Voice-based commerce is shaping up to be the next major disruptive force in retail — and Amazon is poised to grab most of this wallet share.
Voice shopping is expected to jump to $40 billion in 2022, up from $2 billion today, according to data from OC&C Strategy Consultants.
The voice segment will be driven by a surge in the number of homes using smart speakers, which is on pace to hit 55% in 2020, from 13% today. And Amazon is positioned to dominate the new channel with the largest market share — currently more than twice that of its nearest competitor.
For example, Amazon’s Echo device has 10% penetration of homes in the United States, followed by Google’s Home (4%), and Microsoft’s Cortana (2%). Apple has been left behind for the time being, as its HomePod device has only just hit the market, and Siri currently lacks the AI capabilities of Google, the report explained.
Amazon also has a firm hold over consumers’ buying decisions, with 85% of consumers selecting the products Amazon suggests. That said, “Amazon Choice” status — a label applied to products that can be directly purchased from Amazon Echo — will be more important than ever.
Products that attain Amazon Choice status typically realize a sales boost of more than three times. Losing Amazon Choice status typically leads to a 30% reduction in sales.
Not every category is being purchased via voice just yet. Currently, voice purchases tend to be stand-alone, lower value items. The three most commonly shopped categories through voice are commoditized: grocery (20%), entertainment (19%) and electronics (17%). Clothing is fourth at 8%.
To drive additional spending and higher price points, retailers must develop “skills,” or connected applications, that integrate into current voice offers. There are currently only 39 such apps within the voice shopping category. One option could be skills that provide “inspiration,” such as new recipes, for example.
Building trust also has a direct correlation with the speakers’ overall ratings. Only 39% of consumers trust in the “personalized” product selection of smart speakers, and only 44% believe the devices offer the best value selection of products.
Ensuring that products are easy to find is critical, as 69% of customers know the exact product they wish to buy. That said, tailoring search terms to insure distinctiveness (e.g., “sensitive toothpaste”) increases the chances that a product will be “found.”
“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 speakers promises to do the same,” said John Franklin, associate partner, OC&C Strategy Consultants. “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.”