Wednesday, 3 September 2014

Amazon Firefly – A Great Alternative to Product Tagging?

Loyalty & Engagement market is evolving at a great pace. Naturally, this process of evolution has had a head-on impact on the scope of the market. Loyalty & Engagement programs are no longer designed only for end-consumers, but loyalty is solicited from your distribution channel partners too. There weren’t any doubts ever on the impact of the supply chain & distribution channel partners (Distributors, Wholesalers, Retailers etc.) on end-sales of the products. However, somehow marketers weren’t looking beyond discounts & service support to gain loyalty from their channel partners. Even today, most of the distribution chains in the consumer electronics industry depend on these two tactics to keep their channel partners loyal. But, this does not solve the broader problem. Even if we assume that they manage to keep their channel partners loyal, they do not really promote sales. The best way to drive sales within the distribution channel is by turning the channel partners into your ‘extended sales force’.
Traditional discounts are discontinuous. They generally occur once per bulk purchase transaction by channel partner. If we can somehow find a way to link each & every primary, secondary & of course tertiary sale (which is generally the end-sale to the customer) to give incentives to channel partners, it would be great engagement method. How to do that? Two words – product tagging.

Product tagging is perhaps the only method of tracking the sale events of a product through various levels of the distribution chain. Uniquely coding the products to account for each tier in the chain seems to do the trick. Here’s the catch – Product tagging is extremely difficult in real-life once the product comes out of the factory automation environment. And in actual practice most of the tagging has to be done outside these automated environments – in the warehouses or shipping bays. It tends to become exponentially difficult when there are multiple tiers of codes (for each tier in the distribution chain) or there are many SKUs in the company’s assortment. Lack of skilled labor in the warehouses & packaging departments just compounds the pain. 

Here, I’ll try to propose a highly ambitious solution to this tagging problem. And the solution is – don’t tag the products! Before you begin to question my mental condition, hear out the last piece of the puzzle: Amazon’s Firefly technology. Amazon has been working on real-life object recognition through intelligent image & sound processing for better part of a decade now. As you may be aware, it has very recently launched its own phone, the Amazon Fire phone which contains this breakthrough feature called Amazon Firefly. Amazon Firefly’s premise is that it claims to be leaps & bounds ahead of other technologies in the field of object recognition. You just have to press the ‘Firefly button’ provided on the Fire phone & it will turn on its sensors (camera, microphone, GPS) to recognize whatever object you are looking at (image recognition) or  listening to (sound recognition) or a mixture of both. Thus product tag (unique code pasted on the product packaging) is out of the picture since the mere event of scanning & recognizing the product through the Firefly feature can be used to identify the product. However, we have to make a major assumption here. We’ll assume that sale has happened even if customer just scans the products, regardless of tracing the actual sale. Still, the next thing that I’m going to point out may very well be the workaround for this issue. Amazon has opened the SDKs for the Firefly technology for developers to build their applications around it. Of course there is going to some usage fee involved, but developers will have the power to add unprecedented level of intelligence to their applications. 

Applying this to our context of product tagging, we may build an application which will recognize the unique serial number or barcode or QR code present on the product to establish the proof of purchase. And these serial numbers can very well be added to the product in the factory automated environment. There is another way which could bypass product tagging altogether if we force the customers & channel partners to complete the purchase transaction only through the portal or application specified by us.
We have to make another assumption – availability of Fire phone on a mass scale. Only time will tell validity of this assumption. For now, we can do nothing but get mesmerized by the technology & hold our breath for it to solve the painful product tagging problem.   

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