AMZN Stock: This Device Could Be Big for Amazon.com, Inc.
When Amazon.com, Inc. (NASDAQ:AMZN) unveiled a service on March 31 last year that lets you order toilet paper at the push of a button, many thought it was an early April Fools’ joke. AMZN stock didn’t react on the news, as investors didn’t know what to make of the new service. One analyst chimed that Amazon’s latest attempt to connect with customers would misfire.
“Do we really need this device?” Forrester Research analyst Sucharita Mulpuru said at the time. “I can see this being much better for, say, ordering pizza, but for ordering diapers or toilet paper seems a little odd. Who waits until the last roll of toilet paper before replenishing anyway?”
But it looks like Amazon might be getting the last laugh. Due to high customer demand, Amazon announced last week that it is expanding the number of products available for instant re-ordering through its Wi-Fi–connected “Dash Button.”
The Amazon Dash Button is a small electronic device that has an adhesive strip that can be mounted anywhere a customer is likely to notice a product running low, like a fridge or washing machine.
At the push of a button, Amazon is alerted via the user’s home Wi-Fi network to deliver the item, saving the customer time from making a trip to the store, or from even using their desktop computer or mobile device to place an online order. The buttons cost $4.99 each, but that cost is reimbursed after the user makes their first order through Dash.
A year after its initial announcement, it looks like the Dash Button is gaining momentum. Amazon just announced a slew of big name brands that are being added to the service including Charmin, Doritos, Energizer, Red Bull, Starbucks, Trojan, Pepsi, Quaker Oats, Lysol, Peet’s Coffee among many others. That brings the total number of products offered through the service to more than 100.
Amazon didn’t give out specific numbers of Dash Buttons sold or the total revenue they generated, but the company did say that Dash Button orders have grown by more than 75% in the last three months, with at least one order now taking place every minute. (Source: “Amazon Grows Push-Button E-Commerce Empire,” Investor’s Business Daily, April 4, 2016.)
The service is proving to be successful enough to warrant competition from rivals eBay Inc (NASDAQ:EBAY) and Wal-Mart Stores, Inc. (NYSE:WMT) who are in the early stages of launching a similar program. (Source: Ibid.)
Amazon might be onto something, as the service satisfies that instant gratification craving a lot of us have. Amazon also loves the service because it keeps you ordering from “Prime” and not from any of the company’s competitors.
Companies listed with Amazon’s Dash Buttons will also benefit from the service as it essentially builds customer loyalty by removing the competition. You’re most likely not going to have Dash Buttons for Tide and All laundry detergent right next to each other.
The Dash Button service is a neat idea that shows off the potential of the Internet of Things (IoT), but the real innovation will come when the Dash service is built into the products themselves.
And that is already starting to happen. In February, Amazon partnered with Brita to launch an Internet-connected water pitcher that automatically orders a new water filter from Prime. (Source: “Amazon and Brita Just Solved the Biggest Problem in Your Fridge,” TIME, February 29, 2016.) The pitcher comes with a built-in counter that can track the amount of water that passes through the filter.
Amazon has also partnered with several printer manufacturers that automatically order ink and toner cartridges when they run low. Internet-connected washing machines are also in the works that can anticipate when supplies run low and automatically order replenishments for you too.
The Bottom Line on AMZN Stock
The Amazon Dash Button service may not be moving the needle at the moment in terms of the company’s total revenue, but it has the potential to lure more customers to Amazon’s e-commerce store.
In the long run, as Amazon makes more Internet-connected devices readily available to order items you run low on, AMZN stock is sure to benefit.
