The shopper path-to-purchase just got shorter—a lot shorter. In a move that may smack of being an early April Fool’s prank (it’s not), Amazon today announced theDash Button as a product replenishment system to Prime Members, which enables instant re-ordering of many of life’s simple needs.
The branded widgets work with 255 products from 18 brands, including Tide detergent, Keurig cups, Olay face cream, Huggies diapers, Bounty paper towels, Gillette Fusion shaving products and anything else that can typically trigger a trip to the store and now can be ordered with the push of a button.
Place the gadget close to the shelf where you keep the items, push the button when you feel you are running low, and Amazon sends your phone an alert to place the order with your Amazon app.
While still invite-only, device-makers are already developing with the Dash-based Internet of Things ecosystem in mind, including Whirlpool’s smart washing machine and a coffee pot by Quirky.
The implications of the Dash Button—an extension of its Dash scanner announced last year—are huge for retailers and CPG companies. It will disrupt the path-to-purchase model that has been effective for marketers of consumer packaged goods for years. The model focused efforts and investment on creating preference for their brands and consistently getting them into the shopping basket- bridging the in-home and in-store experience. The model has been a basis for influencing shoppers by managing the predictable path of identifying a need (replenishment), to getting a brand name onto the shopping list, to influencing the shopper to trade up or add on a sale in-store.
P&G’s classic “first and second moments of truth” approach to branding and marketing has been the Gold Standard of this path-to-purchase discipline. In their influential approach, P&G divides efforts to create preference into the shelf (first moment of truth where packaging and product claims rule) and the home (second moment of truth where the product performs). Retailers also jump onboard the path-to-purchase model by driving shoppers to their store for convenience, price and promotion, private-label brands, and their own apps with shopping lists.
But the Dash Button’s Internet of Things bolt-on ease threatens to destroy the first moment of truth and the path-to-purchase as we know it, merging the home and the store shelf and switching more power to the CPG brands. It makes the shopping list and the store irrelevant for consumables purchases.
Incumbent Brands, Incumbent Retailers
Amazon’s innovation leapfrogs the shopping list by creating an immediate means to reorder an incumbent brand at the point-of-use. The Dash button replaces the idea of preferred brand (a cognitive bias) with incumbent brand (an enduring decision). It eliminates the store and channel decision, obsoletes in-store marketing, and further elevates the smartphone as a primary means of engaging the shopper with new items, deals, and brand-switching messaging. It redefines convenience, and perhaps most importantly, it gives brands a new permanence in the home versus an ephemeral and fickle “preference”.
Because the products that lend themselves to the Dash Button are in traffic driving categories, fewer trips to brick-and-mortar retailers will result. Target, for instance, is relying on increasing their relevance to shoppers by emphasizing consumables. They will have new challenges to their strategies to drive traffic if and when the Dash Button and similar frictionless replenishment technologies become mainstream. Amazon will become the incumbent retailer. This development will likely cause tension between traditional bricks and mortar retailers and CPG companies.
Many questions will need to be answered as the Dash Button rolls out. Will there be a third party that starts to play, where shoppers can chose the retailer? Will CPG companies take cost out of their packaging and in-store marketing as the shopper switches away from making purchase decisions in-store and their products get delivered directly to the home? Being a premium service, will technologies like the Dash Button create further social polarization between the haves and have-nots, relegating shopping for consumables a chore only the lower income shopper must endure? Could the Dash Button potentially mean that affluent shoppers will be harder to get into Walmart, Target, and the Dollar retail channel?
Like the Operant Conditioning experiments in the 1930’s, Amazon has now created a way to turn our homes into a virtual “Skinner Box” that fulfills our needs for nearly immediate gratification. The implications for retail cannot be overstated, and retailers will need to match the innovation with their own innovation to stay relevant and give shoppers reasons to shop beyond price and convenience
Bill Chidley is a Partner and Co-Founder at ChangeUp. Creating Innovating Experiences that Drive Growth. http://www.changeupinc.com
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