“Alexa, order my favorite pair of jeans.” “Alexa, add white T-shirts to my cart.” “Alexa, where’s my package?”
Voice commerce in the U.S. is expected to spike up to $40 billion in 2022, up from $2 billion in 2017, making it possibly the next major disruption force in retail. That’s according to a report from strategy consulting firm OC&C. The report also estimated that voice shopping in the U.K. could rise to $5 billion in 2022, up from almost nil last year.
Amazon is the channel leader, given its multiple Echo offerings. With a smart speaker market share of between 70 and 80 percent, the marketplace firm also has the most established e-commerce platform. As of December 2017, there were 24.2 million Echo units shipped to the U.S. and U.K., compared to Google’s 8.1 million units of its Home device launched in February 2017. Although Echo has been around longer, Home, which operates under the e-commerce platform Google Express, is considered to have better AI capabilities, OC&C said. Further, Apple’s HomePod hit shelves in early February and Samsung is expected to launch its smart speakers later this year. Cortana is Microsoft Corp.’s AI system, operated through third-party devices, such as speakers from Harman Kardon.
According to the OC&C report, voice shopping is still in its infancy, although the user base is growing. It noted that 36 percent of the U.S. and 16 percent of the U.K. have made a purchase through their smart speakers more than once. Separately, according to a different study in July from Walker Sands Communications, one in five consumers out of the 1,622 surveyed made a purchase using Echo or another voice-controlled device some time between 2016 and 2017, and another 33 percent said they plan to do so some time between 2017 and 2018. And in a third study, this time from Juniper Research last year, smart speakers are projected to reach 55 percent of U.S. households by 2022.
The OC&C report noted, “Voice shopping is mainly seen by customers as a sales channel, rather than a browsing experience — 70 percent of purchases are made by consumers who know precisely what they want to buy.” It explained that voice shopping is a non-visual experience, where products are selected based on a description in words. The nature of the process itself limits the scope of browsing, the report concluded.
At Amazon, electronics and its related accessories, entertainment and groceries are the more popular categories for voice commerce, while health and beauty and apparel are lower on the list. By basket value, the average for voice commerce in electronics is $239, compared with $661 for the online channel. Using the same comparison, basket values were $32 versus $36 for health and beauty and $81 versus $64 for apparel. Alexa is programmed to make a recommendation, usually an “Amazon’s Choice” product. The system doesn’t always do that for apparel, which is considered to have personalization requirements, but it will for basic or functional products, such as batteries.
John Franklin, associate partner at OC&C and a coauthor of the study, said, “One hundred percent of consumers are still using [the smart speakers] primarily for playing music, with 97 percent checking the weather and news and 94 percent for shopping, but for the lower end of the product range, such as basic items and staples — the things Amazon is known for.”
He said one barrier centers on trust and consumer concerns over whether they’d get the right products ordered. But the longer consumers use the speakers in their home, and the more of them they have in their home, the odds become greater that their activity level in connection with smart speaker use would grow.
Over time, smart speaker use is likely to increase as AI technology evolves, Franklin noted. Adding to that could also be the broader range of products offered as more retailers get comfortable with the retail channel.
However, one area that might take longer to see traction could be fashion shopping via voice commerce. The sector is considered more complicated due to fit issues, although advances in the “virtual reality world and how would an item look on me” could help consumers get past these issues, Franklin concluded.