Is the Convenience Worth the Price?

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Living in an era were technology is changing the way we communicate, shop and socialize, it should not be a surprise that given the increased stress of always being connected, consumers are altering the very fundamentals of how they shop, even for the most basic of commodities.  Not all that long ago, the predominant marketing strategy for acquiring the basic necessities of daily living focused on price and who could deliver common, everyday products to an ever demanding consumer at the lowest costs. More for less became a tactic of every big box retailer and the demise of many thousands of unprepared small competitors, many of whom had only the offer of added free convenience services to stem the tide of looming business ruin at the hands of the purchase powered retail elite. Lower price trumped added convenience offerings across the full spectrum of consumer products and services as consumers volunteered to trade a little more personal time in performing the shopping experience to get an ever cheaper price.

But with all the time saving, multi-tasking, never turned off or tuned out tech gadgetry, consumers are quickly realizing that as life and business move faster to accommodate the new reality of modern communication and technology, there is simply never enough days in the week to get all those common daily survival errands and chores done. Perhaps that is the reason e-Commerce for convenience shopping is on the rise. For all those retailers, who not so long ago couldn’t give away convenience as part of the sale, the fact that consumers are now willing to pay for it has to be curious at the very least. In today’s retail environment, convenience is a commodity for which shoppers are apparently willing to spend more. “Post-recessionary consumers are prepared to pay for products that simplify their hectic on-the-go lives,” said Daphne Kasriel-Alexander, consumer trends consultant for Euromonitor International, a London-based market research company. “Technology plays a big part in attaining convenience, and omnichannel shopping options creates a seamless link between virtual and ‘real world’ shops with wide consumer appeal.” And nowhere is the “willing to pay more for it factor” more evident than at Amazon.

The company has recently introduced its new “Prime Now” delivery service to selected urban markets around the country. Amazon’s Prime Now delivery service is available to Amazon Prime members who pay a $99/year fee. The service offers one-hour delivery for a fee of $7.99 and two-hour delivery for free.  In addition, consumers are encouraged to tip the delivery person a minimum of $5.00 for each delivery. “Prime Now” is accessed via a mobile app for iOS and Android, and offers members a way to have common items like paper towels, shampoo and groceries delivered to their door within 60 minutes of ordering. But that’s not all. Need a dress for a last minute date for the evening or a new camera for that evening sporting event, no problem. Shop, choose, click, pay and take delivery at your door in just hours, and the service extends to items most consumers wouldn’t need in an hour or even two. Now that is instant gratification personified.

Amazon’s effort is creating a buzz among traditional retailers and promises to be incredibly disruptive for big box retailers who are already bruising from the dollar store phenome. Same store sales for the likes of Walmart, Target and other formula retail store giants may fall victim to Amazon Prime Now’s diversionary effect. Once the bugs and selection gremlins are overcome, multi-store operations of all sizes and wares could experience a shrinking pool of potential new customers.

Only time will reveal if Amazon is able to make the “Prime Now” adventure profitable or even be able to sustain and scale the service successfully. Will consumers continue to be keenly focused on the convenience factor long enough to make the offering successful or will they, with time, relegate Prime Now to the “neat but not necessary” list of things of the past?

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

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