Did Amazon Find the Key to Shoppers’ Happiness?

Leave it to Amazon to keep things interesting. Now, in addition to same-day delivery of just about anything, Amazon can walk your dog, clean your house, install and set up your new refrigerator, let selected neighbors in, leave your packages securely inside your home, and who knows what else.

I’m talking, of course, about Amazon Key. Like everything else they do these days, Amazon’s announcement is big news for the retail industry. Available exclusively for Prime members, Amazon Key includes an in-home kit with a cloud-enabled indoor security camera and compatible smart lock for $249.

According to an Amazon press release, “Amazon Key allows customers to have their packages securely delivered inside their home without having to be there…each time a delivery driver requests access to a customer’s home, Amazon verifies that the correct driver is at the right address, at the intended time, through an encrypted authentication process. Once this process is successfully completed, Amazon Cloud Cam starts recording and the door is then unlocked. No access codes or keys are ever provided to delivery drivers. And, for added peace of mind, in-home delivery is backed by Amazon’s Happiness Guarantee.”

Will it Work?

An audacious value proposition? Of course. Will it work? Who knows. My guess is that a thin slice of time-starved, upper-income, tech-savvy, trusting, heavy Prime users will turn to Amazon Key.

I don’t think Amazon will hit a home run with this across all Prime demographics, though. Unprecedented technology and privacy failures have burned consumers too many times, with Equifax being the #1 culprit in recent months. Security issues with unprotected webcams offer a real concern. Making consumers comfortable with the idea of perfect strangers entering their home is another huge barrier, even with the measures that Amazon has in place. And will Amazon’s delivery people need your alarm code? The list goes on and on.

Much of the initial consumer reaction to Amazon Key was skeptical. As Huffington Post observed, “The Amazon key is designed to aid package delivery. What could go wrong?” The answer, according to the article, is summed up in one word: plenty.

What Does Amazon Key Mean for Amazon?

However, success or failure really isn’t the point. Amazon floats more audacious ideas than any other retailer, and as a result they raise the bar for the rest of the industry. Amazon Key is a clear signal that Amazon wants to take the consumer experience directly into its customers’ homes. As a result, other retailers must rethink what it means to truly serve their customers. Once again, Amazon is rapidly reinventing the norm in today’s retail industry.

Even if it’s a modest hit, Amazon Key offers consumers a basic, all-in-one home security cam and smart lock for $249, regardless of whether consumers use the service. And if Amazon wants to drive large-scale adoption, they can take it a step further. Amazon could consider not only delivering shoppers’ same day Whole Foods order, but putting a home-cooked dinner on the table. Now, that would take customer service to another level!

Amazon Prime Day: Breaking Rules, Making Money

Amazon Prime Day 2016: A lesson in playing the long game
Amazon Prime Day 2016: A lesson in playing the long game

Pretty much everyone I know, knew about Amazon Prime Day. While most of them didn’t buy anything on Amazon that day, they still took the time and made the effort to look at the deals they could get on a day billed as being bigger and better than Black Friday and Cyber Monday.


How can such a self-serving sale day, or, as some venture to call it, a “holiday,” that’s so different from the norm succeed in retail?

Not Your Grandmother’s Sale

Let’s think about it. Why do retailers introduce sales? Traditionally, they are spurred on by a present and competitive business need, such as:

  • Shedding excess inventory or old models/styles to make space for more in-demand items;
  • Earning market share during high-sales volume times, like the winter holidays;
  • Increasing cash flow to make new investments;
  • Simply keeping up with competitors who market more aggressively on price.

But Amazon made this holiday up to celebrate their 20th anniversary last year. They’re already the largest retailer in the country and are poised to topple Macy’s as the largest apparel seller as well. It happened in the middle of July, during the mid-week grind, with no obvious holiday tie or “competitor sales”. It defied the accepted rules of engagement.

Playing Mind Games

The Power of Habit: Amazon must have read this one twice

A quick story: I was away with some high school friends last weekend. One was reading a book called “The Power of Habit: Why We Do What We Do in Life and Business” (found, of course, on Amazon for $9.18 in paperback, but there are over 400 vendors and options to choose from). The author, Charles Duhigg, talks about why we do the things we always do. Duhigg tells the reader about craving an afternoon cookie every day, and obliging himself. Then, through careful self-analysis, he realized the cookie need was not a result of hunger, but because he needed socialization and a walk. The true reward for his urge wasn’t unhealthy food, but camaraderie. Now, he skips that snack and feels a lot better.

To that same end, Amazon knows that people are creatures of habit and of reward. Amazon understands social psychology better than anyone and have the resources and marketplace influence to manipulate the masses into giving them more control over their consumption habits.

