Ged Carroll

Month: April 2015

  • The Amazon Dash button post

    At the beginning of this month Amazon launched an addition to their Dash ordering hardware with the Amazon Dash button. There was a lot of incredulity amongst the media heightened by the unfortunate timing which overlapped with April’s Fool Day.

    Why the incredulity?

    I would break the cynicism down into two broad buckets:

    • The Amazon Dash button has a very singular usage / use case, narrower even the Yo! app which was a bit of a tech fad last year. Critics are at best uncertain that consumers would use them? I generally buy toilet rolls every 4-6 months, do I really need a button for that?
    • The Amazon Dash button implies that the hardware required is ridiculously cheap. How many boxes of washing powder, packets of Mac & Cheese or toilet rolls would be required for a button to break even?
    Business perspective

    Rather than ripping into this into too much depth I thought I would share Benedict Evans’ interesting hypothesis about the Amazon Dash button:

    Amazon is trying to eliminate both vendor and brand decisions, and turning itself into a utility company – get your house connected to power, water, gas and Amazon. And choosing which commodity product you need is just another piece of friction to be removed by Amazon’s kaizen

    There are some interesting directions that come out of this view point. Let’s break Benedict’s analysis down chunk-by-chunk:

    • Eliminating vendor decisions: there are two prongs to this. Firstly, it would reduce the basket size for supermarkets and also reduce impulse purchases. Let’s think about the Walmart ‘beer and diapers’ retail urban legend for a moment – if you weren’t shopping for the diapers, you aren’t likely to have picked up the beer next to it as you would have had no reason to go near those shelves. By implication it is also an attack on some of the categories carried in convenience stores. Given that the button is about ‘just-in-time’ shopping it implies that the users are not likely to have rooms in their lives for big box retailers or CostCo. The buttons are likely to aimed at urban dwellers rather than the suburbs were larger homes and larger vehicles to do the big box store shop are the norm – Sam’s Warehouse is safer than Walmart in this scenario
    • Eliminate brand decisions: since sales are diverted from supermarkets this also affects their private label sales, especially where they are acquired by accident as lookalikes stacked next to well-known brands. Challenger brands find that switching becomes much harder as they can’t intercept the customer at the point-of-intent through shopper marketing and the opportunity cost for the consumer gets raised due to the comparative nature of the friction in purchase.  It also begs a question about how much it affects the share price of WPP and other marketing combines who have spent big on shopper marketing acquisitions over the past few years. Do buttons offer a net gain or loss of value to them? I do know that the button puts Amazon in a much more powerful position versus vendors in terms of discount pricing to retailer and warehousing. The key to understand the power  that Amazon would bring is ‘choosing which commodity product you need…’. The very idea of a product being boiled down to a commodity buy would scare the living daylights of the average brand manager in an FMCG mega-corp
    • Turning itself into a utility: for Amazon this is about locking the consumer in via Prime to the consumer life. At the present time, logistics costs have been an increasing proportion of the cost of sales for Amazon, there must be a hope that the scale of grocery shopping will bring down the price of Prime and drive profits higher?

    There is no reason why the likes of Tesco, Ocado or Iceland couldn’t have done this. The wider Dash technology would make it easier for consumers to do grocery shopping and reduce the friction of online purchases. Instead they seem to have wanted to reduce cashier numbers inshore and focused on self-service tills. Time will tell if they made the right technological choice.

    What about the user?

    This is designed to make the consumers life easier and I can see how it makes purchase of otherwise annoying to shop for items frictionless, but it only works within reason. You can’t have a wall of buttons on the front door of your fridge freezer and just when do you press the button in the bathroom to order up more razor blades or toilet roll? What happens during the run up to Christmas when Amazon has had sub-optimal performance with regards deliveries on occasion? What is the buying frequency required to make the button habit forming, used without thinking about it, without consideration. When does the opportunity cost for the consumer tip in their favour regarding button usage?

    What I don’t have yet is a clear understanding on depth and breadth of the customer problem being solved by the Dash button.

