NSA privacy issues still top of mind, that is a dangerous position to be in.

Amazon is winning now, however, if they start sending drones over my house looking for a delivery address, I reserve the right to change my mind.

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Mark Heckman, Principal, Mark Heckman Consulting

This same argument can apply to social media. It appears a professional is likely to be reprimanded or portrayed negatively on the news for something wrong they posted on social media than receive recognition for something right they posted on social media.

This is a great article as it points out how retailers should learn from Amazon approach to using data to improve quality of service versus the other forms of data uses such as information services collecting data to sell to others.

Ed Dunn, Founder, (Stealth Operation)

What turned me off Google was their capturing everyone's WiFi passwords...then claiming that it was inadvertent. Oh, and the slap on the wrist they received afterward. I've lived Google-free for several years; the less they know about me, the better.

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Cathy Hotka, Principal, Cathy Hotka & Associates

It is not that Amazon is okay and Google is not. It is that Google is seen as a search engine and tied to everything that goes with that title. Amazon is seen as a shopping site.

In the consumer's mind, two totally different businesses.

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Mel Kleiman, President, Humetrics

I'll share data with companies I trust. With others, I'll opt out.

Ben Merritt, Senior Manager, Consultant, Sogeti USA LLC

This is a very insightful observation, and it supports my contention that vast numbers of people who should be "salesmen" are simply slick characters with tricks to ostensibly "help" me - but primarily by helping themselves. Notice the quote about Nest labs: "Even though Nest immediately emphasized that its user data will only be used to improve Nest products." So nest products wants to have better products! Well, bully for them. Jeff Bezos works day and night to make things better for ME! If you don't see the mental difference, YOU are part of the problem, not the solution.

Amazon is in a lonely, but satisfying position. Really, REALLY focussed on the customer, not on what THEY are doing.

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Herb Sorensen, Ph.D., Scientific Advisor TNS Global Retail & Shopper, Adjunct Senior Fellow, Ehrenberg-Bass Institute

Yes, in that Google avows the aim of organizing ALL data in the world while Amazon is just trying to understand what you buy from them. While both can be intrusive, the latter is clearly an opt in as you do not have to buy from Amazon. Regardless of intent on the part of Google, they are still gathering information about you without explicit opt in. It appears these concerns will only grow with more "breaches" of consumer information. The upshot of this is that retailers should be careful to disclose, ask permission and work hard to secure consumer data.

Robert Heiblim, Principal, RH Associates

This will be a topic that will receive even more attention in the future as the concern for access to personal data receives more and more media coverage.

However, the fact remains - when a company can make our lives easier and more convenient to purchase the things we need and want, it will get our attention and an increasing amount of our disposable income.

Tom Borg, Business Expert, Tom Borg Consulting, LLC

I thought the hubbub over the Nest acquisition was hilarious. Google was acquiring a team of hardware developers, and they didn't have an adequate PR team ready to handle the other reasons people thought they were acquiring Nest.

But the real reason I wanted to comment is that people trust Amazon because they are trying to sell us products. They think Google thinks we are the product to sell. Each of them has their own creep factor.

I'm particularly worried about Amazon because of things like "predictive shipping" and such - if Amazon knows I need paper towels before I do, that's a warning sign to me that I am truly being sold just like Google does - Amazon is just doing it in a way that looks like they are doing the right thing for the customer but are really using my data to make money for their company.

Concetta Phillipps, Student, Keller Graduate School

The typical consumer understands what Amazon.com is about, which is the biggest online store in the world. You can get almost anything at Amazon.

The typical consumer doesn't understand what Google's business platform is. They see it as a search engine and aren't sure of their business model. They hear that Google is watching what you search for, what you click on, etc. In a sense, the typical consumer doesn't do business with Google. They just sue Google.

As a result, the trust and confidence level of the retailer they entrust their credit card info (and more) to, is different than Google. Reality is both track the "customer's" information. It's just perception.

Consumers need to step up and owner their privacy. They need to understand what's safe and what is not, when to share and when to not, etc.

Retailers need to be careful how they use customer data. There is difference, and sometimes it's very subtle, between marketing and stalking. I don't mind sharing my info with a retailer provided they use it with care and don't abuse the privilege of having my data.

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Shep Hyken, Chief Amazement Officer, Shepard Presentations, LLC

"Perception is reality." Google is in my face night and day. Amazon is not. I can easily see how Google uses the information about me. For example, ads related to my earlier searchers appear unsolicited and in unwanted locations. Other personal information shows up as I complete orders, etc.

In essence Google is trying to grab or divert my attention 24/7. On the other hand, I seek out Amazon. If I don't want their promotional emails I can opt out.

This could be a simplistic analysis overall, but it is specific to my experience. And it explains why I have more Google privacy concerns that Amazon privacy concerns.

So my advice to retailers would be to hold your cards close to the vest. Be sparing in your application of data, especially those applications that are highly visible to your customers.

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Joan Treistman, President, The Treistman Group LLC

Sadly ironic for an organization whose motto is "Don't be evil." That having been said, my recollection of the large number of discussions about Amazon's practices - has it been a googol of them yet? - is somewhat different than Nikki's. I recall a great many privacy concerns...great power - be it information or other - in anyone's hands is a cause for concern.

'notcom'

Google started from a "group of engineers believing in an open source mobile platform." Now it's the most popular search engine in the world and aggregates a lot of information about everything.

This information is helpful in the case of predictive analytics because it enables retailers to provide a richer, smarter, easier shopping experience for consumers. Consumers are benefiting but comfort in sharing personal data is an issue.

I respect Google for consistently updating opt out choices for its products and asking the consumer to take time to explore and choose settings they are comfortable with. Amazon certainly has privacy policies, too.

Best advice here is to know who you are doing business with...and what their privacy policies are.

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Karen S. Herman, Founder & Design Director, Gustie Creative LLC

That's an interesting analysis and I tend to agree with it. Their business models are different and that's at the heart of the comparison - one uses your data to serve you better in a pretty obvious way (Amazon), the other needs your data to make money via advertising (Google), while less obviously using the data to serve you better (serving more relevant ads or creating new, free products).

I think an information-based business like Google is always going to have the data usage perception problem that a retail service business doesn't. Google's real customers are not you and me, but their advertisers, and that's just not the case with Amazon. If anything, there's more pressure on retailers to use the data it does collect to provide a great shopping experience to consumers, omni-channel or not.

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Gib Bassett, Global Program Director for Consumer Goods, Teradata Corp.

I think the reason why Google is getting more concerns than Amazon is that it is very clear what Amazon is delivering using the information (better service, etc.) in layman's terms, and consumers are used to retailers using data to better serve them through the use of frequent shopper programs for the past 20 years.

In the case of Google, information is not something that consumers have equated with direct value exchange of personal data. Google hasn't been able to align the value it delivers to the data it collects, at least in the eyes of the consumer, hence the higher scrutiny and backlash.

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Kenneth Leung, Director of Enterprise Industry Marketing, Avaya

I think Amazon "seems" reasonably transparent as to what they are doing, and how they will use the information collected (delivering sharpies by drone just in time...). Google on the other hand is completely silent as to what they collect, and what their intent is with all that data. Google collects massive amounts of data about everything (so it seems) basically following you around on the web and watching every click. Amazon just sells you stuff and wants to sell more stuff.

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Peter J. Charness, SVP America, Global CMO, TXT Group

I disagree that most consumers see the Google and Amazon as similar.

Amazon wants to sell us something. We understand that motive. Google is creepy; a bit like NSA. We're not sure what they're looking for, but we are sure it's none of their business.

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Christopher P. Ramey, President, Affluent Insights

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