Where is the battleground in your category?
Last week Amazon took another step into the grocery world with the launch of their ‘Dash Buttons’. These are internet connected buttons that can order household goods with one press. They can be stuck on, or hung near, fridges, washing machines or bathroom cabinets and are designed to speed up the process of replenishing many FMCG products.
The buttons are connected to smartphones through the Amazon App. To set up the Dash Button the customer tells the App which product they want to order when it is pressed. The product is added to the shopping basket within the App. The order can be cancelled within half an hour of pressing the button and once pressed, the button is only re-set once the product has been delivered. So, no chance of a toddler ordering 25 boxes of detergent!
Will this work? It’s much too early to say. For us, this is less about the specific technology and more about what it says about how grocery shopping will evolve and what it may take to win with shoppers in the future. Will the battle be less about the shelf and more about winning before the shopper gets to shelf, if they get there at all?
The last few years have seen a big increase in promotional activity. Shoppers have been incentivised to buy a different brand each time they walk down the aisle. Whichever brand is on deal. Brands are often re-competing for the purchase every time the shopper arrives at the shelf. For some categories, this can mean purchase decisions are up for grabs 52 times a year. Competing in that environment is hard. And costly.
The Dash Button, and Amazon’s Subscribe & Save service, change the purchase dynamic. They focus on driving repeat purchase not on switching purchase. They incentivise shoppers in a different way and make it as easy as possible to repeat buy. Shoppers like things to be easy and what is easier than never having to think about buying detergent again?
We think that this approach will apply to most categories and brands in time. However, it will be particularly important for certain products. So, which ones?
Products that are used regularly, often daily, with large quantities used over time. Things that you don’t want to run out of, or would have an issue if you did. For instance, toilet paper and toothpaste.
Products that have fairly predictable use up rates. For instance, things you know you will need to buy, say, once a month. The classic example of this is Nappies.
Products that are boring to shop for. How many shoppers want to spend time in the household cleaning aisle?
Products that are inconvenient to shop for. For instance, bulky products like detergent, cases of beer or soft drinks.
In 20 years’ time, people will think it is amazing we ever went to a shop and bought some of these bulky items. Think about it. You pick the product off the shelf, put it in your trolley. You get it out of the trolley and put it on the checkout belt. You take it off the checkout belt and put it in the trolley. You take it out of the trolley and put it in the car. You take it out of the car, carry it into the house and you put it away. Why lift it 5 times, when you can press a button once?
And here’s something to consider. If the future is about locking shoppers into brand (& store) purchases, the key thing will be to win early. If your brand is not the one the shopper has selected to buy automatically, it will be doubly hard to change things – much harder than it ever is in store.
As E-commerce and technology continue to develop quickly, the way we target and incentivise shoppers will have to keep up. The battle, amongst many shoppers, will slowly move away from the shelf. Are you ready to move with it?
Feel free to forward. Have a great weekend and speak to you next week.