Amazon Launches New Dash Buttons, Tripling the Amount of Products Offered

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Amazon has expanded its Dash Button portfolio to include fish oils, razors and pita chips

IDO LECHNER

• 31 MARCH 2016
• RETAIL

From one-click payment to drone delivery, Amazon has cemented its standing as theinnovator of seamless and timely shipping. With the inclusion of Dash Buttons for Prime members, which offer a physical asset with which to restock on household favorites, the A-to-Z supplier is proving that quicker paths to purchase and distribution equate to larger influxes of cold, hard cash. In fact, Amazon Dash Buttons have proved so successful that Amazon Prime has just announced the availability of more than 100 new ones, ‘giving Prime members the easiest way to order thousands of products.’

For those unfamiliar, Amazon Dash Buttons are Wi-Fi-connected, push-button devices which empower users with a physical version of a one-click purchase. And given that each button is only capable of ordering one pre-determined product, say, a roll of paper towels or some Tide pods, it isn’t uncommon for users to own more than one.

With the expansion of the lineup to include roughly 80 more brands, Amazon notes that overall sales have increased by over 75 percent in the last three months, averaging over one purchase per minute via Dash Buttons alone. Whereas previously the offerings were limited to consumer packaged goods (CPG), the overwhelmingly positive statistics generated by the buttons have persuaded the food and beverage industry to hop aboard the bandwagon as well.

“PepsiCo is always looking for new and innovative ways for shoppers to engage with our brands…the Dash Button was one of those unique opportunities,” says David Orr, Global Customer Lead, PepsiCo. “We have been very pleased with shopper feedback and engagement since the launch and look forward to expanded learnings moving forward.”

Available for $4.99 USD, Amazon promises to make your first purchase with the Dash Button free. Whether you’re ordering diapers in a sleep-deprived stupor or restocking on cat litter in a frenzy, you’ll have some peace of mind knowing you don’t have to remember your password.

So what do you need? Slim Jims? Shampoo? Condoms? Having tripled the assortment of products open to one-click, free two-day shipping, order the Dash Button of your choice and Amazon will take care of the rest.

China Tax on Overseas Purchases Set to Kick In

Move seen as an attempt to boost domestic products; could hurt e-commerce players

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Food delivery workers from Meituan, an E-commerce company, on March 1 prepare to deliver orders placed online from a center in Beijing. PHOTO: ASSOCIATED PRESS

March 31, 2016 11:44 a.m. ET

5 COMMENTS

China is tightening its grip on cross-border e-commerce, imposing a new tax system on overseas purchases that form a growing business catering to Chinese consumers with an appetite for foreign goods.

The changes, announced by the Finance Ministry last week, include raising the so-called parcel tax that is currently imposed on overseas retail products that e-commerce firms ship into China. On top of that, such goods sent directly to consumers will now be treated as imports and will be subject to tariffs and value-added and consumption taxes, whose rates vary depending on the type and value of goods.

The ministry said the changes, which become effective April 8, are intended to put foreign and domestic products on an equal footing. But industry analysts said the move seems designed to give a boost to “made-in-China” products and could dent a small, but growing market for foreign goods sold by Alibaba Group Holding Ltd., JD.com Inc. and other e-commerce players.

Those marketplaces feature nutritional supplements and food by brands such as Ocean Spray, as well as diapers and other baby and maternal products. They form a slice of the 5 trillion yuan ($773 billion) in sales by e-commerce firms in China last year, double the level of 2012, according to Beijing-based research firm Analysys International.

The new levies could dampen some demand, just as an increasing number of retailers world-wide are hoping to sell into China, says Charles Whiteman, senior vice president of client services for MotionPoint, a technology company that helps international retailers sync their e-commerce websites across languages and currencies.

“Increases in prices always have the effect of driving demand down,” but the effect will be “modest,” Mr. Whiteman said. “It probably won’t be too noticeable for branded products,” which consumers are willing to pay a premium for.

Chinese consumers have demonstrated a willingness to pay more for products such as cosmetics, infant formula and other baby products. Chinese e-commerce companies have said that such products form the vast majority of the imported products sold on their websites, because of product-safety concerns in China.

Alibaba and JD.com both said they expected robust demand from Chinese consumers for overseas products, especially high-quality ones, to continue, even with the changes in policy.

