The internet giant this week plans to announce it is adding dozens of new brands to its Dash buttons feature, according to documents reviewed by The Wall Street Journal and people familiar with the matter.
Mistaken by some as an April Fool’s joke when Amazon rolled them out in the spring of 2015, the thumb-drive-sized devices enable shoppers to order things like Tide detergent and Cottonelle toilet paper simply by pressing a button. Customers are encouraged to put the wireless devices by their refrigerators and washing machines for quick reordering.
But fewer than half of people who bought a Dash button since March 2015 have used it to place an actual order, estimates Slice Intelligence, which conducts market research based on emailed consumer receipts. Those consumers who do order make a purchase roughly once every two months, Slice found.
Several consumer-product executives said they have signed up for the gadget largely to ensure their brands maintain close ties to Amazon. The venture is more vital as a marketing tool than a product-delivery system, they said.
“It may not be the most intuitive feature,” said Ken McFarland, director of e-commerce for Seventh Generation Inc., which has Dash buttons for its cleaning products and diapers. “But Amazon is trying so many things and you don’t want to miss out on the ones that work. You want to be out there if it does happen to be a hit.”
Companies pay Amazon $ 15 for each button sold and 15% of each Dash product sale, atop the normal commission, which typically ranges from 8% to 15%, the people familiar with the matter said.
For their part, consumers pay $ 5 per button, though Amazon sweetens the deal by offering a $ 5 rebate for every button. The rebate is good toward the first purchase using that button. Only members of Amazon’s $ 99-per-year Prime membership are eligible to use the Dash buttons.
Helping expand Dash’s ranks: Amazon dropped a hefty buy-in fee of around $ 200,000 required of the first companies that signed up, according to people familiar with the terms. Those early Dash brands belong to major consumer companies, including Procter & Gamble Co. PG -2.32 % , Kimberly-Clark Corp. KMB -2.15 % and PepsiCo Inc. PEP -2.36 %
Amazon declined to comment. The buttons fit into Amazon’s broader strategy to make shopping as easy as possible, giving consumers fewer reasons to go to competitors’ brick-and-mortar stores.
Amazon faces competition, too, including from itself. Its Echo and Tap voice-activated virtual assistants allow customers to order a range of products just by saying them aloud, potentially supplanting the Dash buttons.
And at least one startup, Kwik Commerce Ltd., is rolling out buttons of its own. The Sunnyvale, Calif., company this month said it had raised $ 3 million to expand its line of buttons, which include Huggies diapers and beverages from Anheuser-Busch InBev BUD -5.49 % NV.
Sergio Monsalve, a partner at Norwest Venture Partners, which led the Kwik investment, said Amazon is vulnerable. “There are other categories to address, like food,” he said, noting Kwik has a deal to distribute Domino’s Pizza LLC pizzas in Israel. “There’s plenty of margin” in such on-demand deliveries, he said.
Cot’n Wash Inc.’s Dropps laundry detergent packs will be among the products in the coming Dash expansion. Chief Executive Jonathan Propper said he is unconcerned by ridicule of Dash or its practical limitations, real or perceived.
“Things can change,” Mr. Propper said. “Look at the categories Amazon created that never existed before, like Kindle. There were people who said no one wanted to read a book off a screen.”
Seventh Generation’s Mr. McFarland said the Dash buttons seem to work better for products like laundry detergent that require replenishment on an unpredictable schedule. But diapers aren’t a good fit because shoppers generally buy them at regular intervals, which makes a subscription delivery service a more convenient option.
A spokeswoman for Sun Products Corp., which uses Dash to sell All and Wisk laundry detergents and Snuggle fabric softener, said the buttons have “exceeded expectations.”
Math teacher Kyle Boyd bought buttons for Tide, Gatorade and Greenies dog treats when they first came out, but today only uses the Tide button. The others are stashed in the Yorktown, Va., family’s junk drawer, she said.
Among her complaints: the buttons don’t display price info when they are pushed, which can lead to big swings as Amazon updates its prices online. She stopped using her Gatorade button when the price of a 12-pack jumped from $ 9 from the first purchase to $ 22 for the second. Amazon provides text-message alerts—including price—upon request when a button is pushed. “If I have to check on the price every time,” she said, “it’s not actually saving me time.”