Amazon's (NASDAQ: AMZN) Dash button is a model of simplicity in the complex world of the Internet of Things. Press a button at the point of need and the replenishment order is placed.
But beneath that simplicity is a marketing machine that prompts customers to re-order products without any outside influences, thus providing a wealth of sales data. It's a good example of the "Zero Moment of Purchase," said Anil Kaul, CEO of Absolutdata, a data analytics firm that works with major brands.
"Just as Google summarized internet-driven decision making as the Zero Moment of Truth, Amazon has created the Zero Moment of Purchase, putting brands at the exact moment of need," Kaul told FierceRetailIT. "In a Zero Moment of Purchase scenario, all other factors—coupons, packaging, advertising—become irrelevant."
By making it easier to buy products, Amazon has eliminated competitive pricing from the purchase decision. "Normally, a consumer walks into the store and looks at multiple types of detergent. They look at multiple brands, private brands, and ultimately form a decision. In this case, price is eliminated. Things like coupons lose influence and become irrelevant," Kaul said.
Consumer need has historically originated at a distance from the point of sale, whether that be a POS terminal in a store or, as is increasingly the case, an e-commerce platform on a smartphone. Through Dash, Amazon eliminates this gap and gives the consumer the ability to order immediately when the need arises, Kaul said. Thus, Amazon Dash allows the company to streamline select products to consumers while completely bypassing competitor marketing and pricing, "driving a Zero Moment of Purchase scenario," as Kaul put it.
"By uniting the moment of need and the moment of purchase, you're not only making things easier for the consumer, but also doing something very powerful by killing the time gap and eliminating external factors," he said.
For example, if a consumer runs out of detergent and needs to make a purchase, outside factors can influence the consumer's choice during the intervening time. These factors include price, packaging, sales and coupons.
"Currently, big retailers hold a lot of power over brands. They drive the business and own the customer relationships," Kaul said. "The Dash allows brands to build a direct link to the customer, creating an alternate channel beyond retail and delivering unprecedented access to customers, as well as data [to retailers]." And better data will contribute to a better bottom line.
As a result, the Dash button could erode the power of traditional grocery distribution, and give Amazon an opportunity to sidestep that channel and get inside a consumer's home. "This allows Amazon to do what they do best—use technology and data to interact with customers," Kaul said.
To measure this unique new data, Absolutdata recently launched the NAVIK Converter, a "decision engineering" product that helps software-as-a-service companies turn free and trial users into paid subscribers, he said. The solution identifies users who are primed for conversion and recommends how and when to target them with marketing messages or product changes. In testing, the NAVIK Converter has raised conversion rates by as much as 30 percent without any increase in marketing spending.
"SaaS companies struggle with free-to-paid conversions even though their business model relies entirely on making it happen," Kaul said. "Data can be an effective tool, but only when wielded with precision. Absolutdata recognized that the solution is in asking the right questions and following the thought to the end, and not in getting tangled up in data and modeling techniques alone."
-See this Absolutdata press release
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