The Reality Behind Voice Shopping Hype

By Priya Anand

Aug 06, 2018 10:01 AM PDT

Amazon and Google both tout voice shopping—the ability to make purchases and check on the status of orders with verbal commands—as significant features of their smart speakers. Some forecasts call for annual voice shopping sales to reach $40 billion in just a few years. 

But it appears that only a small fraction of smart speaker owners use them to shop, and the few who do try it don’t bother again. The Information has learned that only about 2% of the people with devices that use Amazon’s Alexa intelligent assistant—mostly Amazon’s own Echo line of speakers—have made a purchase with their voices so far in 2018, according to two people briefed on the company’s internal figures. Amazon has sold about 50 million Alexa devices, the people said.

THE TAKEAWAY 
• Few people with Alexa devices use them for shopping
• Fifty million Alexa devices have been sold
• Alexa skill better for marketing than sales

Of the people who did buy something using Alexa voice shopping, about 90% didn’t try it again, one of the people said. A larger number, 20%, have engaged more broadly with Alexa voice shopping by using commands like “What are my deals?” and “Where is my stuff?” to track orders that were likely made on other devices. 

“Clearly, voice shopping is not yet in the stage of being a mass market product,” the person said.

Instead of shopping, people mostly use Echo—and Google’s device, called Google Home—to answer simple questions about the weather, set timers and play music and radio stations. The companies are also promoting them as hubs for controlling smart home devices like light switches, door locks and thermostats. Amazon says that developers outside of the company have created more than 45,000 Alexa “skills,” or customized voice functions.   

Amazon is cagey about the number of Alexa devices in use. Jeff Bezos, the company’s CEO, said Amazon sold “tens of millions of Echo devices” last year in a letter to shareholders earlier this year. In an earnings press release last month, Mr. Bezos said the number of Alexa-enabled devices, which includes hardware made by other companies, has more than tripled in the past year. 

Some skeptics question whether most shoppers will ever want to make voice purchases for items, such as a camera or book, that merit deeper research of reviews, prices and features. People who do shop through their smart speakers tend to buy paper towels, detergent and other home staples.     

When brands approach Patrick Givens, who builds skills for Amazon’s Alexa and Google Assistant at the digital marketing agency VaynerMedia, they sometimes ask how to sell more of their products through the voice assistants. He tells them not to expect too much.

“Clearly, voice shopping is not yet in the stage of being a mass market product.”

“We’ve done a lot of work to manage back the expectations to say we don’t expect a high volume of purchase here right away,” Mr. Givens said. “We would definitely think of commerce in voice today as a space to try to build learnings right now, but not a place where we expect to see meaningful purchase volume” for the foreseeable future.

In a statement, an Amazon spokeswoman said: “Millions of customers use Alexa to shop because it is the most convenient way to capture needs in the moment,” adding that “We want to enable customers to shop in whatever way is easiest for them.” Amazon has sought to encourage more voice shopping by offering discounts on items purchased through Alexa, including during its big Prime Day sales event. 

Jo Jaquinta, who has created more than a dozen Alexa skills for clients, said that developing an Alexa skill is more of a marketing exercise than a sales tactic. “I know no app that pays for its development costs itself,” Mr. Jaquinta said. “The return they’re seeking is out of publicity and brand awareness.”

Many studies have estimated that voice shopping is more common than the internal figures from the person briefed on Amazon’s business. A June survey of about 1,200 U.S. adults age 18 or older by the research firm Voicebot.ai estimated that 26.1% of smart speaker owners have made a voice purchase. The company found that about 16% of people with smart speakers said they used them to shop on a monthly basis.

Meanwhile, the firm OC&C Strategy Consultants projected earlier this year that voice shopping sales through devices from all tech companies could catapult from what it estimates today to be $2 billion to $40 billion by 2022. In December, RBC Capital Markets analysts estimated in a research note that Alexa could generate $5 billion to $6 billion a year in revenue from voice shopping by 2020. The person briefed on Amazon’s voice shopping numbers said it has not yet become a meaningful driver of revenue within the company. In February, Amazon’s chief financial officer, Brian Olsavsky, said on an earnings call that the company last year saw “record [Alexa] device sales with very high levels of customer engagement, including increased levels of voice shopping.” The Amazon spokeswoman declined to make an executive available for an interview.

One of Amazon’s challenges is that so few people are buying things through Alexa that the company has had a hard time identifying patterns that would allow it encourage further voice shopping, the person briefed on the program said. “There might be very few voice shoppers right now… but once you find out what’s special about them, you can grow them very quickly,” the person said. “That’s an unresolved problem.”


Source:https://www.theinformation.com/articles/the-reality-behind-voice-shopping-hype