Alexa and friends make their voices heard
Digital shopping could reach $40B by 2022
The retail revolution shifting sales from stores to laptops to smartphones could be on the verge of its next sea change — when shoppers will ask Amazon’s Alexa and other voice-driven speakers to order just about everything.
Purchases made through devices such as Google Home and Amazon’s Echo are projected to leap from $2 billion to $40 billion by 2022 as technology improves, U.S. consumers become more comfortable and the speakers become nearly as commonplace in homes as a flat-screen TV, according to a new study from OC&C Strategy Consultants.
“We really see this as the next big disruptive play in U.S. retail,’’ says John Franklin, associate partner at OC&C, which surveyed 1,500 smartspeaker owners in December.
The smart-speaker space is one in which many tech giants want to play. Though Amazon and its digital helper, Alexa, have come to define the niche, Google Home and its Google Assistant are second in popularity. Apple began shipping its Siri-assisted HomePod smart speaker in February. Microsoft’s “Cortana” is also part of the mix.
For now, the most popular use of voice-driven speakers is to play music or find out whether to take an umbrella when heading out the front door, OC&C says.
But as virtual assistants can turn up a thermostat and even rattle off jokes, voice-driven speakers are at the center of a budding universe of AI-connected devices that include bathroom mirrors, door locks and TV monitors. Smart home product sales are expected to total $4.5 billion this year, up 34% from 2017, according to the Consumer Technology Association.
Among the U.S. residents who have a smart speaker, 62% have used it to buy groceries or some other item, according to OC&C’s study. The report predicts that the percentage of U.S. homes with a smart speaker will rise to 55% by 2022.
“That number has been going up incredibly rapidly over the last two years,” Franklin says. “That’s clearly a big driver in the overall potential in
voice shopping. We then expect household spending with smart speakers will increase also.”
AMAZON IS STILL KING
Amazon, which first upended the retail environment when it wooed readers away from traditional bookstores, then became the go-to for many online shoppers, dominates the emerging smart speaker space as well.
The Amazon Echo is used in 10% of U.S. households, followed by Google, which is in 4% of homes, and Microsoft’s Cortana, which comes in at 2%.
“Retailers should be taking notice of this primarily because of the way Amazon is pushing this technology and the potential Amazon has ... to access consumers on a regular basis and in a very intimate way,” Franklin says.
Google is pushing back. As visitors increasingly start their browsing on Amazon instead of Google, the world’s largest search engine has linked up with retailers, including Whole Foods, Costco and Walmart, whose items are available through Google Express.
OBSTACLES REMAIN
There are hurdles that could slow down how quickly shoppers take to voice shopping— and how lucrative voice-based purchases are for retailers.
It can be difficult to compare prices when ordering via speaker, and customers often have to use specific wording such as “OK, Google” when launching their transactions.
Shoppers are more apt to buy cheaper items, such as phone charger cables, via voice. The average online basket was $661 for online purchases of electronics, compared with $239 for voice orders, OC&C said.
Then there’s the matter of trust. Among shoppers who don’t make purchases through a smart speaker, less than half, 45%, say they would trust the device to recommend the best reviewed products.
Among those who do shop via voice, 83% say they have confidence in the virtual assistant’s suggestions — signaling that once consumers try the new way of summoning goods and services, they often like it.
Those numbers give “us confidence this isn’t simply a fad but is a meaningful channel that will continue to disrupt retail over the next five years and beyond,” Franklin says.