The Future of Auto-Replenishment — Part 4 of 4
Auto-Replenishment & the Winning Technology
Winning Over Consumers with Tech That Actually Makes Sense for their Lives
In the previous three articles, I’ve given you a clear definition of auto-replenishment, I’ve talked about the problems with the shipping model and the value proposition of large vs. small orders, and I’ve taken a look at Amazon’s Smart Shelf, arguably the most prominent (and yet virtually unknown) piece of auto-replenishment hardware on the market today. Now I’d like to round out this series with a hardware prediction for the future. Having considered everything that’s out there right now including the motivations of consumers, the requirements of CPG/FMCG companies, the fundamentals of the retailers and what can actually be done with hardware, there is a device and an experience that just might change the game.
Auto-Replenishment Defined
For the newcomers, here is a quick intro to auto-replenishment:
Auto-replenishment is the process of automatically re-purchasing products at the moment a consumer needs a refill. An auto-replenishment system forecasts, or detects through real time monitoring, when the inventory of a household product is low and then automatically generates a refill order on behalf of the consumer to ensure that he/she does not run out.
My Pick For the Winning Technology
Now that that’s out of the way, where do we start in terms of defining the future of auto-replenishment technology? I’m going to start with the device that has the most characteristics of a winning design for the future. It’s Pantry Pal from Vectorform.
At a glance, the Pantry Pal would appear to be not much different from the Amazon Smart Shelf that I covered last time. However, the Pantry Pal incorporates something that the Smart Shelf does not: a reusable container. Initially I will admit to thinking that the container was a limiting factor of the Pantry Pal. Why should I need to transfer my products, let’s say dish detergent tablets, from their natural packaging into a new container? What if the amount of product I have doesn’t match the container? I saw those limitations right away and it blinded me a bit toward the possibilities.
The Refill Model
One of the hopes and dreams for auto-replenishment is that once a consumer has committed to a brand, we can switch to refills instead of repurchases. What does that mean? In today’s version of auto-replenishment, when supply gets low, our devices simply reorder the exact same product as a consumer could buy on their own. It’s a glossy package designed to sell the product to a noncommitted buyer. The logo is bright and there are colorful claims of 99.99% germ kill or “leaves dishes shiny and fresh.” Auto-replenishment is simply automating the current purchase of the current products.
The refill model offers a new opportunity to for product reinvention. Why continue to sell the same old product when that product doesn’t have the same burden of making the sale placed upon it? In a refill situation, the purchase decision has already been made and the packaging is merely a vessel for transferring the contents from Point A to Point B. The CPG companies can now reduce their costs by simplifying the packaging. Reducing the printing/graphics on 100,000 units really adds up. And what about the packaging itself? Does it need to be plastic any longer if the consumer is transferring it into a durable container at home upon receipt? Of course not.
Let me show you something.
This is an assortment of household cleaning products from an up and coming brand called Cleancult. I’ve personally used their All Purpose Cleaner and their Lemon Scented Dishwasher Detergent Tablets. The thing that I loved so much about the product and the thing that got me to try it in the first place was their paper packaging. I had been convinced that dishwasher tablets simply could not be switched from a plastic, moisture proof container into a paper based package. After trying Cleancult, I‘m convinced that not only can it be done but that it has been done.
Cleancult is actually a subscription service but they nail a number of key components necessary for successful auto-replenishment. First, they have reduced the cost of the packaging by making it paper based. When compared to Finish, Cascade, or even a Seventh Generation the packaging is almost completely no frills (by design). Second, they targeted a realistic pack size for consumers at 18 tablets which is far more appropriate to store under the sink than the market leading 90+ count packages being sold today online. Unfortunately, Cleancult has changed the packaging to a larger 32 count sized box that is full multicolor all around. If they have gotten into physical stores, its clear that they would need to compete visually as well. Larger brands may have the ability to produce multiple lines of the same product but it seems that a smaller upstart like Cleancult cannot.
The point I am making here is that there are examples of excellent products that are bucking the old rules which set the precedent for what a refill model can and should look like. Taking a product in a Cleancult like package, pouring it into a Pantry Pal like container, and then discarding the packing in your STANDARD recycling pushes all of the right buttons. I am a firm believer that any recycling material that requires a consumer to think beyond paper or plastic/cans/glass is not going to be widely adopted.
The Future of Auto-Replenishment
Now that I have made a case for making the products themselves a win win solution (manufacturer’s costs go down and sustainability goes up), let me explain how the technology needs to change.
Amazon Dash Smart Shelf
The Amazon Dash Smart Shelf, the Pantry Pal, and every other smart scale technology out there has a fatal flaw. They are all designed to work with a single product. When you buy one of these devices, you need to pair up with the product that it will be measuring at the outset and in some cases there is significant effort to switch it out. What we need it a solution that can truly act like a shelf and have multiple products placed on it simultaneously. This is easier said than done, of course.
