THE AMAZON DASH BUTTON — OPPORTUNITIES AND CHALLENGES

Amazon’s Dash button marked the entry of the tech giant into the ‘Internet of Things’. The premise of the button idea is simple; a small tab that can be stuck or hooked on to your appliances that, when pressed, will trigger an order of the staple product. Once pressed, a notification is sent to the synched smartphone from which the purchase can be approved and the delivery scheduled. Currently the service is only available to Amazon Prime members in the US.

Facilitating the jump from our devices into our homes has a number of obvious benefits for Amazon. Brands will be eager to tie into the tech giant’s engagement in the Internet of Things for one simple reason: consumer lock-in. As Apple has demonstrated over the past decade, placing a customer within an ecosystem that fosters purchasing back through a dedicated channel (e.g. the App Store or iTunes) is the modern day brand ‘holy-grail’. As purchasing channels are becoming more fragmented, with niche, digitally enabled start-ups growing rapidly through easily accessed funding, established brands are even hungrier to snap up opportunities that keep a customer dedicated to their products.

The question is whether consumers will adopt this technology in their homes. There is no doubt that an early cluster of digitally avid customers exists within the Amazon Prime world, and they will offer Amazon some rich user data from which to adapt the product for future wider use. Expanding beyond this close knit user base, to truly integrate the Internet into the home however, will pose a challenge for Amazon.

A Glimpse into the Future

We can already see a variety of technologies trying to enter this space, from smartphone-controlled light bulbs and thermostats to tablets on fridges. Whilst fancy, futuristic, and undoubtedly exciting to use for the first time, many of these technologies prove to lack the one selling point intrinsic to the digital world: ease of use. This is partly due to issues with accessing these connected devices, which is most often done through a smartphone. For example, a customer might have to take their phone, enter a passcode, bring up the dedicated application and then carry out the relevant action within it. Although this process might not sound ineffective and time-consuming– if someone has 10 or more items in his or her household that are digitally connected, it may end up taking more time and cognitive energy to enter and exit every application necessary to manage the separate devices than it would to actually manually carry out the actions, i.e. turn off the light and switch on the coffee machine. This may be changing with the possible impending growth of the smartwatch industry, but that is for another post.

Where Amazon bridges this gap is through essentially giving us the reverse experience of what we have seen so far. Rather than controlling a device through another, such as with Google Nest or a Phillips lightbulb, the Dash Button acts as a physical touch point into the digital world, offering actual efficiency in a consumer’s daily life. When one of the last rubbish bags has been pulled out of the cupboard, a quick tap of the Dash Button will automatically order a new set. This can be applied to toiletries, coffee, tea bags, or other staple items, offering a process that has the potential to become a standard part of life in the future.

Facing Challenges

There are two main obstacles that the Dash Button has to overcome in order to foster wider adoption, namely 1) Price of product and 2) Delivery.

A consumer’s ability to go online and get the best available price for herself has provided one of the strongest shifts in consumer behaviour for the retail world. Will a customer be happy to sacrifice the ability to (easily) shop for the best deal online for the convenience of a quicker order? If the former proves to be more expensive for the customer in the long run, the chances are that the Dash Button will be used sparingly. Price alert functionality may be useful in order to combat this.

The problem of delivery is an intriguing one. The nature of the Dash Button suggests fragmented, smaller batches of deliveries will need to be sent to a household. Most importantly, the cost of this will need to be minimal, if not free, in order for the customer to carry this out repeatedly for a variety of staple products. Additionally, if a consumer finds herself constantly missing deliveries with larger items being sent to mailing depots for collection, this will act as a barrier to wider adoption.

In saying this, Amazon is possibly the leading company to tackle delivery issues. Its vast operating scales giving it economies of scale, coupled with its dedicated investment into providing free delivery, mean that it has the capability to provide these deliveries at a lower cost. Yet, it remains to be seen whether this can be up-scaled to an even more rapid, high-volume and flexible approach whilst remaining cheap.

The introduction of the Dash Button, therefore, also adds some real-world credibility and understanding to Amazon’s investment in drones as a delivery system. Developing these to a properly utilised, safe, and legal delivery mechanism will develop Amazon’s delivery capabilities in to the future. An example here would be re-routing. Unlike with your usual delivery driver, limited by roads, time, and a schedule, a drone may be able to take your product to your office or even your local shopping mall if you happen to be away from home.

A Credible Tool for the Future?

The Dash Button will provide an interesting attempt to connect our homes to the digital world. Ultimately, its success will lie in how Amazon has crafted the technology to the consumer’s needs, and whether pricing and delivery can be balanced in order to enhance the customer’s shopping experience. Perhaps the biggest value will come from collaboration with businesses in order to lock-in customers regularly — the potential is there for consumers to adopt this on a wider scale, the results remain to be seen.