The changes in taxes come as the Chinese economy is slowing down and the deceleration is crimping tax revenues. Tax revenues grew 4.8% last year, compared with 7.8% in 2014. Beijing is looking for new sources of growth and revenue, and is trying to guide the economy to rely more on consumption and less on investment and industry. At the same time, Beijing is anxious to build up domestic businesses to provide jobs.

The boom in e-commerce has provided better-priced goods to consumers and created new delivery and other logistics jobs. To nurture the sector, the government since 2012 allowed e-commerce firms to pay just the parcel tax, and not other tariffs, when importing goods through customs in about a dozen cities, including Shanghai and Shenzhen.

The lower taxes have given e-commerce businesses an edge over ordinary importers in China and domestic companies that make similar products, the Finance Ministry said in announcing the tax changes.

“As consumption plays a bigger role in the economy, the government prefers to see outbound consumption flow back,” especially for medium- and high-end goods, said Tan Naixun, an analyst at research firm Analysys International.

Calculating the impact of the changes on merchandise is difficult given that different categories of goods carry different rates. A company that sells infant formula milk, for example, will pay nearly 12% more in taxes if the sale is under 500 yuan because previous exemptions don’t apply, according to Mr. Tan, the analyst.

Luxury goods like jewelry will see extra taxes between 9% and 17%, while some levies on personal-hygiene and cosmetic products could fall since the changes rescind the previous heavier parcel tax on those products.

New tariffs on overseas purchases are likely to do only so much for domestic Chinese companies. Inefficiencies, particularly in distribution, add to prices of local goods. As incomes have risen, Chinese consumers have grown more discerning on both price and quality.

Li Jinyu, a 36-year old who teaches English at a university in Beijing, said she wants to shop locally but finds products are often more expensive than overseas ones.

She said she paid a little over 600 yuan for a pair of boots from London through Amazon.com when they were on sale. The same pair of boots at a name-brand store in Beijing carried a price of 1,900 yuan, she said, so even with the new taxes, the online price is better.

“If I see good deals, I’d still rather buy overseas,” she said.

Amazon.com Inc., which launched what the company calls an “Amazon Global Store” for purchasing products from abroad in China in 2014, didn’t respond to requests for comment.

How Quickly Are Industries Adopting the Internet of Things? Kai Goerlich Science fiction writer William Gibson is credited with saying, ”The future is already here—it’s just not evenly distributed.” Such is the case with the Internet of Things (IoT).

How Quickly Are Industries Adopting the Internet of Things?

Kai Goerlich

Science fiction writer William Gibson is credited with saying, ”The future is already here—it’s just not evenly distributed.” Such is the case with the Internet of Things (IoT).

Digital business requires both data and the equipment to capture, store, manage, and analyze that data before enterprises can better inform their decisions, automate actions, and improve operations. IoT technology provides a way.

According to IDC, companies are ramping up their IoT investments rapidly, which can be seen in seven major industries with high levels of physical products or assets. Overall, the market research firm forecasts that IoT spending will increase 19% on average through 2018. Some industries, such as discrete manufacturing, have already invested significantly; others, such as healthcare, have spent less to date but are expected to expand quickly in the future.

Opportunities for Connection

The IoT is poised for rapid growth across a wide variety of industries that are connecting physical assets 
Download the infographic here.

The IoT Creates New Revenue Models

The Internet of Things represents a new course for automation and data-enabled decision making. Companies can use data collected from sensors on machines to create new business processes and revenue models.

It’s no wonder the numbers that researchers at Gartner cite—6.4 billion connected things in use in 2016, an increase of 30% over 2015—sound both large (billions, up 30%) and small at the same time (we’re just getting started). The future is being distributed unevenly, but it will reach just about everywhere, eventually.

Utilities

Utilities are still in the early stages of connecting their physical assets, a McKinsey Global Institute analysis finds. Deregulation and new market entrants are expected to prompt greater investments in the future. For example, smart metering systems and renewable energy sources, both growing activities in this industry, require IoT connections.

And to compete, utilities will need to invest in systems that monitor and analyze data from smart devices at homes and businesses, Tata Consultancy Services notes. IDC predicts that eventually this industry will see a high impact from its IoT investments because both utility companies and consumers have a stake in making energy production and use more efficient.

Healthcare

The industry as a whole has been slowed by regulatory and privacy concerns, Tata Consultancy Services research finds. But as healthcare providers install more equipment to connect medical devices to networks, they, too, will adopt more data-driven devices. Ultimately, IDC suggests that the IoT will have a high impact through monitoring applications and sensors that enable patients to manage their health and fitness.

