Why Amazons Recent Scandal Should Scare The Restaurant Business

April 27, 2020

Amazon has recently been in the news after admitting that they use the data from the independent sellers on their platform when deciding what own-brand products to launch. It seems to be a scandal but really, did anyone think any differently?

The major supermarkets have used their own sales data when launching their own-brand product for years. Why should Amazon be different? One difference is in the fact that the resulting product can be presented exactly to the customer to whom it would appeal, but even this is little different than placing your own product on prime shelf-space.

But where this is a new practice - and where it will cause destruction - is in the restaurant industry. Amazon is only tangentially in this area right now but it is entering it in a big way with a huge investment in Deliveroo.

Now you might say that Deliveroo is a delivery service like GrubHub and Ubereats. Which is true - and a reason why restaurants should be very worried.

Each of these companies collects a massive amount of data. Every order, when it was purchased, who bought it, how often that person makes a purchase and even what they are most likely to want at any given time.

It’s not hard to see what they might do with this.

A Vision Of The Future

Imagine a customer opening the app and seeing the perfect restaurant they were craving for at the very top of the list. They’ve never ordered from it before but it matches every desire they have at that moment. They go further and see that the restaurant actually has a special on their ideal meal.

Will they go any further down the list? Does anyone go to the 2nd page of Google results? (a rhetorical question of course).

What the customer doesn’t know is that the restaurant exists only on the app. It might even have been created just for them.

As owners of the platform these virtual brands are then placed top and centre when the customer opens the app. Pushing real restaurants down the list.

But surely they can’t open that many restaurants?

Well as I mentioned these are just virtual brands. And they can all be serviced from one central kitchen, the same meal rebranded for each restaurant.

UberEats already claim to have 2,500 virtual brands.

What happens when Deliveroo plugs into Amazon’s systems?

Taking Back Control

What I’ve outlined might seem like a nightmare scenario but it’s one which restaurants are already enabling. And a major reason why they need to reconsider their participation.

The delivery is already unprofitable with the commissions charged so there is no real harm in giving it up. If you can do it yourself of course then keep do so but if not then focus on sit-in and/or takeaway. The important thing is to take orders in a way that ensures you keep data while minimising commissions.

An option like our own Restaurant Ordering System lets you control your data and customers - and also saves you commission fees by being free!