Are consumers ready to use automated purchasing tech on a wide scale?

Jun 15, 2017
Matthew Stern

At the Internet Retailer Conference and Expo in Chicago, Ken Cassar, principal analyst and vice president at Slice Intelligence, shared findings about the current state of purchase automation, with some big insights into what drives customer adoption of these services and how brands and retailers should think about leveraging them into the future.

“For most of us who started purchasing in the early days of e-commerce, it was really about [price and selection],” Mr. Cassar said. “Over the course of time we’ve found out that that changed. The importance of convenience really rose to the top.”

Mr. Cassar explored the popular subscription model for automated CPG replenishment — services like Dollar Shave Club — noting that the most cited source of consumer frustration with the model is a lack of control.

Amazon Dash buttons offer a fix for this, giving customers convenience alongside control of the order. But despite 2.2 million Dash buttons being sold, the device hasn’t reached ubiquity. Mr. Cassar noted that 52 percent of Dash buttons purchased in 2015 had not been used once by April of 2017. The buttons also greatly favor the most popular brands that offer them.

Mr. Cassar discussed vendors exploring other takes on automated purchasing. For instance, Gillette’s shave club allows members to replenish items by text message.

One difficulty CPG vendors are facing in the space, according to Mr. Cassar, is in shipping. With 60 percent of CPG customers ordering between one and three items, automated purchasing services take an unsustainable hit on shipping costs. Finding a way to incentivize queuing items in the basket will be critical to making the next generation of auto-ordering and replenishment services economically feasible.

With smarter voice-activated AI, sensor-based replenishment, new wearables and in-automobile voice assistants on the horizon, Mr. Cassar gave advice to brands attempting to navigate automated purchasing in the near future.

“Put yourself in the shoes of the consumer,” Mr. Cassar said. “Think through every step, from the detection or anticipation that they need a product, to the purchase through the delivery. Think about ways you can reimagine that process to deliver more and more convenience to consumers.”

DISCUSSION QUESTIONS: What methods of auto-ordering and auto-purchasing will be most successful in giving users more convenience while also giving them more control of their orders? How can retailers and brands incentivize customers to queue items in auto-purchasing baskets to bring down shipping costs?

Please practice The RetailWire Golden Rule when submitting your comments.
"Maybe we can’t give the consumer anything and everything but we can sure try to give them the most."
"Thinking through how the customer ordering process will evolve is the most exciting challenge in retail today."
"Hopefully Alexa and other voice-based systems are capable of answering the question “Is the price the same as I paid last time?”"

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12 Comments on "Are consumers ready to use automated purchasing tech on a wide scale?"

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Jon Polin

Thinking through how the customer ordering process will evolve at the intersection of retail, CPG and technology platforms is the most exciting challenge in retail today. A consumer should be able to simply input a desired product via any one of numerous input platforms (voice, text, etc.) and then get that product from any one of several fulfillment options (stores for the foreseeable future but likely not forever). The challenge is in figuring out how to connect these inputs and outputs in a way that is simple for the consumer and financially viable for the manufacturer and fulfiller/retailer. The company who figures out how to blend these inputs and outputs effectively and efficiently will strike gold. I know the horse I’m betting on in this race.

Shep Hyken
The key word, as mentioned in the question, is “convenience.” That trumps everything. I attended Mr. Cassar’s presentation and laughed when he said that he believes after a few years he’s collected a lifetime of razor blades from I don’t have a lifetime supply, but have a few extra boxes of blades from Dollar Shave Club. The reason? We don’t change the blades weekly, as suggested. If we did, the subscription model would be perfect. So maybe it isn’t razor blades. Maybe it’s a weekly magazine that you may not get a chance to read because there isn’t time. Next thing you know, you’re four weeks behind with a stack of reading. Does that mean subscription models don’t work? Of course they do. They are easy and convenient and that’s what counts. Consumers know it’s not the company’s fault they have too many razor blades or didn’t read their magazine. The Dash button gives the consumer more control, but if they don’t re-order at the right time they risk running out of product. (Still,… Read more »
Nir Manor

Shipping one CPG item to a consumer home can never be profitable. Pushing to increase basket size is an option that may work to some extent. A method that may work for brands is to create a basket catering to the needs of specific consumer segments that sets up automated purchasing over time. A good example is a basket for families with new babies. If a basket with all a baby’s needs is created according to the baby life cycle and shipped periodically to a consumer’s home, this can be a win-win for both brands and consumers.

