Actionable Insights From APT's Retail Practice

The Industry Impact of Amazon Dash

April 4th, 2017 | Posted by APT in Retail

Two years after its launch, Amazon Dash – the Wi-Fi connected device that allows consumers to order their favorite products with the push of a button – has grown to offer products from more than 100 brands. With items in categories ranging from grocery to beauty to baby and pets, consumers can fill their homes with various Dash buttons and never again need to trek to the store.

This automated approach to shopping may only be the beginning. “The real long-term goal is that you never have to worry about hitting that button,” said an Amazon spokesperson, following the product’s 2015 release. With Amazon Dash Replenishment already built into some household appliances – such as Whirlpool washers and dryers that can automatically restock laundry supplies, and Brita pitchers that order new filters as needed – Dash could be a mere stepping stone to an even more automated shopping experience.

There is also an undeniable advantage for Dash brands – they are positioned closer to the consumer, allowing them the opportunity to secure purchases before competitors have the chance. The implications for retailers are further compounded when considering that Dash offers many key, trip-driving products – that is, major items that drive consumers to shop in the first place. If they can secure these products through Dash, they may not venture to the store at all, leading to the loss of entire baskets of sales.

In addition to Dash and Dash Replenishment, other Amazon programs like Subscribe & Save and Prime Now also offer a model of hyper-convenience, making it easier for consumers to skip the in-store experience altogether. This emerging trend of hyper-convenience has the potential to upend the brick-and-mortar retail business model – so how can traditional retailers innovate to compete?

One option is to first focus on what Amazon can’t do – at least, not until they expand their brick-and-mortar network: Optimize the in-store experience. Some examples of in-store enhancements include Nike’s on-site treadmills, which allow consumers to test shoes before purchasing them, and Saks Fifth Avenue’s Power Lunch package, which includes a style consultation, beauty treatment, and lunch.

These types of offerings feature an experiential component that is unique to the brick-and-mortar store. Refining the in-store experience can offer many benefits, from building baskets to growing loyalty; however, while various initiatives to enhance the in-store experience may all seem great in theory, only some will be profitable.

The key to deploying these new customer experience ideas is to first try them in a handful of stores and measure their impact before investing full force. This Test & Learn approach is the most reliable method to ensure companies are responding to competitive threats as effectively as possible.

Amazon Dash may not be destroying brick-and-mortar retail on its own. However, the potential still remains for increasingly automated innovations to ultimately threaten the traditional in-store retail business model by offering unmatched convenience. As new technologies like Amazon Dash continue to emerge, it is important for retailers to think critically about their own business strategies, and test potential news ideas to compete effectively.

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