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Wal-Mart Has Its Own Take on Amazon's Dash Button

By Daniel B. Kline - May 8, 2017 at 9:43AM

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The retailer has filed a patent for an IoT device that goes a step further.

For decades, really since delivery services like milkmen largely went away, most Americans have shopped by making a list, then going to the supermarket to get what they need.

It's an imperfect system because different consumables get used up at varying rates. That leads to either a need to make more visits, or going without until your weekly shopping trip comes around, or you build up enough demand to make an extra trip.

Amazon ( AMZN -0.00% ) has begun tackling this problem and putting at least a partial end to the shopping list with its Dash buttons. These are small, Wi-Fi-connected Internet of Things (IoT) devices that have one function: ordering a specific item. In general, they are placed near that item -- perhaps a Tide Dash button would be stuck on a wall near your washing machine -- and when you're close to running out, a simple press of the button places on order with Amazon for two-day delivery for Prime members.

There are hundreds of Dash buttons for everything from toilet paper to Red Bull, trash bags to Pop-Tarts. It's a simple system where a second order cannot be placed until the first has been delivered, and the consumer can set exactly what he or she wants to be ordered when setting up the device.

Amazon charges $4.99 for each Dash button, but gives consumers a credit for that same amount once they place their first order. It's a smart way to not only to save customers from having to run to the store because they run out of something, but to tie them to Amazon.

That's something Wal-Mart ( WMT -1.01% ) has taken notice of, and the company has filed a patent for its own Dash-like device. The brick-and-mortar retail giant is not merely copying its online rival, it also has an added twist.

An Amazon Dash button for Tide sits on a washing machine.

Amazon's Dash buttons allow for easy ordering. Image source: Amazon. 

What is Wal-Mart working on?

While Amazon's Dash button requires someone to actually press it in order to place an order, Wal-Mart's proposed system would be passive. Roughly, according to the patent filing, the consumer would configure the device, which would then track usage patterns. It would then be mounted in or on the item being tracked and could place an order for replenishment when the consumer-set standard is met.

The system will use Bluetooth, radio frequency, infrared, NFC, or other technology to track how much product is being used. Wal-Mart called the technology a subscription system in the patent application, but unlike a traditional subscription, the next order would not come at a predetermined date, but when it's actually needed.

That not only takes some of the work out of the process for the consumer, it creates a flow of orders to Wal-Mart. The patent notes that this type of tracking may also create opportunities for cross-selling. For example, if the device knows how much toothpaste you use, it may also be able to tell you when you need a new toothbrush.

This is a smart idea

Dash buttons are obtrusive. They have product logos on them and few people would want to place them in visible parts of their home. That limits their use to places like laundry rooms and perhaps inside various cabinets, hidden from view.

Wal-Mart, if it can create the device in the patent, while also making it small and near-invisible, may have a better solution. Its idea takes Amazon's IoT button and makes it something consumers don't have to think about.

If it works, Wal-Mart will have an IoT device that can make sure you never run out of whatever it is you worry about not having. That's a big step ahead of what Amazon offers, and it could, should it become a reality, win the company some automated business.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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