Wednesday, April 01, 2015

Amazon enters IOT with Amazon Dash Button

Amazon owns 1-click shopping on the web. So its not a surprise for Amazon to make our long-due dream of making our household appliances smart - with 1-click  push of a button. The Amazon Dash Button launched today!

How we hate to go shopping for Diapers and Garbage Bags

The product person is me is impressed by the design of the slick button, the tap of the button synonymous to the 1-click action we associate with Amazon brand and how it reduces friction in purchasing non-fun essential items like soap, coffee, garbage bags, printer paper, shaving cream  and diapers. And it seamlessly extends Amazon's commerce business right into our home.

Have you seen Flic the Wireless Smart Button on IndieGoGo?

This is a generic 1 click IOT button a startup is planning to build.
Watch the video, it is hilarious!

Amazon offers the IOT device, the App, the platform and owns the inventory of the brand consumables. So they are able to offer a seamless frictionless experience for the consumer setting it up for success.

My Take on Whats Behind the Dash Button

It looks like the button is a Bluetooth device that communicates with Amazon App on your smartphone and uses the Phone's connection to order online.  Amazon is giving a custom button for each brand so it simplifies it for consumers to order particular consumables. So you get a button for Tide and stick it to your washing machine and another button for your coffee maker.  Each Bluetooth device has a unique Mac address. When you set it up first time, it will tie to your Amazon identity and let you configure (I am guessing here) some sizes/quantity/type of the item to get to a particular SKU in Amazon's catalog. Subsequently when you press the button it tells the App to order that item and sends an alert giving the user the freedom to cancel the order.
Once you order the item, subsequently the order tracking comes via mobile alerts using Amazon app. This is comparable to alerts from shopping sites on Messenger Platform that Facebook  launched last week at their F8 conference.

IOT Design Simplicity extended to Commerce Experience

The beauty of IOT devices compared to all tech innovations of the past is how we are seeing simplicity in design and the good ones tie seamlessly to a mobile App.
Amazon Dash Button is a simple button you can stick anywhere on any appliance to remind you to order the refills. It ties to the Amazon App and allows you to cancel your order giving user the choice to do comparison shopping. This is such a subtle feature that builds trust with users challenging them that Amazon has the best price. It builds on Amazon's delivery convenience. It offers features to track the purchase which all ties back to existing Amazon App.

Why this is win for Amazon and not any Retailer?

Amazon owns the distribution of Prime customers where they have solved for the delivery problem. Any other retailer will have the problem of on-boarding users to adopt a new technology. And this ties seamlessly to Amazon's inventory (for most cases). So they are deploying it for Prime Customers only at launch, thereby strengthening the value of Amazon Prime memberships.

Questions from a skeptical data mind

You know I love new innovations but also become schizophrenic trying to look at other sides of every product roll-out. That's the best part I love working with many different teams with multiple, smart viewpoints. The analyst in me wonders what Amazon data says (we'll never find this out) about the buying habit of people who buy consumables online. Do we go to Amazon to buy Diapers and end up purchasing lots of other stuff merchandized to us? Now will there be any cannibalization of such spending from users? It is possible that some product manager inside Amazon looked at this data and said, this is still the right thing for the customer so lets do it and went ahead. Maybe they estimated the upside from the scale of new purchases from the Dash button and the increased trust from Prime customers offsetting this loss (if any).

Innovation Ecosystem - Dash Replenishment Service (DRS) for Device Manufacturers

Amazon offers a Platform API for device manufacturers called "Dash Relinquishment Service"  to connect to leverage Amazon's authentication and payment systems, customer service, and fulfillment network.

Whirlpool plans to offer re-ordering detergent. Brita is planning a connected water filter that will measure water usage and re-order filters. Quirky is planning a new connected device series called Poppy that offers a Pet food dispenser, baby formula maker, pour-over coffee maker that can measure usage and refills. Brother Printers will re-order ink cartridges and paper refills. All of them plan to use Amazon's DRS service to seamlessly order from Amazon.
Amazon has left control with manufacturers to decide if they want to build in an Amazon Dash like button in their device or bake the counting of usage and ordering refill automated inside the device so they can manage their own design for their brands while using DRS.

Are you as excited as me about this progress in IOT and Commerce? Share your thoughts in comments below.