The slow death of brand loyalty and the rise of functionality
In the last few weeks, Amazon has launched its Dash service in the UK. The small, Wi-Fi enabled device allows you to re-order specific products from Amazon at the touch of a button.
By extending its ‘One Click’ technology (first patented back in 1999) into a number of low-cost connected devices, all sorts of household products – from shampoo to toothpaste to washing powder, can be replenished instantaneously. Amazon claims to have 40 brands signed up so far.
The idea itself isn’t new. As I recall, that accolade belongs to Red Tomato Pizza’s connected fridge magnet, which launched in 2012. And the concept isn’t without its challenges.
For a start it won’t appeal to the cost sensitive, as it requires Amazon Prime membership (£79 per year) and there’s no pricing availability on the button itself.
In a multi-person household, it’ll be impossible to keep track of who has ordered what.
And unless you need hundreds of family packs of Andrex, you’re in serious trouble if you’ve got a toddler who likes to press buttons.
Commentators everywhere are quick to point out that Amazon Dash will most likely fail. And they’re probably right – but it’s the ambition, not the tactic that will change the game.
Critics cite the Wall Street Journal‘s research (Slice Intelligence) that most customers with Dash buttons “rarely or never use them to make a purchase” or support FastCo’s point of view that given the 48 hour delivery time Dash is “an exercise in futility”.
Even BuzzFeed is in on the act with "13 times Amazon Dash failed so hard it won", questioning the consumer desire “to buy on-demand butt wipes for dudes” but raising the spectre of a new genre of bragging rights by installing a Trojan condom Dash button by your bed.
A few weeks ahead of Amazon launching Dash, Sainsbury’s announced a same-day delivery service in 30 of its stores and that it would be trialing a one-hour home delivery service for a limited range of products. And with good reason - while Sainsbury’s saw just 0.1 per cent of overall growth in Q1, looking a little deeper you’ll find that its online business delivered an astonishing 14 per cent growth.
The same is true elsewhere in the sector: despite the uncertainty of Brexit and the UK skirting a recession, Ocado’s 2016 H1 retail sales rose 13.9 per cent to £582m, far outstripping the growth of traditional retailers.
It would seem that forward-looking retailers are hitting a rich vein: in a global survey, Digital Dopamine by Razorfish, almost 76 per cent of respondents claimed that they were actually more excited when an online purchase arrives than when making the same purchase in store.
While it’s clear that technology is reshaping how consumers behave and products are sold, it is less well recognised is that it is also changing the fundamental nature of competition.
In a world where one-hour delivery slots become the norm, not only does the advantage of premium location become irrelevant to the consumer, but the flagship store, a high street presence and premium frontage quickly risk becoming a liability to the retailer.
Last year Forbes estimated that up to 15 per cent of US malls are now half-empty and in the UK, BRC estimates that thousands of shops and almost 1 million retail jobs could go by 2025.
With Amazon offering 500 million SKUs you’ll need deep pockets to compete on choice.
Perhaps most notable of all though, is that convenience of online shopping increasingly trumps price. In the UK 55 per cent of respondents to the Total Retail Survey (2016) cite their main purchase influence as convenience, compared to just 37 per cent citing expense. Competitive price advantage is quickly being eroded. And the trend is global.
We can only speculate on whether these particular attempts by Amazon, Sainsbury’s and like-minded competitors to elevate themselves to being truly “at-the-point-of-need” will succeed.
But we can be certain that the prize for winning the war of convenience is survival.
William Lidstone is chief marketing officer at Razorfish