Amazon Key: What’s it Unlocking?
It’s commonly understood that overcoming last-mile issues are vital for home delivery’s long-term success. However, crossing the threshold into the home may be the most challenging part.
Consider a recent SurveyMonkey poll conducted on behalf of Recode that reveals that less than 4 percent of U.S. households would definitely buy into the Amazon Key program, whereas 61 percent would definitely not. If you don’t recall, Amazon Key provides Prime members with a smart lock that, after installation, allows secure delivery of packages inside homes without the customer having to be there, with delivery monitored through an included camera whose view can be accessed via mobile device.
Some who like Amazon Key may minimize this finding and mention a lesson shared by the late Apple cofounder and CEO Steve Jobs, declaring that customers don’t know what they want until they see or experience it. Academic research supports this point of view, showing that a consumer’s attitude about purchase intent for a new product or service – especially innovative ones that are technological in nature – is a poor predictor of success until after the product launches.
Even so, whether it’s Amazon Key or another innovative solution – such as Walmart’s direct-to-fridge delivery – it’s vital to understand who’ll open the door and what will help even more to unlock the opportunity. A framework that minimizes biases, questions assumptions, and focuses relentlessly on the consumer is essential to putting those who cringe and cry out “Creepy! Not in a million years!” into context.
Who’s the Target Customer?
Amazon is marketing Amazon Key exclusively to Prime members. The rationale from Amazon’s perspective, from the near- to longer-term, includes that this will help increase the value of a Prime membership, acquire non-member households into their subscription service, and enable the company to eventually deliver a broader array of services as part of a strategy that builds the connected home of the future.
The size of Prime’s member base represents almost 60 percent of the U.S. households, according to estimates from Brick Meets Click, but this is too broad a definition for sizing the early adopter segment. So to understand who’ll fall into the target group, it’s necessary to determine which Prime members will most likely find Amazon Key attractive.
What’s the Relative Advantage Gained?
The new feature that Amazon’s in-home delivery offers, compared to Amazon’s current practice, is the ability to leave packages inside the front door. If this doesn’t appeal to you, then you don’t receive package deliveries at your home at all or very often, or you’ve never have had a package stolen or damaged.
Many U.S. households could find this feature attractive, based on results from a September 2016 survey commissioned by August Home, a smart lock manufacturer. The survey found that 53 percent of households are worried that packages left outside the home will be stolen, rising to 74 percent for households who’ve had a package stolen before.
Applying these findings against the Prime member base suggests that the equivalent of nearly 31 percent of all U.S. households may have some degree of interest in the solution.
How Relevant is the Problem?
Relevance is a strong indicator that a consumer will be positively predisposed to the intended message. So to tighten the estimate further, we’ll assume that the strongest interest will come from households who’ve actually had a package stolen.
Brick Meets Click estimates that just more than 9 percent of U.S. households have had a packaged stolen within the last year, based on an analysis of August Home’s findings and Census Bureau statistics. This means Amazon’s primary target market is the equivalent to between 5 and 9 percent of all U.S. households.
Even though this market estimate sounds small, it’s worth pointing out that actual penetration rates related to ordering groceries online from supermarkets or online platforms, like Peapod, falls within this range today. According to a Brick Meets Click survey of U.S. consumers conducted in late May 2017, less than 6 percent of U.S. households bought from supermarkets or online platforms during the past 30 days.
What are the Perceived Concerns?
Like with many technological innovations, consumers consider issues related to affordability, compatibility, and complexity when evaluating if the cost-benefit makes sense.
Are consumers willing to spend nearly $250 on the in-home kit? Will homeowners be comfortable turning off the security system if they one? And how will other factors, like pet ownership and a connected home, impact their respective decisions? These are all relevant and important questions to examine.
Then there’s the issue of trust that comes with allowing others to open the front door while no one is home. This loss of control creates a level of uncertainty that relates to concerns of privacy and security and ultimately fears of being injured physically or financially.
So addressing these concerns is critical to getting the consumer to buy the solution.
How are Consumers’ Risks Minimized?
Amazon is attempting to build trust through a combination of features and customer service that gives back some control, reduces uncertainty through proactive communications, and provides assurances to minimize risk.
The cloud camera provides video coverage of deliveries at the front door, which consumers can watch from their smartphones live or after the delivery. Customers receive multiple notifications on the delivery day informing them: of the four-hour time window, when the delivery is about to occur, and just after it is completed. And Amazon Key’s “Happiness Guarantee” is there to allay any other concerns.
Although these steps should help drive trial, the issue of acceptability is best tested by exploring what could go wrong. For instance, what happens if a consumer claims that $5,000 worth of jewelry was stolen from the house by the delivery person?
There’s a chance that the consumer may be out $2,500 or more, depending on if they own personal articles insurance and whether Amazon provides their maximum coverage for property related damages. Even though the odds of this scenario happening are low, it is this type of incident that would go viral over the Internet, causing much damage to the brand and business.
What’s being Unlocked?
Although it’s literally the consumer’s front door, it’s also the consumer’s wallet and new means of delivering value via innovation. For Amazon, this innovation may help to drive up Prime membership by 5 percent while upselling this service to nearly an equal number of existing Prime member.
Building adoption for technological innovations, like in-home delivery, is often not that easy, as it forces consumers to consider an unfamiliar and unproven alternative. So, having a clear and compelling proposition that appeals to the target customer and gets her to say “Cool, where do I get one?” is mission critical.