Wholesale

The IoT promises to bring new capabilities to distributors, including new opportunities to sell goods through industrial vending machines and automated transportation systems. However, the industry as a whole has been what McKinsey Global Institute calls a medium-level player on
the road to digitization.

Discrete Manufacturing

Companies ranging from consumer goods makers to industrial manufacturers are applying IoT investments to monitor production and the flow of goods. Sensors enable predictive applications to schedule maintenance for jet engines, for example. And consumer goods makers are starting to experiment with marketing applications enabled by machine sensors and smartphones, Tata Consultancy Services notes.

Retail

As VDC Research Group points out, the drive to digitize business has been going on since well before 2013. Prices for RFID transponders have dipped over the past decade, which has enabled retailers to affix tags to goods, speeding up inventory tracking and shipments processing and reducing shrinkage, RFID Journal reports.

Logistics

Logistics firm DHL and networking vendor Cisco predict that there will be 50 billion connected devices by 2020, while making the point that this “represents only a tiny fraction of what could be connected—something on the order of 3% of all connectable things.” The resulting connectivity will reshape how decisions are made about the way goods are stored, monitored, serviced, and delivered. According to IDC, the IoT will have a high impact on the logistics industry because the benefits are clear and easy to measure.

Process Manufacturing

Companies in process industries have been heavy investors in technologies that make their assets more productive, including enterprise resource planning and supply chain management software. Leading players see the IoT as a way to extend the value of these investments. For example, Deloitte researchers note that oil and gas companies can wring more efficiency from resource processing and distribution by collecting and analyzing data from sensors and by monitoring equipment to reduce unplanned equipment outages.

Benchmark Study Show Both Sides See Opportunity for Improvement, but Vendors Think They are Better than Retailers at Collaboration March 30, 2016 Supply Chain Digest Editorial Staff

This month, one last data point from the recent Supply Chain Digest benchmark report on the state of supply chain relationships between retailers and their suppliers, on views related to supply chain collaboration. The full report, based on detailed survey results from 50 retailers and more than 200 manufacturers, is available here: The State of Retailer-Vendor Supply Chain Relationships 2016 Supply Chain Digest Says... "It's not us, it's the other guy," the message seems to be. How good do retailers and vendors believe they are at supply chain collaboration? As can be seen in the chart at the right, the majority of retailers place their collaborative skills as just average (55%). Thirty-nine percent considered themselves above average, and interestingly, no retailer placed itself as having "near the top" in terms of collaboration capabilities.  Meanwhile, vendors scored themselves as possessing higher collaboration skills than did retailers, with a combined 53% scoring themselves as either above average or near the top, with just 37% scoring themselves as average collaborators. Visit the Retail Vendor Performance Management home page to learn more and subscribe to the monthly newsletter. That naturally enough leads to the question of what the barriers are to improved collaboration between retailers and manufacturers. Below is also a chart that quantified what both sides saw as key obstacles, but neither retailers nor vendors think their own collaborative capabilities are a big issue, with average scores of 2.4 and 3.7 on a scale of 1 (low barrier) to 7 (high barrier) from retailers and vendors respectively. "It's not us, it's the other guy," the message seems to be. In fact, the lack of trading partner skills in collaboration was the top ranked barrier among vendors, while the top ranked retail barrier concerned challenges in how to share the gains from any collaboration. In general, retailers rated almost every barrier a full percentage point or more lower than vendors, for reasons that aren't clear, other than perhaps a somewhat more simplistic view of what collaboration means versus the vendor perspective.

Who Spends More: The Whole Foods or Walmart Shopper?

Posted by Alex on Feb 29, 2016 3:30:00 AM

Comedians have made a habit of poking fun at Whole Foods. The grocery store’s reputation forhigh prices and stereotypes about its clientele have been the focus of many talk show routines and stand-up specials. As it turns out, selling $6 asparagus water makes you a pretty easy target.

Whole Foods has started selling rabbit meat. They’re killing them humanely; they’re only using rabbits who died of shock after seeing the prices at Whole Foods. 

– Conan O’Brien

Whole Foods, undoubtedly, is expensive. But when we step back and look at the average total cost per visit, is it really where Americans spend the most on grocery shopping?  

At Perfect Price, we maintain a database of billions of credit card transactions so we have a view into how much people actually spend when they go to these stores. Our curiosity about typical grocery shopping bills inspired us to analyze our data on the the typical amount spent at the most popular stores in the United States.