There are two ways that I think this could happen and one is less effort than the other which is why I’m giving Pantry Pal the advantage here. Amazon could easily modify the Smart Shelf to add multiple products capabilities. In this case, Amazon would need to add a bar code scanner to the scale. Each time a product is going to be placed on the scale, the consumer would scan the barcode and set the product down. The scale would lookup the barcode which would give it access to the product itself along with the critical data about the starting weight. With each use, the Smart Shelf could recalculate the difference between the actual weight and the start weight and determine the volume remaining.
This enhanced Smart Shelf experience solves the major problem in a way that is very simple. After all, most consumers have done self checkout at some point and are very familiar with scanning a bar code. However, while simple, this process has introduced friction into the simple task of putting away household items.
It would seem like Amazon could modify things such that items would only need to be scanned the first time. Surely if Amazon knows the weight of all five items on the scale, it would know which item was removed and put back without requiring a scan? You would be correct except what happens when two products are removed and put back at the same time? This mucks up the works pretty good and will require a rescan of each item.
Pantry Pal
This is where the strength of Pantry Pal comes in and the advantage of durable, reusable containers. Vectorform has the ability to embed or affix a sensor to the bottom of its containers which can, in turn, be tied to the product within the containers, just like today. When the customer adds a new container to the scale, it automatically knows which item it is because of the sensor. In this case, the Pantry Pal doesn’t even really need to know the starting weight of the product at purchase. As long as the device measures the before and after weights for each use, it will learn the dose weight, be able to calculate the remaining doses and even the expected depletion date because it knows the usage frequency.
Many consumers today already use durable containers to replace the original product packaging. For me, I use my own containers for pasta, sugar, flour, tea bags, and more so I don’t actually need anyone to convince me of a behavior change. The enhanced Pantry Pal could simply slip under my existing containers. There are already companies like Adrich that sell aftermarket “sensor stickers” that might be a workable solution to integrate here. Other manufacturers of sustainably driven smart packaging like Vesta Smart Packaging could also potentially collaborate on a winning design. Whatever the case, the transition needs to be as easy as possible for consumers and I believe that Vectorform’s current design is going to eventually become the standard.
Did I mention that with many items on a single scale, it’s far more likely that you’ll glance at at app and get your current volumes across the board? This is something that we’ve seen smart refrigerator companies try to figure out for some time. This could do the job for things that aren’t in the fridge.
Consumers Love Winning the Pricing Game
That brings me to the final piece in the auto-replenishment puzzle: Pricing. I’m not going to spend a lot of time breaking this one down other than to say that when consumers opt-in to a subscription or an auto-replenishment program, they are willingly trading control over the price they pay for the convenience of not having to worry about it. Winning the war on price is something that many shoppers truly pride themselves on. They stock up when something is on sale. The figure out how to get double and triple coupons. They are whole tv shows dedicated to it and in some circles it could be considered a sporting activity.
A New Business Model Just Waiting To Be Launched
What this means is that as supermarkets and grocery chains continue to be more and more commoditized by online shopping fulfillment services, a place in the market has opened up for an entirely new kind of business. I refer to it as the “Kayak of Grocery.” Maybe this will be one of the existing services but I’m thinking not. Consider this scenario:
A shopper has a Pantry Pal device that is connected through our new business that we’ll call “KG.” They’ve just hit the replenishment threshold on their Finish dish detergent and a signal gets sent to KG’s algorithm. KG checks all of the online and local prices for the product and then adds in the shipping/delivery costs for any services that the consumer has linked to their account. Today, Amazon Prime with Same Day Deliver might be the lowest cost options and it orders it. Next month, Kroger might be having a sale that, when combined with delivery charges, actually works out best. The consumer ceases to care how the product gets from the Finish factory to their doorstep as long as they know they won that price battle. I don’t think this is that far away although I’ve not heard of anyone truly working on this just yet.
Conclusion
While I don’t think the market has offered something really compelling to consumers that can convince them to change the way they buy household products, I think we’ve very close. I’m extremely encouraged by the progress I’m seeing in both the world’s largest companies as well as the startups that are really pushing things forward. I hope this four part series has helped shed some light on auto-replenishment and the future of online retail of household items. I’ve thoroughly enjoyed putting my thoughts down on digital paper for you and appreciate the positive feedback and conversations I’ve had with a number of my readers.
I’m going to be focused on other things for a while and likely won’t write another piece on the auto-replenishment world for a while. As always, I’m reachable on LinkedIn if you’d like a chat. Take care and good luck!
