Voice shopping in retail expected to grow to $40 billion by 2022
Voice-controlled shopping is set to explode in popularity over the next four years, according to a new report. While the nascent technology currently has relatively low market penetration and sales, voice shopping is expected to be the “next big thing”, like mobile and apps before it.
Bizarre commands such as “Alexa, please buy me some underwear,” are likely to become common place in consumers’ homes, over the next four years, as voice shopping technology is set to take off. In a recent study, consulting firm OC&C believes that voice shopping sales will surge from a forecasted $2 billion this year to an estimated $40 billion in 2022. This massive growth (1900%) will be driven by increased use of smart speakers at home, like Amazon’s Echo and Google Home. OC&C predicts that the smart speakers will penetrate 55% of US households by 2022; currently 13% of households use a smart speaker.
Amazon, the current market leader in voice shopping, is likely to dominate the growing market. The Amazon Echo is 10% of US homes, while Google Home is in 4% and Microsoft’s Cortana is in 2%. Amazon benefits from the seamlessness of providing its own dominant e-retail store with the Amazon Echo speaker and Alexa AI engine. Amazon is also willing to sell Echoes at a cheap price in order to get them into more homes and get consumers hooked on their e-commerce option and register for their Prime service.
In contrast, Apple is lagging behind in the AI home speaker segment. The technology giant’s Homepod was only recently released, missing the critical holiday season, where Amazon and Google slashed prices to expand speaker sales. In addition to Apple’s late arrival to the market, analysts at OC&C believe that Apple’s AI, Siri, lags behind the capabilities of Amazon’s AI, Alexa. Apple clearly has an uphill battle to fight in the voice assistant and voice shopping market.
While home speakers, as well as the use of AI assistants on smartphones and tablets, figure centrally into the voice shopping market, there is also great potential in the automobile market. A study by marketing research and consulting firm Parks Associates reveals that 57% of US broadband households are interested in voice control features for their car. With a shift to automated cars approaching, a future where consumers shop using the voice control features of their Artificial Intelligence (AI)-enabled cars is easy to see. Consumers can buy their groceries and shop for new shoes from their onboard, voice controlled AI systems, while their automated car does the driving. Talk about a productive commute!
Indeed, automobile manufacturers such as BMW are already working to integrate Alexa into their onboard systems. A partnership between IT consultancy Accenture and auto parts leader Faurecia is also currently working on a project where multiple occupants of a vehicle can utilise the Alexa voice assistant to perform separate tasks. Amazon, as such, figures to reap even wider market penetration due to its early technological supremacy in the field of AI assistants.
John Franklin, Associate Partner, OC&C, commented, "Voice commerce represents the next major disruption in the retail industry, and just as e-commerce and mobile commerce changed the retail landscape, shopping through smart speaker promises to do the same. The speed with which consumers are adopting smart speakers will translate into a number of opportunities and even more challenges for traditional retailers and consumer products companies."
The market dominance of Alexa and Echo will reap benefits for Amazon’s e-retail shop as voice shopping expands in popularity. According to a Bain & Company study, when voice shopping through Alexa, Amazon will suggest an “Amazon Choice” recommended product more than half the time to first-time purchasers, provided that no brand is specified. Products with an Amazon Choice designation (ostensibly based on some combination of price, popularity, and user reviews) will see their sales triple. Indeed, 85 percent of Amazon customers already choose these recommended items.
Bain also found that Alexa will recommend an Amazon private label product 17% of the time if an e-retailer offers them. With two of the most popular product categories for voice shopping currently being groceries (20%) and electronics (17%), Amazon stands to boost the purchase of AmazonFresh groceries and AmazonBasics electronic accessories, along with their tablets and e-readers. There, thus, exists a strong potential for Amazon to funnel voice shoppers toward products from its e-store, as well as its own branded products.
Rather than being technology pushed by companies that mistakenly think they know what their customers want, consumers are apparently quite interested in voice control and voice shopping. According to a study by consultancy Capgemini, about a quarter of shoppers said they would prefer to use a voice assistant instead of an app or physical store. Furthermore, 40% of consumers expect to use a voice assistant instead of an app or website 3 years from now.
Bhavesh Unadkat, Principal Consultant in retail customer engagement at Capgemini, said that voice shopping will win over even more adherents through ease-of-functionality and added value, stating, “If you type something into Google, you get a million generic search results. Smart assistants should be capable of looking at your previous searches and order history to offer relevant products. Say, for example, I’m searching for child’s clothing. This assistant should know enough about me to know I have a toddler and show me products for that age group.”
Related: Retail stores risk losing consumers to digitally prepared competition.
