The Grocery Game Changer

December 8th, 2017

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Category: Technology

(Agriculture.com) –  Since 2006, the media and analysts have been saying “data is the new oil.” Coined by UK mathematician Clive Humbly and used widely over recent years, the phrase attempts to explain the complexities of how data is being used to generate revenue. In a 2006 blog, Michael Palmer says, “Data is just like crude. It’s valuable, but if unrefined, it cannot really be used. It has to be changed into gas, plastic, chemicals, etc. to create a valuable entity that drives profitable activity. So must data be broken down, analyzed for it to have value.”

We are using a commodity from the 18th century to understand a new kind of 21st-century business that, too, is transforming how we live our lives and do our work. But data is not the new oil. It’s far more important than that. It will drive the future of nearly every business and will force radical changes in traditional engines of the economy like agriculture.

THE NEW DATA COMPANIES

Out of the top 10 most valuable companies in the world, as measured by market capitalization, six are data-driven. Their use of data and its ability to connect people and transform businesses goes far beyond just data being oil. In 2017, Apple, Alphabet (the parent company of Google), Microsoft, Amazon, Facebook, and Alibaba all expanded to have more than 1 billion users of their services. For these companies to keep growing, they are moving out of the digital economy and into the traditional economy, which puts them on a collision course with agriculture.

In June 2017, the business world was caught off guard when Amazon announced it was buying the lifestyle grocery chain Whole Foods for $13.7 billion. Over the last few years, Amazon has been exploring and prototyping new approaches to selling food. Its Amazon Fresh service delivers groceries to people’s homes. In 2016, it opened convenience stores in Washington state and New York City. In these stores, customers with an Amazon account simply picked up items and walked out. There was no need for a cashier because the person’s online account was charged. This meant a store that traditionally employed 89 people ran with 10 employees.

Earlier in 2017, Amazon invited executives from companies like General Mills and Mondelez to its fulfillment center in Washington to talk with their worldwide consumer chiefs. Reporting on the meeting, Bloomberg speculated that Amazon wanted to explore using its distribution system and user base to allow the consumer companies to bypass traditional stores like Walmart, Costco, and Target. Amazon is not alone in its expansion into the traditional economy.

 

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