    Product design

    The original Dash device was interesting because it represented a rejection of the broader theme of convergence where functionality is subsumed from dedicated hardware into a software layer running on a computer, via a web browser, tablet or smartphone. Instead Dash is a shopping appliance and wouldn’t look out of place in a cupboard full of Braun kit.

    The Dash button represents a further evolution of specialist hardware, a brand-specific, tactile hardware interface. It mirrors software like IFTTT’s ‘Do’ application, the Yo! messenger app and the Dimple smartphone button project.

    For non-food products like toilet rolls that come in a plastic bale that is quickly discarded, there may not be a barcode to scan in on your Dash device. Instead you would have to ask for a new pack of Charmin’ or more Mach3 razors. Processing each voice message is expensive, which makes the opportunity cost around creating dedicated buttons for certain classes of product much more attractive. Amazon first and foremost is a data-driven company, they will know which product categories that they want to have buttons for. However, what makes on an Excel spreadsheet doesn’t always make sense to the consumer…

    More information

    Amazon Dash button
    Benedict Evans newsletter edition 106
    Investing in smart logistics | Fidelity Worldwide Investments
    Amazon, in Threat to UPS, Tries Its Own Deliveries | WSJ (paywall)
    Supply Chain News: A 360-Degree View of E-Fulfillment Part 1 | Supply Chain Digest
    Amazon joins numerous startups in building delivery networks to disrupt Fedex and UPS. | DataFox
    The Amazon Dash post
    Dimple smartphone button project | Indiegogo
    SpinVox: the shocking allegations in full | The Kernel

  • Smartphone crown in China + more

    Apple takes smartphone crown in China – CNET – the smartphone crown is based on over a quarter of urban smartphones sold; Apple’s smartphone crown profit share rather than market share approach. More related content here.

    A New Wave of Chinese Smartphones Set to Emerge in 2015 – TechNode – the key thing here is likely to be relevant patents which many of these companies currently don’t have

    Billionaire Fridman targets US and Europe in $16bn telecoms spree – FT.com – board will include Lastminute.com co-founder Brent Hoberman and Irish telecoms entrepreneur Denis O’Brien, has been brought together to aid acquisitions in the technology sector to augment an already substantial portfolio of telecoms businesses. It will also include Osama Bedier, a former Google payments executive, former Skype executive Russ Shaw and Sir Julian Horn-Smith, one of the founding management team at Vodafone (paywall) – presumably a shedload of leverage as well since $16Bn won’t go that far

    Cyber Trends: 5 Subcultures on the Internet | Highsnobiety – interesting how the internet is melding and spawning tribes

    Panasonic to Release Spherical Fan/circulator – Nikkei Technology Online – gives Dyson a run for his money with this design. I love the space age feel of it

    From Socks To Sex Toys: Inside America’s Subscription-Box Obsession | FastCompany – I think that there is something to be said about careful curation ridding one from the tyranny of choice and giving the approximation of the great record store clerk or the guy at the comic shop – if they are done well. But I am also reminded mostly by these services of book and record clubs of yore

    How To Make A Secret Phone Call | Fast Company – interesting art project which illustrates the complexity of modern privacy

    Windows RT: Mission Accomplished | Fast Company – leverage on Intel

    Casio App Enables Word Searches on Recordings – WSJ – if this works as promised it is amazingly cool and the technology could revolutionise web search

  • Smart home: is all we want is a better burglar alarm?

    The Bluetooth SIG (Special Interest Group) put together some PR-able research on what consumers think about the smart home.

    Methodology
    First of all the methodology:  online survey of over 4,000 US, UK and German consumers. The sample size is better than many, however I don’t know if the sample was self-selecting or what kind of biases might be in there. Since it was gathered solely online one has to have a certain amount of skepticism on sample make-up. But to do this as a telephone survey, they would have had to make in excess of 170,000 phone calls to get the 4,000 respondents to the smart home research.