The table below shows the average spent per trip at the top food sellers in the United States. We included all food sellers in the top 25 of all retailers in terms of revenue, as well as a couple of other notable chains (like Trader Joe’s and Seven Eleven). For each of these stores, Perfect Price data includes thousands of trips in May and June of 2015. Though food items make up a large proportion of spending at all of these stores, they all sell non-food items to varying degrees.

Far and away, consumers spend the most at  Costco, the third largest retailer in the United States. It’s no surprise to see Costco at the top of the list. As a wholesaler, the company offers low unit prices in exchange for consumers purchasing in bulk. You can’t just buy one pack of oreos at Costco -- you have to buy ten. Costco is followed distantly by Sam’s Club, it’s primary wholesale competitor.

At the very bottom of the list is 7-Eleven, the largest convenience store chain in the United States. The average spend per trip  at 7-Eleven is less than 15% of that at Costco. In fact, almost half of all purchases at 7-Eleven are for less than ten dollars. The chart below shows the percentage of purchases at each store of ten dollars or less. Interestingly, almost 10% of Costco purchases are less than $10 buys (perhaps Costco food court lovers?).

The average spend for trips to Walmart, Whole Foods and Trader Joe’s all fall in the range of $50-$55. We were interested in just how similar the distribution of bills were at these stores, and how they compared to Costco. Below, we parse out the percentage of purchases that fall into different spending categories: $0-$10, $10-$25, $25-$50, $50-$100, $100-$200, and over $200.

The distribution of spending at Whole Foods and Walmart —stores that are diametrically opposedin the cultural imagination —are actually quite similar in terms of the distribution of spend. Slightly more people spend less than $25 on a trip to Whole Foods, and slightly more spend between $25-$100 at Walmart, but overall, the distribution of how much people spend on trips to these stores are remarkably alike.

Trader Joe’s shoppers are heavily concentrated in the $10-$100 range with nearly 9 out of every ten falling in the category. People making trips to Trader Joe’s rarely spending very little, but are also unlikely to be going on a shopping spree. In contrast, Costco shoppers go big at an unusually high rate. Nearly 20% of trips to Costco are for bills of $200 or more, this is true of less than 5% of trips to Whole Foods, Walmart and Trader Joe’s.

Given the impassioned feelings Whole Foods incites, we were intrigued about how spending differed at the store across cities. Were there certain cities where Whole Foods bills were unusually high? The next table shows the average spend in the twenty cities with the most shopping trips. What we found surprised us.

The city with the highest spending per trip is Chicago with an average of $66. This is more than double what we found for trips in Boston, and 50% more than trips in Austin and Portland. Boston, Austin and Portland, the places with the lowest Whole Foods spend per trip, are all places whereWhole Foods stores are abundant. Making a trip to Whole Foods in these cities is less of a hike for people in these cities, so they are more likely go for a smaller trip.

***

It has been nearly a century since grocery shopping, in its modern serve-yourself form, emerged. It used to be that a clerk personally collected whichever items shoppers requested. Today, stores of all shapes and sizes have materialized to meet Americans’ shopping needs. And as we’ve seen here, what we spend at those stores — from Whole Foods to Costco to 7-Eleven — varies tremendously. If you want this sort of data for your business, please get in touch.

Photo Credit: Wikipedia.org.

Returning customers are far more valuable to online retailers than new customers

• Andrew Meola
   
 

• Mar. 30, 2016,

BI Intelligence

This story was delivered to BI Intelligence "E-Commerce Industry Insider" subscribers. To learn more and subscribe, please click here.

New customers are certainly important to retailers, but returning customers should mean more.

A new report from Monetate reveals that the value of returning customers is greater across numerous product categories, and that value continues to grow every year.

Returning visitor transactions comprised 48% of all U.S. e-commerce sessions in the fourth quarter of 2015 and spent $2.7 billion, almost double what new shoppers spent in that time period.

New online shoppers are only half as likely as returning customers to place an item in their card at just a 7.6% rate, compared to 14.8% to existing shoppers (up from 13.6% in the same period one year earlier).

New visitors also have higher bounce rates, the act of leaving after visiting just one page (typically the homepage). Those shoppers leave 34.8% of the time compared to 24.4% for returning shoppers, though that number is up from 23.1% in the year-ago period.

Returning visitors also have a higher conversion rate at 4.5%, up slightly from 4.4% in Q4 2014. New visitors convert just 2.4% of the time, down from 2.5% in the year-ago quarter.

