Why Amazon Dash Is a Threat to Brands (and How They Can Fight Back)
When Amazon’s wireless one-touch reordering device it calls “Dash” was announced three years ago, it received mixed reactions. Some considered it genius, others figured it would never take off, and then there were those who thought it was an April Fool’s joke. But since then, the Dash Button—which captures a replenishment order of a specific branded home product on Amazon’s online store when pushed—has launched in the US and the UK with much success.
The total number of brands with Dash Buttons recently hit the 250 mark after the e-commerce giant added 50 more of them from brands like Colgate, KY and Rogaine to an already impressive pedigree including Ariel, Durex and Gillette. Dash is by no means still an experimental service; it’s been warmly embraced by consumers—so much so that Amazon claims some brands are now receiving more than half of their orders from Dash Buttons. That’s a statistic more for the brands to claim than Amazon, but clearly there has been a lot of Dash Button use.
The key driving force behind the Dash Button’s success is a lack of customer friction when ordering. Crowned as the company that invented and patented one-click buying, Amazon is the master of customer friction reduction, removing as many obstacles as possible between the customer and the checkout process during their shopping experience. Dash Buttons are a perfect example of how Amazon has excelled at this, because they make it possible to take advantage of one-click ordering without having to go online. In fact, consumers don’t even need to be near a screen. If they run out of detergent, they can simply hit a button by their washing machine, and an order will arrive on their doorstep the next day. In addition to the Dash Button itself and the ordering part of the process, Amazon’s Dash Replenishment Service, which is the fulfillment part, relieves all other potential burdens from the customer—by default it won’t allow further multiple orders of a product to complete until the first product is delivered, ensuring protection against any unintentional pushes of a Dash Button.
But while this frictionless customer experience is an effective driver of sales, without thinking it through and adopting a more brand-centric method, it’s merely a short-term gain for brands.
Despite the obvious perks for brands the reality is that there’s a long-term risk involved.
The brands leveraging Dash Buttons as the order capture part of the process lose visibility of their customers’ ordering habits once Amazon starts selling them, so they become immediately disintermediated. Additionally, because Amazon buys at high volume and is such a big player in the market, it has the power to drive down prices, essentially squeezing margins of all of these brands and their manufacturers, who will ultimately end up with a smaller share of the pie.
Brands are also losing their power as influencers over buyers decisions. Amazon’s ultimate goal is to generate its own data. By understanding the shopping habits of a brand’s most loyal customers, Amazon has a better chance to create the shopping business of the future. But the problem for brands is that Amazon owns that data, and the Dash Button encourages consumers to buy more things from Amazon, not from a choice of fulfillment options from the brand’s wider roster of e-commerce fulfillment partners, which can have a compounding effect. And even worse news for brands in the future, Amazon is using shopping habit data of these big brands to make their own competing products.
Brands need to fight back and avoid the slippery slope that is Amazon data ownership.
Brands don’t need to play solely by Amazon’s rules to deliver frictionless buying experiences. By making their products smart, brands can offer a replenishment service straight from the pack that drives sales, while simultaneously keeping (and leveraging) their data. They can form direct relationships with consumers and still use Amazon’s replenishment, among many others, as a fulfillment service to include in the model if they choose.
- #BornDigital products: Through EVRYTHNG’s packaging partnerships, consumer packaged products can now be manufactured with embedded physical to digital triggers that are associated with digital identities in the cloud, which then use IoT data to drive applications, including product replenishment. These #BornDigital™ products make reordering quite simple: At the bottom of a box of coffee pods, there could be a call to action asking the consumer to scan one of the last few pods. This would then trigger a pre-approved supply of replacements to be shipped immediately.
- Connected devices: While a Dash Button requires manual consumer interaction, connected devices that are connected to the EVRYTHNG smart products platform can proactively ping you with a helpful reminder to order or even automatically reorder products themselves. It can then drive fulfillment through Amazon’s Dash Replenishment Service but allow you again to own the customer journey or device data. In this way, a connected coffee maker could have a light that lets you know when your coffee pod supply has run low (or automatically reorder for you). Or perhaps your toothbrush warns you that you’ve used the head too many times, and it’s now time to replace it.
By merging both connected devices and smart consumer products, brands can build an even better reordering method: Each time a detergent pod is used, it’s registered by the connected washing machine, which in turn knows how many pods have been used and assess when it’s time to order more.
With this IoT-enabled solution, brands can essentially turn their individual products into reordering and replenishment points, getting all of the benefits Amazon can provide—without having to lose control over the data. Owning the data about your products—across its lifecycle—is your biggest move in digital transformation to protect you from disintermediation by the Amazons of the world.
A smarter frictionless order to replenishment service is at your fingertips. You just have to switch it on.
Bill Simcox is SVP, CPG and Supply Chain at EVRYTHNG.