Amazon launched in early July 2020 a recurring delivery program for the company, called “Programe e Poupe”. Through this initiative, the user can choose a new option when buying certain products, that of "recurring purchase" and when selecting this form of purchase, the user can select a delivery frequency (monthly, bimonthly, quarterly and even half-yearly) and of payment for that product, and these operations become automated, without requiring new requests from the user.
In addition to convenience, another advantage offered is a 10% discount on all participating products (which, of course, are limited to frequently purchased items, such as hygiene and cleaning products, food and beverages, feed and other products for pets ), and for Amazon Prime members, shipping is free on all deliveries. Another point, which in my view seems to have been a hit by the company, is the simplicity and flexibility of the program. No special membership is required, and purchases can be canceled at any time, with no minimum subscription period required.
Figure 1: “Programe e Poupe”, Amazon's recurring delivery program. Source: Amazon
This initiative is somewhat similar to delivery clubs, on the which I wrote a few years ago here in the insights, but without the product randomness factor. Like these models, there are also benefits for logistics operations, since it is a modality that can bring more predictability to the potential demand for items that are part of the program, which facilitates sourcing processes, stock placement and resource estimation for delivery. This visibility, in a more predictive way, has already been used by other retail associated platforms (such as Shopper, Home Refill and Superlist) to negotiate better prices with suppliers and offer targeted discounts based on customer history. With the order already programmed, this forecast gains possibly greater accuracy.
Figure 2: Recurring delivery options are presented on the purchase page. Source: Amazon
It should be noted that the model of recurring deliveries brings a series of expectations from customers. In a scheduled operation, delivery time consistency becomes even more critical, especially when it comes to essential items. A delivery that is not made within the window expected by the customer can make him give up waiting and buy at the neighborhood retailer, and then cancel the delivery of the program, bringing a certain turmoil to the operation that was intended to be more predictable. It is also necessary to have good communication channels with the customer to warn about possible price changes, or even the delivery date, since the customer will not monitor each shipment as a regular purchase. A failure in these areas can transform the customer who was willing to be loyal into a consumer who detracts from the business, one of the worst possible conversions. It is always positive to see new options that seek to add more convenience to customers, but along with new promises, it is necessary to be aware of the accompanying challenges.
If you want to learn more about digital changes in retail, stay tuned to 26th ILOS Supply Chain Forum, which will take place from October 13 to 15, 2020, and will have the theme “E-commerce and Retail Transformation” as one of the main topics of the program.
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Fernando Chalréo
He has been working on consulting projects in Logistics and Supply Chain for 5 years, with experience in companies in the consumer goods, retail and food and beverage sectors. Types of projects already carried out: Sales & Operations Planning, Inventory Management, Network Planning, Business Process Review, Logistics Indicators and Transport Management