So returning customers are clearly important, but longevity is also crucial. The top quartile of worldwide e-commerce companies receive most of their revenue from repeat customers at the two-year mark, notes RJ Metrics. At three years, repeat customers represent more than 60% of revenues for those companies.

Online retailers, therefore, need to know who their customers are in order to hold onto them and reach those two-year and three-year milestones. And there are numerous ways to do that.

Cooper Smith, senior research analyst at BI Intelligence, Business Insider's premium research service, has compiled a detailed report on e-commerce demographics that breaks down U.S. online and mobile shoppers by gender, age, income, and education, and takes a look at what they're shopping for, and how their behaviors differ.

This is crucial information for retailers who need to know who their potential customers are online in order to market to them effectively.

Here are the surprising facts about men's e-commerce and mobile commerce habits:

• When it comes to e-commerce, men drive nearly as much overall spending online in the U.S. as women. The conventional wisdom is that women drive shopping trends, since they control up to 80% to 85% of household spending. However, In 2010, comScore estimated that women account for $6 out of every $10 spent online. In 2012, a Greenfield survey found that women account for 58% of online spending in the U.S.
• Men are more likely to make purchases on mobile devices. 22% of men made a purchase on their smartphones last year, compared to 18% of women. And 20% of men bought something on a tablet, while the percentage for women was 17%.
• Many men say they would like to shift all their spending online. 40% of American men aged 18 to 34 said they would "ideally buy everything online," compared to only 33% of women the same age. (See chart, above.)
• Men are avid users of online auction sites: 43% of men ages 18-34 say they typically shop on online auction sites like eBay, compared to only 31% of women the same age.
• Men are price-conscious: Men of all age groups are more likely to look for lower prices on their phones than women, and are more likely than women to buy things on their phone.
• Male teens are also more avid e-commerce shoppers than their female counterparts: Among teens, the proportion of males who report shopping online (86%) is ten percentage points higher than that for teen girls (76%). Also, a higher percentage of teen boys say they shop at general interest e-commerce sites like Amazon (34%) and eBay (8%) than is the case among teen girls, who prefer more specialized and fashion-conscious sites.

Amazon Home Services expands to 30 cities in first year

By Daphne Howland | March 30, 2016

Dive Brief:

• A year after launching its Home Services business, which includes in-home help from housecleaning and plumbing crews to assembly of big-ticket items, Amazon has expanded the effort to more than 90% of the U.S., according to a company spokesperson.
• Amazon said Wednesday that it estimates the on-demand market for home services at some $400 billion to $800 billion, and that to meet such demand, it has added 500 new services, bringing the total to 1,200.
• Amazon Home Services competes with the likes of Home Depot and Best Buy and even Ron Johnson’s fledgling effort, Enjoy, as well as with crowd-sourced business directory Angie’s List.

Dive Insight:

Amazon Home Services has grown from four metro markets 12 months ago to 30 U.S. cities. The largest markets are Los Angeles, New York and Washington D.C. “It’s because of the density of the metro area,” said Amazon spokesperson Erika Takeuchi, according to reporting from a press release received by several news outlets.

Amazon’s Home Services unit is another classic example of how the e-retail giant rarely limits itself to retail and is willing to launch and quickly expand any effort in any consumer segment that the company believes it has the potential to disrupt.

"They are uncovering ways of making the purchase of almost any product easier and more cost effective than shopping in a traditional store," Robert W. Baird & Co. analyst Colin Sebastian told Bloomberg. "The barriers between consumers making large appliance and home purchases online are falling quickly, and the home-services integration with Amazon is a great example of that."

At this point, Amazon sells more than a million products that give shoppers in certain cities an option to request help with assembly and installation. And that is boosting sales, according to Amazon spokesperson Takeuchi. The most popular services requested are mounting flat-screen televisions to walls and assembling treadmills, she said.

The growth of Amazon Home Services means that rival retailers like Home Depot and Best Buy must continue to offer similar customer services in order to keep pace. Amazon’s move into the space could pose even more problems for competitors as more consumers realize that Amazon offers home services, according to Forrester Research analyst Sucharita Mulpuru, who notes that Amazon also is greatly helped by its reputation for great customer service. 

"Amazon should absolutely be well positioned to do well here, particularly since they’re putting the brand, which so many people trust, behind everything as a guarantee," Mulpuru told Bloomberg. "Local big boxes are the ones most likely to feel the impact of this long term, but for now I don’t think most people are even aware that Amazon even offers any of these end-to-end solutions."