The Ongoing Evolution Of The Replenishment Economy

Stuart Elmes

 

The modern marketplace is a jungle. A wild, savage place where the battle for survival never lets up. The law of the jungle is a Darwinian concept, and our basic understanding of Mr. Darwin’s ideas leads most of us to conclude that when a product or service dies, it was clumsy, slow, or otherwise ill-equipped for life in 2019. So when Amazon announced earlier this year that it was discontinuing the Dash Button, a flood of obituaries poured out, blaming clumsy design, obnoxious branding, and cats inadvertently ordering hundreds of gallons of laundry detergent. But those looking more deeply into the tea leaves realized that the Dash Button had been a massive success for Amazon’s long-term strategic goals, priming the pump and softening hearts and minds to the replenishment economy they’re trying very hard to build.

The World Is A Dash Button

the ongoing evolution of the replenishment economy

Everyone is familiar with forgetting to buy a staple product, and realizing at the most inopportune moment that there isn’t a single square of toilet paper anywhere in the house. The Dash Button was an attempt to allow you to buy these things at the moment you realized they were needed, without leaving your bathroom or kitchen. But with over 20,000 Alexa enabled devices on the market, a new retailer offering same-day delivery every week, and a growing number of appliances equipped with cameras and sensors, as Dash Buttons disappear you’re paradoxically surrounded by invisible “Dash Buttons” wherever you happen to be. 

Instant and easy replenishment has been a fundamental part of Amazon’s vision for the future. According to Daniel Rausch, vice president of Amazon’s Smart home division: “We’ve always said the best shopping experience for many items in your home is one that doesn’t exist at all—there’s no action to take—you don’t even have to think about it. You know you won’t run out of the essential items you count on most, so you can focus on other, more important things.”

To this end, Amazon has focused on shifting to the new Dash Replenishment Service, which leverages connected devices to automatically reorder staple products from, you guessed it, Amazon! DRS has doubled it customer base in the past year, and it allows sensors and software in Samsung washing machines, Whirlpool dishwashers, Petcube feeders and a host of other products to automatically maintain your supplies of detergent, toner, or whatever else you need. This concept of “interface-free” shopping is something that Amazon is betting heavily on.


Will It Take Off?

The ongoing evolution of the replenishment economy

Analysts have differing opinions on whether consumers are ready for the replenishment economy envisioned by Amazon and other tech giants. The Dash Button ran afoul of regulators in the EU for failing to provide up to date pricing and product information. And budget-conscious consumers who carefully track household expenditures might be reluctant to relinquish control over their shopping decisions. Others might be unnerved by the idea of a completely connected house monitoring how much tissue they use and what they spend on shampoo. As industry analyst Matt Rolandson puts it: “The Dash efforts don’t say a lot about how we want to buy things, but it does say something about how Amazon wants us to buy things.”

Although some have their doubts, we believe that always having milk for your cereal and never running out of toothpaste is a concept with great appeal for the masses. Nobody wants to change out of their pajamas and drive to a convenience store at 11 o’clock, or implore a family member to run around the corner for a desperately needed square of tissue. As consumers familiarize themselves with the ideas behind the replenishment economy, we expect them to jump in the pool. Nobody likes to carry a 30 lb. sack of dog food through a massive Tesco parking lot in the summer heat, and now nobody has to!


Keeping Up With The Bezoses

the ongoing evolution of the replenishment economy

Amazon has been busy creating this new playing field, and they’ve invested heavily in the technology to make replenishment a snap. They have a massive eCommerce foothold, their smart speakers are at the forefront of voice shopping, and DRS is funneling thousands of new customers into the replenishment paradigm. Not to mention the strength of their logistics chain and the perks and profits that come with Prime memberships. If you’re a competitor (and if you are selling almost anything, you probably are) it’s time to prepare yourself for this new way of shopping before it’s too late.

The main appeal of the replenishment economy is the ease and convenience it offers the consumer. They don’t have to waste a second of their time planning to shop for staples or trekking to the supermarket. In order to compete, you’ll need to focus on removing every hurdle, headache, and roadblock from the purchase process. Shoppable packaging and advertising are a must. If you can convert a customer with a click or a voice command, you’re in a great position to create a lifetime of value. Once a customer gets on the replenishment treadmill, it will take a massive push from a competitor to bump them off. So that first purchase becomes absolutely crucial. Enable voice shopping, ensure a smooth checkout experience, and make sure that you have industry-leading delivery times and return policies.

Every barrier that stands in the way of a purchase will be magnified and multiplied as the replenishment economy slides into place. Shopping for staples isn’t a pleasurable experience for the vast majority of consumers. Running out of them is an incredibly frustrating one. We are poised for a sea change in the way we shop for groceries and everyday items, and every consumer you lose to complicated sign-ups, poorly designed apps, or the lack of a voice shopping interface will be incredibly costly. If you’re ready to make the replenishment economy work for you, we’re ready to help!