Amazon Dash Button


I noted Amazon Dash yesterday on Twitter and said I thought it was neat, but I couldn't see myself using it. I've been thinking about that. Basically Amazon Dash is a wireless ordering button linked to your account that acts as an inventory pull system. The idea is you stick one in your laundry room and when you run low on detergent, for example, you push the button and a replacement is ordered from Amazon.

Cool ideal, but seems to put a premium for the convenience. For dry/household stuff, which seem ideal for Dash, even with their Pantry and Subscribe/Save programs I find Amazon more expensive than superstores and warehouse clubs for brand names. You can save even more money buying store brands. The biggest issue for Amazon I think is unit purchase costs go down as package size increases. So, buying in bulk you can save money, which is a pretty intuitive concept. The issue for mail order, however, is bigger the unit count, the more it costs to ship.

What I wonder is if Amazon could work out deals with vendors to reduce costs with warehousing and using volume purchases. For example, could Amazon convince vendors to warehouse closer to their distribution centers, thus giving an advantage over conventional retail? Maybe they're already doing this to some extent. And could Amazon get deals by not just buying bulk retail units, but bulk individual units? Again, Amazon is already kind of there. Amazon offers frustration-free packaging, which is not only convenient for mail order, but saves money on shipping and packaging. So, instead of ordering cases of nutrition bars in retail boxes, they could be lose or bundled with shrink wrap. Amazon could save money on shipping and it should be cheaper from their vendors than what conventional retailers pay.

If Amazon can do that, then they should be able to better compete with conventional retail, but here's the kicker: Rather than trying to compete on cost with bulk, Amazon could right-size purchase for just-in-time inventories. So, if I'm running out of those nutrition bars, I push the button and 2-3 days later I'm resupplied for another couple weeks. The key is if Amazon can reduce costs enough by leveraging their system vs conventional retail so that they can do this at a competitive price. If you're living in an apartment or smaller home, this is really advantageous because you don't need large pantries or storage closets for stuff. Plus, you don't have cash tied up in months worth of inventory.

So, right now Dash Button seem convent, but not very efficient for those who care about costs. That could change, however, and really change how people shop.