By Sharon Terlep and Greg Bensinger
Amazon.com Inc. is doubling down on its Dash push-button
ordering devices, getting consumer-products makers to invest in the
gadgets even amid evidence that consumers are cool to them.
The internet giant this week plans to announce it is adding
dozens of new brands to its Dash buttons feature, according to
documents reviewed by The Wall Street Journal and people familiar
with the matter.
Mistaken by some as an April Fool's joke when Amazon rolled them
out in the spring of 2015, the thumb-drive-sized devices enable
shoppers to order things like Tide detergent and Cottonelle toilet
paper simply by pressing a button. Customers are encouraged to put
the wireless devices by their refrigerators and washing machines
for quick reordering.
But fewer than half of people who bought a Dash button since
March 2015 have used it to place an actual order, estimates Slice
Intelligence, which conducts market research based on emailed
consumer receipts. Those consumers who do order make a purchase
roughly once every two months, Slice found.
Several consumer-product executives said they have signed up for
the gadget largely to ensure their brands maintain close ties to
Amazon. The venture is more vital as a marketing tool than a
product-delivery system, they said.
"It may not be the most intuitive feature," said Ken McFarland,
director of e-commerce for Seventh Generation Inc., which has Dash
buttons for its cleaning products and diapers. "But Amazon is
trying so many things and you don't want to miss out on the ones
that work. You want to be out there if it does happen to be a
hit."
Companies pay Amazon $15 for each button sold and 15% of each
Dash product sale, atop the normal commission, which typically
ranges from 8% to 15%, the people familiar with the matter
said.
For their part, consumers pay $5 per button, though Amazon
sweetens the deal by offering a $5 rebate for every button. The
rebate is good toward the first purchase using that button. Only
members of Amazon's $99-per-year Prime membership are eligible to
use the Dash buttons.
Helping expand Dash's ranks: Amazon dropped a hefty buy-in fee
of around $200,000 required of the first companies that signed up,
according to people familiar with the terms. Those early Dash
brands belong to major consumer companies, including Procter &
Gamble Co., Kimberly-Clark Corp. and PepsiCo Inc.
Amazon declined to comment. The buttons fit into Amazon's
broader strategy to make shopping as easy as possible, giving
consumers fewer reasons to go to competitors' brick-and-mortar
stores.
Amazon faces competition, too, including from itself. Its Echo
and Tap voice-activated virtual assistants allow customers to order
a range of products just by saying them aloud, potentially
supplanting the Dash buttons.
And at least one startup, Kwik Commerce Ltd., is rolling out
buttons of its own. The Sunnyvale, Calif., company this month said
it had raised $3 million to expand its line of buttons, which
include Huggies diapers and beverages from Anheuser-Busch InBev
NV.
Sergio Monsalve, a partner at Norwest Venture Partners, which
led the Kwik investment, said Amazon is vulnerable. "There are
other categories to address, like food," he said, noting Kwik has a
deal to distribute Domino's Pizza LLC pizzas in Israel. "There's
plenty of margin" in such on-demand deliveries, he said.
Cot'n Wash Inc.'s Dropps laundry detergent packs will be among
the products in the coming Dash expansion. Chief Executive Jonathan
Propper said he is unconcerned by ridicule of Dash or its practical
limitations, real or perceived.
"Things can change," Mr. Propper said. "Look at the categories
Amazon created that never existed before, like Kindle. There were
people who said no one wanted to read a book off a screen."
Seventh Generation's Mr. McFarland said the Dash buttons seem to
work better for products like laundry detergent that require
replenishment on an unpredictable schedule. But diapers aren't a
good fit because shoppers generally buy them at regular intervals,
which makes a subscription delivery service a more convenient
option.
A spokeswoman for Sun Products Corp., which uses Dash to sell
All and Wisk laundry detergents and Snuggle fabric softener, said
the buttons have "exceeded expectations."
Math teacher Kyle Boyd bought buttons for Tide, Gatorade and
Greenies dog treats when they first came out, but today only uses
the Tide button. The others are stashed in the Yorktown, Va.,
family's junk drawer, she said.
Among her complaints: the buttons don't display price info when
they are pushed, which can lead to big swings as Amazon updates its
prices online. She stopped using her Gatorade button when the price
of a 12-pack jumped from $9 from the first purchase to $22 for the
second. Amazon provides text-message alerts -- including price --
upon request when a button is pushed. "If I have to check on the
price every time," she said, "it's not actually saving me
time."
Write to Sharon Terlep at sharon.terlep@wsj.com and Greg
Bensinger at greg.bensinger@wsj.com
(END) Dow Jones Newswires
June 26, 2016 15:59 ET (19:59 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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