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Amazon Focuses On Subscription Services To Generate Ongoing Sales, Loyalty Featured

Amazon Focuses On Subscription Services To Generate Ongoing Sales, Loyalty

Subscription services such as Netflix and Spotify have significantly shifted the way people consume media. Charging a monthly fee, these subscription services satiate consumers’ appetite for anywhere, anytime access for videos and music. 

Now, retailers such as Amazon are tweaking their business models by including auto-replenishment and subscription services that can help add ease and convenience to consumers’ everyday lives. After all, 63% of shoppers say they are interested in subscription programs where they automatically receive products based on purchase history or preferences, according to Accenture research.

Over the past few months, Amazon has offered two new services to Prime members: the Amazon Dash button and Echo. The Amazon Dash button allows Prime users to reorder everyday products, such as detergent, tissues and other consumer goods, with a touch of a button. To activate the Dash button, consumers use the Amazon mobile app to connect to their home Wi-Fi network and then select the product they want to reorder. By pressing the button, consumers can complete their order and will receive a confirmation through the mobile app. Amazon also has a standard Dash solution available for its AmazonFresh service. 

Echo is a cylindrical speaker and “personal assistant,” designed to accept voice requests to search for and purchase products. So far, the solution only accepts Prime-eligible purchases and is available to a select number of U.S. Amazon Prime members.

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Although Dash and Echo both still have limited availability, both are creating ripples in the shopper community due to their focus on more seamless replenishment. Rather than taking a last-minute trip to a store, consumers can take advantage of their Prime perks and have preferred items delivered to their doorstep in two days.

“Through Dash, Amazon is eliminating this gap and making the ability to order available immediately at the point a need arises,” said Anil Kaul, CEO of Absolutdata. “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 gap and eliminating external factors. Typically, a consumer runs out of detergent and will ultimately make a purchase. The time between these instances is available for other factors to influence the consumers’ choice, ranging from price to packaging to sales and coupons.”

Not only do auto-replenish and subscription services help create a more seamless experience for consumers, they also can provide a number of benefits for brands and retailers. By offering these services “retailers have ongoing and automatic sales,” said Sean Cook, former CEO of ShopVisible and current VP of Digital Commerce at Epicor. While more consistent and ongoing revenue is undoubtedly a perk, Cook added that these services also can drive down marketing costs because retailers can spend fewer resources on acquiring new customers.

Supporting this point, Kaul added that Amazon is taking cues from Google, aiming to address consumer needs before a feeling of desire even arises.

“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 said. “In a Zero Moment of Purchase scenario, all other factors – coupons, packaging, advertising – become irrelevant.” 

From a consumer product brand’s perspective, Dash and Echo help create a stronger connection with consumers. Typically, retailers have the most impact on consumer behaviors and, overall, “own customer relationships,” Kaul noted. “But Dash allows brands to build a direct link to the customer, creating an alternate channel beyond retail and delivering unprecedented access to customers.”

Remaining Competitive And Innovative As Jet.com Launches

On April 30, subscription shopping program Jet.com opened for beta testing with 10,000 exclusive members. Raising approximately $220 million in start-up funds, and valued at more than $600 million, Jet.com is poised to help consumers purchase wholesale items from a range of sellers. The more items customers add to their cart, the more money they can save. 

Although Jet.com is valuable for consumers that love to buy in bulk, Amazon Dash and Echo aim to appeal more to shoppers that value convenience and speed over price. 

“The Dash Button offers shoppers an alternative to buying consumables in bulk,” said Tom Caporaso, CEO of Clarus Marketing Group. “By rolling it out before Jet.com’s launch, Amazon is making a pre-emptive effort to retain Prime members interested in buying those products online. By expanding its benefits, Prime also expands its potential audience.”

However, Amazon should keep tabs on Jet.com, as CEO Marc Lore has ambitious plans, Caporaso noted. “Jet.com is already trying to neutralize a main benefit of Amazon Prime and the Dash Button by promising to deliver disposable goods within two days. That could help alleviate shoppers’ concerns about speed and turn their focus to item costs, assuming Jet prices are, as Lore has claimed, ‘10% to 15% lower than anywhere else online.’ Jet.com is probably also working to develop a repeatable, regularly scheduled order process to compete with Amazon’s Dash Button and offer members as easy an experience as possible.”

Despite Dash and Echo still in the early testing phases, Amazon’s efforts will not be in vain: “Amazon’s ‘Everything Store’ ambitions stretch far beyond competing with Jet.com for consumable shoppers,” Caporaso said. “The Dash Button is one more vehicle, along with its marketplace, new home services, grocery delivery, streaming entertainment options, Amazon Echo, and myriad other efforts, supporting its goal to become an indispensable part of people’s lives.”




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