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What Does Amazon’s Echo Mean for FMCG Brands?

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Amazon’s Echo speaker has finally launched in Europe, positioned as a connecting point for our increasingly connected lives.

The Internet of Things (IoT) is about making life simpler and more convenient through automated technology, and retailers and brands are increasingly looking to create their own connected devices to embed themselves in the lives of tech-savvy consumers.  Be it ordering your favourite beer brand, asking for weather forecasts or just listening to music, many early adopters are trying out the new technology.

With the Echo and its voice-activated Alexa assistant, Amazon is attempting to remove as much friction as possible for today’s shopper, as well as accelerating its position as the primary touch point for commerce. One of the easiest ways Amazon can do that is to know what you want before you want it, facilitating as fast and convenient shopping as possible after a consumer has already made a buying decision once.

Significant economic benefits for FMCG brands

The device was released in the US last year and according to research from the NPD Group, Echo owners spend on average 10 per cent more than they did prior to owning one, suggesting that these users will become some of the most valuable customers to Amazon.

For everyday household essentials, the power of auto-replenishment is profound, as programs like Amazon’s Dash Replenishment Service (the Dash button also recently launched in Europe) lock shoppers into a specific retailer, category or brand. Once you’ve already chosen Brita water filters or Tide laundry detergent once, you’ve made that brand choice and you don’t need to make it again. This certainly has important implications for how FMCG brand manufacturers go to market, impacting everything from a new product launch to shopper marketing.

Just the tip of the iceberg

Significant rewards await the retailer or brand that wins the race.  The possibility of auto-replenishment of everyday grocery and household items, together with one-hour delivery slots, could sound the death knell for the usual weekly or even daily visit to your local store.  A potential game changer would also be a national roll-out of Amazon’s fresh grocery delivery service AmazonFresh in the UK. Using the voice-controlled Echo to add grocery items to your shopping basket would both improve the shopper experience and appeal to a broader audience, creating a new generation of connected shoppers.

Earlier this year, Jeff Bezos revealed that Amazon employed more than 1,000 people working on Echo and Alexa products and warned “it’s just the tip of the iceberg”, and just last month we heard that Amazon’s Echo and Alexa groups were looking to fill another 400 positions.

While it’s still early days for the Internet of Things, Amazon increasingly aspires to serve as the commerce layer.

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