A few months ago, Amazon.com made a disruptive splash in the world of home delivery with the announcement of its drone project. The new Amazon Dash mobile ordering device for AmazonFresh customers may not be as attention-grabbing as unmanned aircraft bringing goods to your door, but its potential to disrupt how consumers select and purchase items is much greater.
First, a brief Amazon Dash primer. Dash is a portable wand-shaped device that allows users to automatically add items to their AmazonFresh shopping lists. Customers can scan items with the gadget, or speak them into a microphone for voice-based search. It reportedly recognizes more than 1 million items for sale on AmazonFresh and Amazon.com.
The idea is as soon as a consumer runs out of a replenishable item, like a gallon of milk or box of cereal, they use Dash to automatically enter it on their AmazonFresh shopping list, eliminating the need to go to the store to replace it. Take a moment to digest what this potentially means to paradigm of shopping for consumer goods and then read on.
The Home as Physical Store
E-commerce turned the home into a virtual store a long time ago, which has been a driving factor in the rise of omni-channel and seamless commerce in recent years. But Amazon Dash turns the home into an actual physical store where the products consumers buy are tangibly present.
It’s one thing to have to remember to go and add an item to an online shopping list, but quite another to scan it or add it by voice as you are looking at it. The consumer’s cabinet becomes the physical shelf, eliminating the need to visit the shelves in a brick-and-mortar store. Which leads to…
The Death of Incremental Sales
Retailers owe a good chunk of their profitability to unplanned, incremental sales. A customer who visits a store to buy a gallon of milk realizes when they get there that a box of cookies would go great with that milk, or notices a great sale on peanut butter as they approach the milk aisle.
In addition to stealing sales on items consumers plan to buy from brick-and-mortar retailers, Amazon Dash also kills off opportunities to reap incremental sales. That’s a one-two punch many brick-and-mortar stores might have a tough time recovering from.
Brand Loyalty Comes Back in Vogue
Brand loyalty among consumers is weaker than it used to be, resulting from factors such as increased price sensitivity and consumer overexposure to marketing. But a consumer who automatically replenishes goods with the wave of an Amazon Dash wand will inherently become brand loyal, out of simple convenience. This is good news for leading brands, not so good news for newer or less popular brands, or retailers running brand promotions.
What To Do
So what should brick-and-mortar retailers do to respond to this new threat to traditional store-based retailing? Right now Amazon Dash is only available by invite to members of the AmazonFresh program, which serves consumers in Southern California, San Francisco and Seattle. Suffice it to say brick-and-mortar retail will not be “dashed” to ruin anytime soon.
But Amazon Dash represents a larger trend of the continuing erasure of boundaries among brick-and-mortar, online and mobile. It effectively blurs all three of these major retail channels into one unified experience. That is the direction brick-and-mortar retailers need to start heading, if they haven’t already, because Amazon Dash is disruptive today but will represent the norm in the not-so-distant future.