So they enlist their army of marketplace sellers, eager to spice up a lazy summer sales season, who live up to Amazon’s promotional hype and make it worthwhile for casual Amazon shoppers to sign up for Amazon’s $99/year Prime membership.

Prime Day conditions both sides of the transaction to expect benefits from using its platform. For buyers, it’s seemingly a no-brainer. “Save $400 on a 4K TV, have it on the doorstep in two days, plus get free shipping on anything I want for a whole year? Yes, please!” Even though deals beyond a few big-time purchases like those TVs were minimal, shoppers are being conditioned to see Amazon as the go-to place for what they need, which doesn’t pad margins now, but creates the conditions for increased market domination moving forward.

For marketplace sellers, the financial benefits weren’t tremendous, growing only 1% from 2015. The act of participating in the sale, again, really just has the same effect as a traditional sale, as mentioned above. But marketplace sellers are encouraged by the long-term (potential) benefit of increasing their regular customer base thanks to increased traffic from the rise in Prime subscriptions. For one day, they’ve seen a bump in sales volumes, unloaded inventory and brought in new buyers to their potential pool. They’re slowly being conditioned to rely on Amazon for larger and larger chunks of their revenue, becoming less autonomous and another pawn in Amazon’s domination of everything, everywhere, all the time.

Amazon Prime Day can be debated on its single-day successes on seemingly limitless merits, and goodness knows, it’s been debated. But what is undeniable is that Amazon is a master at making us look at them, think of them, engage with them, even when we don’t know we want to, or why we’re doing it. I’d call that a success.

Retail’s Reinvention: Back to the Future?

I’ve been reading and thinking about retail innovation a lot lately, which is no surprise. After all, many of our clients here at Ketner Group are retail tech companies, and retailers have been reinventing themselves at a furious pace in recent years as they seek new ways to compete with Amazon.

One of the things that intrigued me is a recent Reuters article about Walmart’s “radical plan” to have its customers deliver packages to online buyers. The plans are still in the early stages, but as the article explains, “shoppers could tell the retailer where they live and sign up to drop off packages for online customers who live on their route back home,” in exchange for a discount on their Walmart purchases. The retail giant’s ability to crowdsource its deliveries could make same-day delivery a reality, giving Walmart a potent edge over Amazon.

Will this plan ever see the light of day? At this point, it sounds far-fetched. But as one retail pundit pointed out, at least Walmart is thinking of creative ways to reinvent retail.

An article by retail futurist Doug Stephens draws an intriguing picture of what this future might look like. Stephens says “retail, as we’ve known it for at least the last two millenia, is coming to an end…it’s very clear to me that we are coming to a tipping point and data, processing power and connectedness lie at the center of it all.”

In the next decade, Stephens argues, retail will completely shift from a focus on ­physical and digital destinations and storefronts, to a focus on consumers as the ultimate destination. Instead of consumers deciding which stores and e-commerce sites to visit, retail will in essence start coming to us.

For example, according to Stephens, let’s say I’m on a business trip and my mobile device alerts me my anniversary is coming up in two days. A digital shopping assistant then springs into action—and it knows my wife’s shopping preferences so well that it presents a list of personalized gift suggestions in seconds, pulling information from a number of available storefronts. It finds the best available offer (my wife’s favorite fragrance on sale at Norstrom with a special bonus gift), then makes the purchase and arranges for the most convenient pickup or delivery option. The whole process takes under a minute.

It’s an intriguing vision from Stephens (aka The Retail Prophet). And the future that he describes is already taking shape. After all, the very best retailers compete for our business by analyzing our preferences, understanding our shopping habits, and delivering highly personalized recommendations and offers, sometimes anticipating our wants and needs before we even know we have them. (Check out the chapter, “How Target Knows What You Want Before You Do,” in Charles Duhigg’s The Power of Habit for a fascinating account of how Target analyzes consumer data.)

With all these innovations, though, it seems to me that retailers are simply trying to recapture an era where individual store owners recognized their customers by name, knew their shopping preferences by heart, and conducted business as a series of highly individualized, one-to-one transactions. In earlier days, retail was a highly personal business, and merchant’s storefronts were focal points not just of commerce, but community. Did shoppers need something delivered to their home the same day? No problem, the store owner could arrange it. Did you almost forget your wife’s birthday? Luckily, your local retailer had a timely gift suggestion when you called in a last-minute panic.

So as retail reinvents itself, it’s really just trying to get back to its roots, seeking new ways to make large-scale, mass-market retailing more personal and intimate. Technology may be the enabler, but in the end, what retailers are really doing is going back to the future.