You may have heard the news. As reported by CNBC, Amazon announced the end of its highly talked about sampling program which launched in early 2019. So what exactly happened and what does this mean for the Digital Product Sampling space? Here’s what we can learn from Amazon’s quick entry and exit from the space:
Product sampling is very much still alive
Amazon got into the space because of the rising demand from brands to connect with consumers in more impactful ways. With customer expectations rising, it’s become more important than ever for brands to put their product into the hands of the right consumers. That's where sampling comes in. It's a way to create a lasting impression in consumers' mind by engaging their senses and letting them physically experience a product. It's proved to be one of the most effectives ways to get someone to consider a product. In fact, In a survey by Opinion Research Corp, 81% of respondents said they are more likely to try a product after they get a free sample and brands are realizing this. It’s our estimate that the demand for digital sampling in the last year has roughly tripled and that brands who are already spending in the space are planning on spending approximately 9 times more in the upcoming year.
Consumers value privacy & transparency
Amazon thought that leveraging shopper data was a good way to match a consumer with a product sample. The concept was simple: you bought a dog bed, so you should get a dog bone. But in practice, consumers found it “creepy” as the CNBC article points out and that comes as no surprise. Surprising consumers with free product samples in the mail might have seemed like a great way to delight them. But receiving a product they never ordered raised huge privacy concerns and reminded consumers how much their data is used without them knowing. Here’s what we found: consumers appreciate a personalized experience if it’s based on the information they’ve explicitly shared with you. They happily share data about their preferences and lifestyle if it means it's transparently used to curate a personalized experience for them. Getting them to share this information up front makes a major difference in how they welcome a product into their household.
Brands want Direct-To-Consumer Relationships
Digital product sampling is on its way to being more cost-effective than hyper-targeted click-on ads. With the rising costs of advertisement and the declining engagement brands are seeing with their digital ads, it’s expected that they lean towards channels (like sampling) that cut through the noise and enable direct real-life interactions with their consumers. But digital product sampling is still a channel that requires a specific investment in product and fulfilment if what we want is to deliver an at home experience. As the article points out, Amazon was charging $2 per sample for their program which is typical in our space - the big drawback here is that even after making the investment, brands didn’t get access to the data collected, making it practically impossible to build the ongoing direct to consumer relationship they’re looking for. From our perspective, if the brand is going to be making an investment in the product, taking on the costs of shipping and if the consumer is genuinely interested in learning more from the brand, we should absolutely help broker that relationship. If consumers are interested in staying in touch with the brand, why not offer them a transparent way to opt-in and opt-out of brand marketing messages? This not only allows brands to foster these direct relationships, but lets them continue the conversation with the consumer after they've received the product sample.
There’s a lot to be learned from Amazon’s move in and out of the sampling space this year. While traditional product sampling is something retailers have been able to monetize incredibly well in-store as a means to drive impulse purchases or awareness, digital product sampling is proving to be more complex for them. The real opportunity behind moving product sampling to digital is that it enables brands to understand their consumers on a deeper level, build unique product experiences, and develop a personalized and trusting relationship with their consumers. To do this, brands shouldn't rely on purchase history data and algorithms - but rather on the information that their valued customers openly share with them. Marketers, take note.