{"id":23395,"date":"2017-11-15T02:02:37","date_gmt":"2017-11-15T07:02:37","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/dashing-into-a-digital-future-with-the-amazon-dash\/"},"modified":"2017-11-15T02:02:37","modified_gmt":"2017-11-15T07:02:37","slug":"dashing-into-a-digital-future-with-the-amazon-dash","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/dashing-into-a-digital-future-with-the-amazon-dash\/","title":{"rendered":"Dashing into a digital future with the Amazon Dash"},"content":{"rendered":"

When Amazon launched the Dash button on March 31, 2015, the public was baffled (Exhibit 1).\u00a0 The Dash is a small, WiFi connected, push-button tied to a particular brand and users can press the button at any time to place an Amazon order for the product (Exhibit 2). USA Today<\/em> published \u201cAmazon’s Dash button–Not an April Fools’ joke\u201d while the New Yorker<\/em> wrote about \u201cThe Horror of Amazon\u2019s New Dash Button.\u201d[1]<\/a>[2]<\/a> What was the Internet giant doing making physical \u2018easy buttons\u2019 to sell products?<\/p>\n

In 2015, Amazon was a leader with respect to the digitization of its supply chain.[3]<\/a>\u00a0 Its technological advancements (Kiva robots automating its factories, routing \/ shipping algorithms enabling last-minute optimized shipping decisions) and scale allowed the retail to deliver goods faster and more cheaply to consumers than almost any other player.[4]<\/a> For example, only a few months before the Dash, Amazon launched Prime Now, a one-hour delivery service.[5]<\/a><\/p>\n

However, while Amazon had control over its own processes, it had yet to automate the customer experience and purchasing process.\u00a0 Today, Amazon, reliant on its retailers, largely delivers \u2018dumb\u2019 products.\u00a0 A bottle of Tide dishwashing detergent cannot automatically place a reorder when it is running low.\u00a0 The potential of smart, connected products and of predictive ordering are major concerns and opportunities for Amazon.\u00a0 Every time consumers want to buy a bottle of detergent Amazon needs to compete with existing brick-and-mortar incumbents (e.g., CVS, Walgreens) as well as old and emerging e-Commerce players (e.g., Walmart, Google Shopping Express, Instacart) for mindshare.[6]<\/a>\u00a0 Moreover, manufacturers have been experimenting with direct-to-consumer models and smart products that can automatically place re-oders (e.g., a washing machine that can reorder detergent when it is running low).[7]<\/a>\u00a0 While some of these manufacturers (e.g., Whirlpool) have opted to use Amazon\u2019s fulfillment services, Amazon may risk disintermediation from some of these players.[8]<\/a><\/p>\n

The launch of the Amazon Dash was a phenomenal way to address this concern and create a smarter supply chain, simplifying a customer\u2019s purchasing decision. Amazon has expanded its Dash program.\u00a0 Today, Amazon has over 300 buttons, partners are receiving half their Amazon orders via the Dash and it is available in more than 8 countries.[9]<\/a> \u00a0Consumers place orders on Dash buttons more than four times a minute, which is up from once a minute in 2016.[10]<\/a> \u00a0The company has gone on to launch virtual Dash buttons on its app (e.g., consumers don\u2019t need to buy the physical button).[11]<\/a> Finally, the company recently unveiled the Dash Wand, a WiFi connected barcode scanner and voice-enabled device that can order goods.[12]<\/a>\u00a0 Promoting the Wand is going to be a massive medium-term opportunity for Amazon as it enables a consumer to order virtually anything Amazon delivers.<\/p>\n

With respect to my own recommendations, in the short-term, I believe Amazon should further its rollout, adding more partner brands and mass-advertising the Dash to consumers.\u00a0 Amazon could even automatically deliver a Dash with any product that is frequently reordered or have an \u2018add a Dash\u2019 option in the checkout flow.\u00a0 In the medium term, Amazon could go significantly further to digitize the consumer layer of its supply chain, by predicting a consumer\u2019s orders and placing those orders automatically. Through the data it collects from the Dash and its online channel, Amazon can paint a relatively complete picture of a consumer\u2019s purchasing behavior and start prompting the customer with suggested re-orders.\u00a0 Further down the road, Amazon could ask consumers if they want to opt-in to an automatic reordering program and effectively remove the consumer decision from the purchase entirely, making shopping seamless.<\/p>\n

Despite the early success of the Dash and the potential opportunity, there are many open questions.\u00a0 The first is around Amazon\u2019s partnership strategy.\u00a0 A consumer with a Tide dash button, will almost always purchase Tide.\u00a0 How should Amazon craft its partnerships such that it successfully continues to scale its Dash ecosystem for both small and large brands? Moreover, how should Amazon position its own private label brands in this strategy? Second, while the Dash has seen success with frequently ordered products, should the program be scaled to more infrequent purchases? Finally, as Amazon moves into predictive ordering, are there any lines the company should draw with consumer data?<\/p>\n

I believe the Dash represents a significant innovation in building a supply chain not just catered to consumer demand, but catered to real-time consumer needs. It will be fascinating to watch Amazon answer these questions as it seeks to become the \u2018everything store.\u2019[13]<\/a><\/p>\n

