Why Amazon blew it killing “Smile”
The country’s largest ecommerce company ended a program that donated 0.5% of eligible purchases to charities customers selected. This might have surprising negative consequences for Amazon’s brand.
By Brad Berens
This week, Amazon announced that it was ending its “AmazonSmile” program that enabled customers to support charities with most purchases. The program will end on February 20th.
I hope Amazon changes its mind both because it’s the right thing to do and also because it would be better for Amazon’s brand.
Amazon’s stated reason for ending Smile is that the program didn’t have the impact the company wanted. Despite funneling roughly half a billion dollars to charities since the program launched in 2013, Amazon said:
“After almost a decade, the program has not grown to create the impact that we had originally hoped,” the company said. “With so many eligible organizations—more than 1 million globally—our ability to have an impact was often spread too thin.”
The average donation to charities was less than $230, Amazon said.
Amazon will continue to invest in areas where it can “make meaningful change,” such as assisting with natural disaster relief, affordable housing initiatives and community assistance programs, the company said.
The timing and optics are odd.
Both the CNBC coverage I quoted and similar USA Today coverage note that this is happening at the same time that Amazon is laying off more workers than at any time in its history. CEO Andy Jassy is also doing “a sweeping review of the company’s costs.” So while Amazon says that this is because the Smile program doesn’t do enough, the termination of the program is happening when the company wants to account for every shekel.
This isn’t a good look. It looks like a company with a market cap of nearly a trillion dollars is too cheap to let its customers support their favorite charities when they shop at Amazon.
One reason why Smile hasn’t had as much impact as it might have had is that Amazon only donated 0.5% of eligible purchases to charities. Imagine the impact if Amazon had donated 3% of eligible purchases to charity—that half a billion dollars would have turned into three billion.
I’m confident that the company, famously data driven, has metrics in place to see if people who took advantage of Smile buy the same, less, or more after the program ends next month.
But what about the brand impact? That can be hard to measure.
As I’ve written many times, brands exist to help folks dodge the pesky burden of thinking. The original context for brands was livestock: a brand helps people to distinguish among cows that all pretty much looked the same. Most purchase decisions just aren’t all that important in the grand scheme of things, so we use brands to help accelerate our path to purchase.
Everybody has some “passion brands” (to quote my friend Jeff Rosenblum) that they have incorporated into their identities (I’m chemically dependent on Peet’s coffee and tend to wear Lucky jeans, for example), but most purchases are exercises in habit. I buy the big container of Charmin toilet paper at Costco because I’m confident that Charmin is soft, and I don’t want to spend time on a wiping version of the Pepsi Challenge to determine if the Kirkland brand is just as good.
Daniel Kahneman might say that nimble, speedy System 1 handles most purchases decisions automatically, leaving the big high consideration ones to plodding, methodical System 2.
Once you have baked in a habit around a brand, it’s hard to change that habit. For example, it took decades and an extraordinary incident for me to shift from Crest toothpaste to Colgate.
This is happening at the same time that Amazon is laying off more workers than at any time in its history. CEO Andy Jassy is also doing “a sweeping review of the company’s costs.” So while Amazon says that this is because the Smile program doesn’t do enough, the termination of the program is happening when the company wants to account for every shekel. This isn’t a good look. It looks like a company with a market cap of nearly a trillion dollars is too cheap to let its customers support their favorite charities when they shop at Amazon.
What AmazonSmile did for conscientious customers was let them off the hook from feeling bad about buying things from Amazon that they could have bought from a local Mom and Pop store.
Should you buy your copy of Prince Harry’s Spare from Amazon and save 38% off the cover price? Or should you pay full price at your local bookstore in order to keep it in business? You can ask similar questions about many different Amazon purchases.
But AmazonSmile let you avoid that dilemma entirely. “I’m saving money and supporting a charity!”
I experienced this myself recently in my traditional review of the books I read in a calendar year. I linked every book to an AmazonSmile page because doing so benefitted the TD Foundation, which I’ve supported for many years. This decision caused me no agony. I could have linked to pages at Bookshop.org, which benefits independent bookstores, or to pages at Powell’s, the country’s largest independent bookstore that happens to be near where I live in Portland. But Amazon was easier and supported the Foundation, so it was a no brainer.
AmazonSmile made lots of purchase decisions no brainers. Ending Smile turns them back into brainers.
When Amazon says that it wants to pivot its charitable endeavors away from Smile into “making meaningful change,” it’s missing the psychological point. As a customer, Amazon investing in affordable housing is nice, but with Smile I was doing something with my money, and I didn’t have to think about it.
I hope Amazon changes its mind and brings Smile back.
Brad Berens is the Center’s strategic advisor and a senior research fellow. He is principal at Big Digital Idea Consulting. You can learn more about Brad at www.bradberens.com, follow him on Post and/or LinkedIn, and subscribe to his weekly newsletter (only some of his columns are syndicated here).
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January 25, 2020