Is Amazon Trying to Turn Us All Into Drones?
For more than two decades, Amazon.com has dominated the e-commerce industry by doing two things better than anyone else. On the one hand, its website and mobile apps are extremely easy to use and packed with useful information. Amazon’s display of suggested products, reviews and promotions all drive sales and customer loyalty. Consumers know that while Amazon may not always offer the lowest price, it often does. Beyond price, shoppers understand that Amazon is a streamlined and contextual shopping engine, making the process of examining one product after another almost unconscious. If point A is the product you came to look for and point B is the checkout page, Amazon makes sure that road takes you through lots of detours.
On the other hand, Amazon’s state-of-the-art fulfillment centers store a massive variety of products which, when combined with the offerings of its third-party sellers, ensures that virtually anything can be ordered through Amazon and received faster and often cheaper than through another retailer. The business logic driving the fulfillment centers runs counter to how the e-commerce interface thinks, focusing on automation, reliability and cost cutting so that products get from point A to point B without interference or inconvenience. The promise of fast and free delivery itself drives consumers to Amazon and is a crucial component of its growth.
Which is the essence of #thatamazonlife? The thrill of the chase for products while shopping on the site or the reassuringly steady stream of boxes arriving at your door?
Automating the Shopper
When examining some recent innovations from Amazon, it’s hard not to wonder whether the fulfillment logic has encroached on the shopping experience itself. Notably, Amazon Dash lets shoppers scan products in their homes, while branded “Dash” buttons allow one-touch reordering of specific products. The program also includes the “Dash Replenishment Service” (DRS) for manufacturers to build automated Amazon reordering into their products. Similarly, Amazon Mom lets shoppers subscribe for automatic reordering of diapers and other baby products. With these offerings, Amazon seems to be luring users away from getting lost on their website or app in favor of an experience that highlights its fulfillment prowess. Like its unpiloted drones that have captured our imagination, Amazon seems to want to automate you, the shopper, as well as the experience of ordering and shipping your products.
Amazon isn't the first major retailer to offer subscriptions on popular products, and it’s tempting to look at these automation efforts as a temporary market-clearing strategy that will capture subscription shoppers without affecting its core business model. It’s ultimately an unconvincing view, however. Subscription services haven't taken off to a point where they seriously threaten Amazon’s business. Moreover, if Amazon creates a successful user experience around its subscription offerings, it might lure away some of its own on-screen shoppers — i.e., people who log in to buy one thing at a time from the site but end up with a cartful of impulse purchases. These customers will now press a button and avoid temptation. They'll no longer be persuaded down the winding path of discovery that drives the e-commerce experience. It’s not plausible that Amazon would devise a strategy that could so obviously backfire absent a very clear threat from competitors in the subscription space.
That Amazon Life
Consumers on Amazon’s website and apps tend to buy more than they came for, as product popularity information, suggestions and contextual promotions such as “frequently bought together” entice the consumer. For example, when I search for “Pampers size five,” I'm encouraged to wade through curated shopping lists of baby essentials, sponsored product links and complementary offerings from the manufacturer such as baby wipes. If I were to subscribe to get a box of diapers per month, or get a nifty Pampers button to push when I run out, Amazon would lose these potential sales as well as the advertiser dollars that go into promoting them. Yet Amazon seems confident that its customers who commonly buy staple products will use its automated services to enhance their spend rather than replace it. What makes it so sure?
Amazon created an experience where the consumer is empowered with information and reviews about millions of products, can quickly buy those that are most appealing, and can easily understand when they will arrive and how they can be returned. It's provided a seamless and empowering customer experience better than any other players in the space, and its comparative advantage has hardly narrowed over 20 years. Amazon introduced features like Prime, which seemed destined for failure at first, but became popular with shoppers because the retailer encouraged, rather than hampered, the habit of going to its site first to look for products. Prime created an economy of scale around purchasing from Amazon that's led to billions of dollars in extra revenues. Amazon seems confident that this habit, no, this way of life, cannot be threatened by adding in a few off-site conveniences.
Taken to an extreme, Dash and other automation efforts seem designed to break, rather than encourage, the Amazon habit. They give consumers one less reason to spend time on Amazon, which means one less impulse buy is considered or add-on item purchased. This would seem to give other e-commerce sites an opportunity to compete in the arena of product discovery and impulse buying, where Amazon has carved such a decisive advantage. If the strategy that drives Amazon’s sales is indeed replaced with the strategy that drives its fulfillment, the door will be wide open for new platforms to specialize in what made Amazon great.
Therefore, it's almost assured that Amazon has no intention of making a more serious move into the automation game. It will roll out just enough to make life easier for repeat buyers (that diaper button over the changing table is starting to sound pretty good), and clear out whatever incipient competition exists in the space. Amazon will do this while continuing to rely on the Amazon way of life to satisfy its core shoppers and power its revenues.
Jack Lowinger founded group shopping and e-commerce solution Cartonomy in 2012 in order to fill a void of viable social shopping options online. Jack also serves as CEO of Retry, a New York-based online retail technology developer.