    The nature of the questions means that answers are prompted which would again affect consumer attitudes rather than open answers which are then categorised.

    Finally, some cultures (like the Japanese) are much more accepting of technologies than others. Home ownership differences will also add into the mix depending on the depth of capital expenditure required to deploy a given technology. Renting is much more common in Germany, the UK has an aspiration to purchase.

    How valid are consumer opinions?
    In evolutionary products such as a new chocolate bar or toilet roll, consumer opinions on developments make more sense than a largely unwritten future a la the smart home, as Steve Jobs is reputed to have said:

    “It’s really hard to design products by focus groups. A lot of times, people don’t know what they want until you show it to them.”

    On to the results
    They put together some nuggets of data from the questions as diagrams, the most interesting was
    Print
    Ease-of-use is an interesting, but largely predictable response. I guess useful was assumed rather than asked in this question.

    There was a comparative lack of interest in smart appliances in comparison to smart environment controls (lighting, HVAC and home security). I suspect that this is partly because ‘smart’ technology has rolled out first in offices with touch control A/C and motion-controlled lighting – where respondents have been exposed to it.

    The thing that puzzles me is why one would want to control some of this smart home technology via the internet. Something like smart lighting doesn’t need to connect to a cloud but instead use local sensors whether it is a Bluetooth MAC address or infra-red heat signature that moves. More gadget related content here.

    More information
    From Sci-Fi to Reality: Almost Half of Consumers Think The Smart Home Will be Mainstream in Five Years
    Bluetooth SIG (Special Interest Group)

  • Cheaper luxury goods + more things

    Cheaper luxury goods could be on the way in Asia, say analysts | SCMP – cheaper luxury goods is due to a mix of market forces in the likes of China and cracking newer luxury markets, according to the article. There is also the upward competition from premium streetwear products that is forcing cheaper luxury goods (paywall)

    What Luxury Brands Can Learn From Baijiu’s Anti-Corruption Comeback | Jing Daily – this move at re-positioning the brand away from gifting to everyday consumption is similar to work that I did with Bordeaux wines in China

    NSA spying caused 9 percent of foreign firms to dump U.S. clouds | SiliconAngle – I don’t think that the military industrial complex would care

    Magic Lantern Brings Linux to Canon EOS Cameras | Hack-a-day – interesting dual boot camera project

    Patagonia Repair Partnership – iFixit – really interesting bit of native advertising by Patagonia

    An update on Microsoft’s approach to Do Not Track – Microsoft on the Issues – disappointing

    Road Warrior: Waiting on the Elio, a Three-Wheeled Dream Car of the Future | NYTimes.com – I like the look of this is reminds me of the Messerschmitt KR200 and the Volkswagen 1 Litre concept car

    Russian internet trolls are trained to spread propaganda in three-person teams | Quartz – interesting approach to social content marketing using astro-turfing and sock puppetry

    Amazon Dash Button – interesting idea

    US Used Zero-Day Exploits Before It Had Policies for Them | WIRED – not terribly surprising, regulation and policy is always behind technology

    Wearables market action is all in the wrist says market-scryer IDC – wrist devices dominate wearable products

    Ditch the Keyboard, Take Notes By Hand | Mother Jones – really interesting, showing the importance or artefacts

    If you weren’t head-hunted or referred, it’s hardly worth applying for that new job | Quartz – interesting shows the importance of loose networks, presumably driven by communications technologies from email to social

    Meerkat, Periscope, and Hope | Techpinions – interesting analysis

    Bits or pieces?: So Amazon fired a warning shot at supermarkets and everyone went April Fool? – interesting reading

    Renegades of Junk: The Rise and Fall of the Drexel Empire | Bloomberg Business – great article on the rise of junk bonds

    Meerkat Vs Periscope: Tech journalist is a sickly mess | BGR – shows west coast journalists as being basically sock puppets

    5 Key Highlights from the 2015 Apparel and Footwear Research – Euromonitor International – economic trends rather than anything else. Slower growth in China and decline in Russia