Sterling Hawkins

I like that. Or maybe automated reorders only ship when they hit a certain spend threshold so customers can get the brand and package sizes they prefer. I can see some kind of discount/incentive encouraging people to use a shipping threshold working well.

Paula Rosenblum

Here’s the problem … when companies are changing prices on an item on a regular basis, I don’t feel I can trust just pushing a Dash button. I need some kind of confirmation that the price is what I paid last time. Hopefully Alexa and other voice-based systems are capable of answering the question “Is the price the same as I paid last time?” A Dash button is not capable of this and neither is a refrigerator.

Al McClain

Good point, Paula. I’ve noticed with Amazon that not only do prices tend to go up a lot on items frequently reordered, but they often charge much more per unit on multi-pack buys. My strong suspicion is Amazon is hoping consumers get on auto-pilot and forget about price. That could be playing with fire, especially with most shoppers having at least some presence on social media.

Lee Kent

The consumer is ready to auto-order as long as the retailer gives them what they want. That goes beyond convenience. Yes they want convenience but they also want it when, where and how they want it and at the price they want. As a retail-minded person, I want to give the consumer what they want but, and this is a big but, at what price? The buck has to stop somewhere and I’m not sure where that is. Can retailers continue to give away shipping? Offer the best price? I have liked the subscription services the best but if the subscription is just one thing, again, the retailer loses on shipping. Perhaps certain subscriptions must be picked up somewhere while bundles can be direct shipped. The answer is to get smart about the offerings. Maybe we can’t give the consumer anything and everything but we can sure try to give them the most.

For my 2 cents.

Ken Lonyai
Automated purchasing is a brand or retailer’s dream — not so much for consumers. I agree that convenience is a driver, but it’s limited by a number of factors that impinge upon “convenience.” There’s always the question of frequency. Without a sensorial mechanism to only replenish items just-in-time, consumers likely will, over time, accumulate a surplus of auto-replenished items. Sensors or AI are nice for early adopters of these nascent technologies, but it’s too early to be convinced that a broad range of consumers are ready to have a large portion of CPG item usage monitored by faceless multinational corporations. Auto-replenish also is completely dependent upon price transparency and the trust that there won’t be any form of price gouging. Lastly, some people may stick with the same detergent, razors, or deodorant for years, but when they want to change, they may not be willing to use automated purchasing for the new unproven brand. Likely, there will be growth in these purchase mechanisms, but retailers’ dreams are not going to be realized the way they… Read more »
Steve Montgomery

As others have noted, the concept of automated replenishment for groceries will only work when there is a way to do so that creates a market basket of items than can be delivered economically. This means that suppliers of single or limited items will have to participate in the consumer supply chain of other products. There has to be aggregation of the items. Wait a minute, that sound just like what the supermarket industry does today.

Alex Senn

There’s a good point being raised about the cost of shipping these small items. Certainly automated buying is not going anywhere and is only going to expand faster. It then becomes a challenge of having the most convenient spot for consumers to even realize they can have their CPG product shipped each month. This, I feel, is where they are lacking. Put a notice on the packaging, put a notice on the shelf at the retailer, especially put a notice on your website and even send out calendar invites. Whatever it takes, it seems that having the customer repeating purchases is crucial here.

About the queuing of products, I actually think this comes does to an even more connected home/car/life. What I mean is that by having these products aware themselves of their low quantity, they can coordinate with other products which can automatically coordinate ordering so multiple items come together. Are we there yet? No. Will we get there? Yes.

Ken Lonyai

Interesting addendum:

Not automated purchasing but, similarly, automated (subscription) rental.

Camilla Ley Valentin

Adding technology available to the consumer will only enhance the overall shopping experience in retail.

"Maybe we can’t give the consumer anything and everything but we can sure try to give them the most."
"Thinking through how the customer ordering process will evolve is the most exciting challenge in retail today."
"Hopefully Alexa and other voice-based systems are capable of answering the question “Is the price the same as I paid last time?”"

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