Amazon has upped the ante again as far as innovation goes. Dash buttons.
While it may not be the craziest innovation in terms of technological advancement, the way in which it has the potential to disrupt the consumption of common consumer goods and make Amazon a much bigger, more integrated company is a profound concept with such a simple product/idea.
I just found out dash buttons were a thing the day after Cyber Monday…upon a quick search, I found out the buttons were initially announced back in April, so I’m not sure how I let this interesting story slip through the cracks.
Either way, it is obvious that they started to promote this initiative more publicly during Amazon’s increased Cyber Monday-related traffic. They are available for $4.99 a piece, but only to Prime members at this point; they can be used for a variety of commonly used products including Clorox wipes, Tide detergent, Bounty paper towels, and more.
The pricing model is a little strange, however.
There is an initial discount of $5 for purchase, which makes the first $4.99 device basically free. But after getting the first one for free, these buttons will cost consumers $5. With the high long-term value that these buttons could potentially have, one valid option would be for Amazon to just eat the cost of the buttons themselves. If these buttons are what cause a consumer who is committed to a mature common good to choose Amazon as the place to purchase that good, that is well worth a measly $5. Common goods are generally the perfect type of product to sell…they are repeatedly purchased, have very loyal customers, and require little investment into marketing/advertising, where a lot of companies’ costs usually come from.
However, it definitely also makes sense that they have some cost, to discourage those who would abuse the free status otherwise; if they were free, what would discourage a consumer from ordering all of them, just to end up realizing he/she doesn’t use them and they all end up shoved into the back corner of his closet in a gallon-sized Ziploc bag? (And yes, ironically one of those dash buttons would be for Ziploc.)
However, it seems worth $5 to me to almost guarantee a returning customer who will reorder a product on a consistent basis. Reducing the barriers to entry for the devices will increase the initial adoption of them, which is crucial for it catching on in the long-term. It won’t become a widespread, common service if you don’t have enough early adopters to spread word of mouth and make it grow along the natural curve on the product life cycle.
The problems with both of these models suggest that maybe a third option might be better. One option could be a cheaper price. $1.99 would still discourage consumers from over-ordering these devices but would lower the price from $50 to $20 if the consumer wants to use 10 of these buttons. Another option would be to have a promotion where, after a consumer buys 5 of the buttons, they could get up to 5 additional buttons for free. Regardless of what is done, there really should be an option that makes the service easier for consumers to adopt it.
One of the only other potential problems I see with dash buttons is the potential for a lot of waste in the form of boxes, tape, labels, and other materials used to ship small products like toilet paper, condoms, or soap. Past methods of shopping for these products rendered the use of no shipping materials; with Amazon now shipping these products for convenience, the cost to our environment would definitely increase, even if Amazon uses environment-friendly processes, such as recycled materials.
So, even though there are some logistical issues to work out, this innovation puts Amazon right in the ring for becoming a huge contender for common goods, which, as I’ve hinted at, is a very scalable and profitable business. If they can steal away even a small portion of the market share, they could have a whole new venture that grows to be on the same level as their current services, all while increasing consumer’s dependence on Amazon.