It might be the new revo­lu­tion in re­tail and could al­ter the dy­nam­ics of LFRs for­ever

DQ Channels - - Channel Pulse - The au­thor is ANIL KAUL, CEO, Ab­so­lut­data

It might be the new revo­lu­tion in re­tail and could al­ter the dy­nam­ics of LFRs for­ever

Walk­ing into a store can be over­whelm­ing – you’re likely to face thou­sands of prod­ucts, all vy­ing for your at­ten­tion and dol­lar. Even more dizzy­ing, each prod­uct has been care­fully branded, the shelf space un­der it has been sold at a pre­mium, and the cost may have as much to do with per­ceived value as it does with the prod­uct’s real worth. Gro­cery shop­ping on an empty stom­ach is known to be a poor choice, but as hunger blurs ra­tio­nal­ity, de­ci­sions be­come more in­stinc­tive and we tend to go with the most ap­pe­tiz­ing op­tion, re­gard­less of price or nutri­tion. What was pre­vi­ously lim­ited to food is now well suited as a metaphor for ecom­merce. We’re bom­barded by op­tions, each care­fully en­gi­neered to in­trigue and per­suade us, with lim­ited abil­ity to sort through and fo­cus. This has led to what Google dubbed the Zero Mo­ment of Truth, or the well-in­formed way con­sumers make de­ci­sions in the In­ter­net era.

Last week, Ama­zon in­tro­duced the Dash But­ton, a phys­i­cal man­i­fes­ta­tion of the com­pany’s ‘1 click’ but­ton that al­lows con­sumers to re-or­der de­ter­gent, cof­fee or other house­hold goods in real time as they run out. More than a nifty gad­get, the Dash But­ton is up­end­ing the re­tail model as we know it.

Think of a hun­gry con­sumer – be­fore he heads to the store, per­haps he is at home hunt­ing for a snack. He looks in his cab­i­net and sees he is run­ning low on chips. See­ing this, he might add it to a shop­ping list and later ar­rive at the gro­cery, where he will be pre­sented with hun­dreds of va­ri­eties and fla­vors at a range of prices. Or, he could hit an ad­ja­cent but­ton to re­order, and avoid the process, de­ci­sions and all.

By unit­ing the mo­ment of need and the mo­ment of pur­chase, the cus­tomer jour­ney is sim­pli­fied, but more im­por­tantly, it re­moves any chance for com­pe­ti­tion. In the time be­tween need and pur­chase, com­mer­cials, sales, pack­ag­ing, coupons, stock­ing and an ar­ray of other ex­ter­nal fac­tors can in­ter­fere and change the con­sumer’s mind.

This may be bad news for re­tail­ers; big box stores cur­rently carry a lot of weight. Stores drive the busi­ness through con­ve­nient lo­ca­tions and com­pet­i­tive pric­ing. They own the cus­tomer re­la­tion­ships and charge a pre­mium for de­sir­able shelf space, but they also rep­re­sent a chore. Pick­ing up de­ter­gent is a task, not a treat, and can be an in­con­ve­nience. Pre­sented with a drive, search­ing for an item, then wait- ing line, or sim­ply tap­ping a but­ton at home, most con­sumers will opt for the path of least re­sis­tance.

Con­versely, this may be the start of a new age for brands. An in-home pres­ence gives brands the op­por­tu­nity to over­come tra­di­tional dis­tri­bu­tion and, more im­por­tantly, to learn about their cus­tomers. Imag­ine know­ing you sell 12 pal­lets of prod­uct to the same store each week. Now, imag­ine a cof­fee drinker whose sup­ply di­min­ishes roughly ev­ery three weeks, and who re­li­ably or­ders the same size pack­age of the same va­ri­ety of grounds. Based on that alone, we can study us­age and cre­ate a sub­scrip­tion model tai­lored to this con­sumer. Scale this to a thou­sand cus­tomers liv­ing in a given area, and we can re­align ship­ping and pro­duc­tion lo­gis­tics to meet lo­cal de­mand with­out wast­ing re­sources.

Ecom­merce has pro­duced tremen­dous streams of data chron­i­cling click rates, A/B tests, and more. Be­hind the Dash But­ton, brands may find a pre­vi­ously un­met qual­ity of data, ca­pa­ble of shift­ing mar­ket share and prof­its. Within the CPG space, frac­tions of per­cent­age points can make a huge dif­fer­ence, and a small amount of in­sight about the con­sumer could push a brand out of the ball­park.

The Zero Mo­ment of Pur­chase may be near si­mul­ta­ne­ous with need, but its ef­fects will be far reach­ing. While Ama­zon may be the first to en­ter our kitchen cab­i­nets and laun­dry rooms to align with the point of need, they cer­tainly wont be the last. As tech­nol­ogy prices drop, more brands will be able to launch sim­i­lar so­lu­tions, and more con­sumers will be able to af­ford them.

Will we soon find our homes filled with hun­dreds of but­tons to re­fill ev­ery­thing we eat and use? Or will we see an en­tire smart home, set to auto-re­fill based on sen­sors? More likely than not, it will vary by con­sumer and by pref­er­ence, but who­ever re­ceives the or­ders will be meet­ing a new stream of de­mand based on data and us­age, not just sales.

Will such big re­tail sto­ries be a thing of the past with con­cepts like Ama­zon’s Dash But­ton?

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