The Dash for innovation in B2B commodities

The Dash for innovation in B2B commodities

Jeremy Smith Blog, Supply Chain

Yesterday saw the launch of the new Amazon Dash Button product. This is the start of an integrated supply chain service which is run on the principles of Lean Consumption. The ‘Internet of Things’ has long promised us fridges that order your milk for you, as it runs out, but this is the first real move into the mass market for this model.

Lean Consumption runs on the premise of making things simple and low maintenance for the consumer, which is clearly no bad thing, and by placing a button next to your dishwasher that you can press when you are running low on tablets is very much an example of this. Whilst the benefit to your average lazy consumer (who isn’t one) is significant, what are the potential consequences? The ability to switch is clearly still there, but they are making it harder to do so as you would have to forego the easy option of pressing a button and incurring all those search costs to go to another product. I’m not sure about you, but I imagine price increases will become subtle, yet frequent once this Dash product stabilises. Using discounts, vouchers and offers is something else that Amazon can control and the consumer may have to become a price taker, or give up on the convenience that Dash is offering them. A value proposition trade-off in action!

Also interesting to see is that most buttons have just the one product in the category. For example, just Ariel, no Persil. Many of these products are in areas where there are monopolistic or oligopolistic brands and I’d be interested to know how much this innovation has been supplier led or funded as there is a lot of benefit here of locking in the aforementioned lazy consumers.

For me though, the biggest benefit is to Amazon. Amazon has been very public with its plans on moving into the grocery market (Amazon Fresh) leveraging the already impressive Amazon delivery network and moving into the Ocado, Abel & Cole and supermarket home delivery space. This solution will allow them to effectively control what Amazon will see as the ‘maverick spend’ of their Prime members who are aware of the service yet choosing to use other providers. They are playing on the lethargy and vanity of their customers to significantly make the process easier, allowing them to increase the leverage with their suppliers and build data that will give them even more insight on usage and demand patterns in order to increase market share and profitability.

This is clearly a win for your average consumer in an area where they are already brand loyal, and a huge potential win for Amazon in controlling where their customers spend their money. But how can we procurement folk take this innovation and apply it in the B2B world, away from the B2C model? MRO, where CPFR (Collaborative Planning, Forecasting and Replenishment) type systems are not already implemented, is one application where there is often non-compliant spend. This is because end customers either knowingly avoid preferred supplier lists or find the order processes too cumbersome to follow and therefore using other channels and increasing maverick spend. Dash models would be a simple way of linking your end users to your catalogues, to your supply chain in a lean manner. Many other applications would also work, stationery springs to mind, but as Amazon improve this product expect them to move the solution into the B2B world as they have also done in other areas over the last few years.

 

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