retail news in context, analysis with attitude

Advertising Age reports that the introduction of the new Amazon Dash - a button with an adhesive strip that can be mounted on things like cupboards and washing machines, allowing people to press it and order with one click when they see that they are running low on specific products - could be a boon to major CPG companies.

The story suggests that the Dash "could give big packaged-goods brands the edge they've been looking for on a playing field where the industry's traditional behemoths have been getting pushed around by smaller players ... Amazon hasn't said exactly how the model would work, but Dash could easily become a conduit for trade-promotion funds as brands bid for buttons, which would be like miniature end-caps in millions of homes."

Participating manufacturers and brands, the story says, include "Procter & Gamble Co.'s Tide, Gillette, Bounty and Olay; L'Oreal Youth Code, Clorox Co.'s Clorox Wipes and Glad Trash Bags, Kraft's Maxwell House and Mac & Cheese, Coca-Cola Co.'s Smartwater, and Kimberly-Clark Corp.'s Cottonelle and Huggies."

The Ad Age piece says that Amazon clearly is becoming more focused "on CPG as an area of growth -- and revenue. Last year, the retailer hired P&G veteran Sunny Jain to head its CPG business. And tapping into a growing CPG appetite for its data, Amazon recently began offering category sales numbers to companies paying $5 million to $10 million a year for advertising, according to IRI Worldwide. CPG's vast multi-billion-dollar pool of trade-promotion funding has to be attractive to a fast-growing retailer under increasing investor pressure to turn a profit after showing a loss last year."
KC's View:
I always get a little nervous when I hear about retailers angling for more trade promotion funds, since when I hear those words I tend to think about slotting allowances, which have been an enormously corrupting influence on the supermarket industry, compelling retailers to make money on the buy instead of the sell.

But unless I'm misjudging the situation, it seems to be less of a problem for online retailers like Amazon, which use what's referred to as "the long tail" to make everything available to everybody. It isn't like a brand that offers a high slotting fee can crowd out one that doesn't have access to those kinds of bucks.

I also think it is interesting that as Amazon tests this version of Dash one-click technology, it is doing so only with Prime members ... which means that the e-tailer is getting information from its best and most frequent shoppers. That's an enormous advantage as it looks to create a path of least resistance to the next sale and the next sale and the next sale after that ... creating the mythical ecosystem from which shoppers can't or won't want to escape.