Amazon Dash Doesn't Need Widespread Adoption to Be a Winner

By Markets Fool.com

WhenAmazon.com debuted its Dash button two months ago, the business media responded with a collective head scratch. Some surmised that the device that enables push-button reordering of commonly purchased household products like diapers and detergent was an early April Fool's Day joke.The New Yorker insisted that it was a horror, bemoaning the endless assault of technology and consumerism into our daily lives, whileUSA TODAYcalled it brilliant, saying it makes us smarter, not lazier.

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Source: Amazon.com.

What's clear after the initial fanfare has subsided is that fears and hopes of a widespread impact on shopping habits have both been overblown. Reviews of the Internet-of-Things-powered device have been mixed, as some initial consumers rave about the technology, likening it to the Jetsons, while others have not found them quite so necessary.

Still, even if the response from consumers is muted, there is still one important constituency likely going gah-gah for the buttons.

A marketer's dream
For Amazon's CPG partners likeProcter & Gamble,Kimberly-Clark, andKraft Foods, the Dash button is nothing short of a marketing coup. Like a loyalty card on steroids, the buttons do everything possible to lock the consumer into a long-lasting relationship with their favorite brands. After all, what could be easier than simply pushing a button and getting a new box of garbage bags in two days? Automated reordering may be on the horizon for Amazon, but for now, the Dash button is pushing the frontier of consumer expectations.

In addition, it serves as an ad for the brand inside the consumer's home, yielding potentially more exposure than the product itself. Short of a framed picture of Tide Pods next to your bed, this is the strongest bond a company like Procter & Gamble can form with you.

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And perhaps best of all for these consumer goods giants, it locks out smaller players, which is particularly a problem among food makers, and strengthens customers' relationship with Amazon. Admission to the Dash club isn't free. Suppliers had to pony up at least $100,000 for the device's initial test, and only 19 brands composing 272 products were allowed into the elite group. According to initial results, some of the most popular products were Kraft Mac & Cheese, Tide, Cottonelle toilet paper, and Bounty paper towels.

Hooking the consumer
The Dash button was made available only to select invitees out of Amazon's large base of Prime members, but the focus on certain high-frequency product categories is likely to lure new customers in the future.

Diapers, for instance, represent one of the most important products Amazon sells because it's an entry-level purchase for many consumers. New parents, burdened with chores and lacking in time, see value in ordering diapers online and often feel grateful to Amazon for enabling them to do so. Those are exactly the type of customers likely to appreciate something like the Dash button in the future.

For now, Amazon has only offered free buttons to its trial customers, but it's easy to imagine the company making something like unlimited Dash buttons a perk for Prime members.

For its part, Amazon says the response to Dash has been "overwhelmingly positive," and there's little drawback for the company and the consumer if the buttons go unused. But more importantly, the button paves the way for increased partnerships with those key CPG brands, and it's proven they are willing to invest in Amazon's own technology in order to move it closer to the customer.

Amazon is proud of its well-deserved reputation as an inventor and its fearlessness of failure. Dash is just one of many new initiatives it's announced this year, and it will likely be improved upon many times over. Whether or not it makes sense to consumers today, in five to 10 years, the Dash button could be the standard in at-home ordering.

The article Amazon Dash Doesn't Need Widespread Adoption to Be a Winner originally appeared on Fool.com.

Jeremy Bowman owns shares of Apple. The Motley Fool recommends Amazon.com, Apple, Kimberly-Clark, and Procter & Gamble. The Motley Fool owns shares of Amazon.com and Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.