(741 words, excludes footnotes)<\/p>\n

Exhibit 1:<\/p>\n

\"\"<\/a>
Source: Hilary Milnes, \u201cRetail industry experts\u2019 first reactions to Amazon Dash,\u201d April 1, 2015, https:\/\/digiday.com\/marketing\/retail-industry-experts-first-reactions-amazon-dash\/, accessed November 2016.<\/figcaption><\/figure>\n

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Exhibit 2<\/p>\n

\"\"<\/a>
Source: Amazon, \u201cAmazon Dash Button,\u201d https:\/\/www.amazon.com\/Dash-Buttons\/b?ie=UTF8&node=10667898011, accessed November 2016.<\/figcaption><\/figure>\n

[1]<\/a> Elizabeth Weise, \u201cAmazon’s Dash button–Not an April Fools’ joke,\u201d USA Today, March 31, 2015, https:\/\/www.usatoday.com\/story\/tech\/2015\/03\/31\/amazon-dash-ordering-button\/70747342\/<\/a>, accessed November 2016.<\/p>\n

[2]<\/a> Ian Crouch, \u201cThe Horror of Amazon\u2019s New Dash Button,\u201d New Yorker, April 2, 2015, https:\/\/www.newyorker.com\/culture\/culture-desk\/the-horror-of-amazons-new-dash-button<\/a>, \u00a0accessed November 2016.<\/p>\n

[3]<\/a> Jefferies, \u201cFulfillment Revisited: A Deep Dive on Amazon’s Evolving Fulfillment Strategy,\u201d April 14, 2015, via CapitalIQ, accessed November 2016.<\/p>\n

[4]<\/a> Ibid.<\/p>\n

[5]<\/a> Ben Geier, \u201cAmazon launches one-hour deliveries with Prime Now,\u201d December 18, 2014, http:\/\/fortune.com\/2014\/12\/18\/amazon-launches-one-hour-deliveries-with-prime-now\/<\/a>, accessed November 2016.<\/p>\n

[6]<\/a> Jefferies, \u201cFulfillment Revisited: A Deep Dive on Amazon’s Evolving Fulfillment Strategy,\u201d April 14, 2015, via CapitalIQ, accessed November 2016.<\/p>\n

[7]<\/a> Kif Leswing, \u201cThis Smart Washing Machine Will Order More Detergent From Amazon,\u201d January 4, 2016, http:\/\/fortune.com\/2016\/01\/04\/whirlpool-amazon-washer-dryer\/<\/a>, accessed November 2016.<\/p>\n

[8]<\/a> Ibid.<\/p>\n

[9]<\/a> Brett Williams, \u201cThere are now Amazon Dash buttons for Colgate, KY, Emergen-C and more,\u201d Mashable, January 25, 2017, http:\/\/mashable.com\/2017\/01\/25\/amazon-dash-adds-more-partners\/#XScTpHdjmaqP<\/a>, accessed November 2016.<\/p>\n

[10]<\/a> Leena Rao, \u201cTwo Years After Launching, Amazon Dash Shows Promise,\u201d Fortune, April 25, 2017, http:\/\/fortune.com\/2017\/04\/25\/amazon-dash-button-growth\/<\/a>, accessed November 2016.<\/p>\n

[11]<\/a> Jason Del Rey, \u201cAmazon just launched virtual \u2018Dash\u2019 buttons for one-click buying from the homepage,\u201d January 20, 2017, https:\/\/www.recode.net\/2017\/1\/20\/14333220\/amazon-virtual-dash-buttons-one-click-purchase<\/a>, accessed November 2016.<\/p>\n

[12]<\/a> Minda Zetlin, \u201cAmazon’s Latest Product Will Try to Manipulate You, but You Should Still Buy One (It’s Basically Free),\u201d June 16, 2017, https:\/\/www.inc.com\/minda-zetlin\/amazons-latest-product-will-try-to-manipulate-you-but-you-should-still-buy-one-i.html<\/a>, accessed November 2016.<\/p>\n

[13]<\/a> Michiko Kakutani, \u201cSelling as Hard as He Can \u2018The Everything Store: Jeff Bezos and the Age of Amazon,\u2019\u201d http:\/\/www.nytimes.com\/2013\/10\/29\/books\/the-everything-store-jeff-bezos-and-the-age-of-amazon.html<\/a>, accessed November 2016.<\/p>\n","protected":false},"excerpt":{"rendered":"

The Amazon Dash – joke or supply chain innovation?<\/p>\n","protected":false},"author":10332,"featured_media":23396,"comment_status":"open","ping_status":"closed","template":"","categories":[52,3235,2396,37],"class_list":["post-23395","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-amazon","category-digital-supply-chain","category-digital-technology","category-innovation","hck-taxonomy-organization-amazon","hck-taxonomy-industry-technology","hck-taxonomy-country-united-states"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/rc-tom-challenge-2017\/","yoast_head":"\nDashing into a digital future with the Amazon Dash - Technology and Operations Management<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/dashing-into-a-digital-future-with-the-amazon-dash\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Dashing into a digital future with the Amazon Dash - 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