Understanding the Method Behind Amazon’s Madness
Amazon Key, Amazon’s latest and greatest attempt to change the way we buy things (and services!) has been met with intense criticism. Criticism of Amazon Key has mainly focused on the risk of providing a stranger with access to your home. What may be missing from this gut reaction (which I, in my 48-year-old mindset initially shared) is Amazon’s ability to see the merging of three independent macro trends that may make a service like this not only possible, but ideally suited for specific customers.
Before we discount this initiative, let’s examine the three trends could make Amazon Key viable and describe who the customers are that may wish to engage in this type of offering.
Three Macro Trends
1. Decreased Security Concerns – In an era of what seems to be daily data breaches and customer information disclosures, one might expect that consumers are less apt to share their digital and physical assets. We have found just the opposite to be true as the percent of people reporting they trust providers of digital services has steadily increased every year. In speaking with thousands of consumers, what has become clear is that they have a better understanding of digital service offerings and the value they provide. Additionally, consumers and feel more confident of how they engage with these services leading to greater trust. This POV is, not surprisingly, extremely age dependent with millennials driving the front edge of this trust change, so be careful who you reach out to in order to verify the potential success of Amazon Key.
2. Available Technology – Smart locks and security cameras are just a few of the technologies available that help to mitigate the risks associated with Amazon Key. Amazon saw the quick adoption of remote monitoring technology as both a clear indicator of an unmet need as well as an opportunity to expand its portfolio beyond “things” to professional services. Thinking about how cab drivers snickered at the thought of their customers ordering car service through their smart phones, it may be wise to think through how these available technologies could transform how people want to interact with retailers.
3. Increased Desire for Convenience – The on-demand culture, driven by capabilities from Amazon and others, has made customers more and more cognizant of the scope to which offerings can be made more convenient. This has created a cycle of expectations (which Amazon rapidly feeds) where what was new and great yesterday is now compared to the latest and greatest today. Everyday improvement has become the only constant in a sea of change. Amazon Key is a great example of this continued progression in delivering.
Target Customers (young, average wealth, and all about choice)
The next logical question is who is the prime target for Amazon Key and how large is this segment? Two factors, which align to the above macro trends, that should be figured when calculating the target market for Amazon Key include #1) desire for “latest and greatest” products and #2) desire for convenience. When looking at consumers who rate BOTH of these attributes high we end up with a highly qualified segment that represents 19% of US consumers between the age of 19 and 65. Firstly, this group is significantly younger (65% are under 38 versus general population where only 38% are under 38). This age bias is not surprising, and Amazon confirms this with their You Tube video that makes it clear this service is focused on young, single millennials. Secondly, this segment is of average wealth even when compared to consumers within the same (younger) age segment. Thirdly, this segment is all about choice with 53% indicating they shop 7 or more stores regularly compared with only 24% of the general population that shops 7 or more stores.
How Can Magid Help You – Interested to understand how your customers align within this customer segmentation? Contact us and we will provide you with a comparison of what percent of your customer base aligns with this targeted segment.