Amazon.com Inc.’s rollout of its Amazon Key smart-home system, which allows it to deliver packages to Prime customers even when they’re not home, is yet another step ahead for Amazon, fulfillment experts say.
“Convenience is starting to drive the market rather than pricing,” says Jeff Mueller, vice president at supply chain consultancy Sedlak Management Consultants Inc. “Other retailers need to find a way to get on board—perhaps not to the extent of app-driven security cameras and door locks, but whatever ways [they] can to make it easier for customers. There are too many choices on the market today, and if you don’t make it easy and super convenient, your customers can readily order from someone else who will.”
Amazon, No. 1 in the Internet Retailer 2017 Top 500, on Wednesday announced that the Amazon Key smart-home system will be available in 37 markets starting on Nov. 8. The service is available only to members of its popular Amazon Prime program, which offers perks such as expedited shipping and streaming video, and costs either $99 annually or $10.99 monthly.
Prime customers must first buy an Amazon Key kit, which starts $249.99 and comes with an internet-connected camera, a smart lock and free installation. After the system is installed, shoppers access it via an app and can have packages delivered inside their homes by selecting the “in-home” option at checkout.
Amazon Key offers Prime customers more value, says Adrien Nussenbaum, CEO and co-founder of marketplace technology vendor Mirakl. “Retailers, manufacturers and distributors need to evolve their strategies and start to hook in value-added services alongside their products or they will continue to leave themselves vulnerable to Amazon.”
Mueller thinks the new tool is a result of rising consumer security concerns. “My understanding is that it was triggered by rising theft rates of packages left on doorsteps, especially in high-density residential areas,” he says.
Amazon focuses on the convenience aspect of the Key system. The site description about the service tells shoppers how they can “schedule permanent access for your family members or give temporary access to recurring visitors like dog walkers, house cleaners, or out-of-town guests.”
Given Amazon Prime’s reach—there are 90 million Prime members according to the most recent estimates from securities research firm Consumer Intelligence Research Partners (CIRP)—Mueller says Amazon Key devices could soon become ubiquitous.
“What’s intriguing is the way Amazon is marketing the technology for additional uses, such as professional services and personal access,” he says. “It creates immediate demand for something you perhaps never knew you needed. We may eventually find Amazon cameras everywhere as a result.”
Amazon isn’t alone in rolling out in-home delivery services that shoppers can watch in real time, though Key is the largest such offering with availability next month in 37 major metropolitan areas.
Last month, Wal-Mart Stores Inc. (No. 3) said it is testing an online grocery delivery service in Silicon Valley with same-day delivery service Deliv and smart-home technology provider August Home.
Walmart.com shoppers using the program can place a grocery order, which will then be fulfilled by a Deliv driver who receives a one-time pass code to open a customer’s August Home smart lock and then delivers the order inside the residence, even putting perishables in a customer’s refrigerator.
By launching in many markets right out of the gate, Amazon is better positioning itself for the future, says Tushar Patel, chief marketing officer at order management, e-commerce and omnichannel technology vendor Kibo.
“Not only is Amazon pushing its way to the top position of the in-home delivery winners’ podium by making the service available in 37 cities in a matter of weeks, but with Amazon Key, Prime shoppers can use it for services that extend beyond the retail realm,” Patel says. “Amazon continues to carve out its niche as more than just a retailer. It’s a way of life, and one that encompasses the spirit of personalization.”
Other retailers may not have the resources to join the race between Amazon and Walmart, but the push by those retail giants to offer more convenient options for shoppers is a wake-up call to other online retailers, he says.
“While it is quite impossible for retailers to compete with Amazon on this level, they can still capitalize on making sure their convenience and personalization strategies are on par,” Patel says. “We know that, based on our own research, 52% of retailers plan to invest in personalization in the next 12 months or are already implementing this strategy. If these announcements from Amazon and Walmart don’t entice retailers to get off the dime, I don’t know what will.”
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