Voice activated tools such as Amazon Echo and Google Home are the next big shake up facing the retail industry with an impact akin to that of mobile.
So warns new data from OC&C Strategy Consultants, which finds that a tenth of UK homes already have on and they are using them to shop with. By 2022, this is projected to increase to 48% – delivering £3.5bn worth of spend.
Amazon’s Echo voice-activated technology is currently the dominant player in voice commerce, with a clear lead (8%) of UK household adoption in comparison to the use of (2%) smart-speaker Google’s Home device, finds the
Some 45% of UK grocery purchases are already replacing brick-and-mortar store and online buys, the majority of which are bought on Amazon Fresh via Amazon’s Echo voice technology.
Even though groceries and other low-value fast-moving consumer goods (FMCG) items form the bulk of purchases made through voice-technology, browsing opportunities remain limited, with 70% of overall are made on specific ‘known’ product, typically as a repeat order.
However, the restricted browsing doesn’t deter Amazon from taking advantage to prioritise its own choice of product assortment; this is often a previously bought product or one which is popular and well-priced, with positive customer experience metrics and a solid supply chain performance, enabling rapid delivery.
In fact, the majority (85%) are very likely to accept Amazon’s recommended product, which can typically boost pre-choice status sales by around three times, reveals the same body of research.
Retailers that are aiming to cement their position in voice commerce sector that’s predicted to contribute £3.5 billion worth of spending to the UK economy by 2020, getting on Amazon’s suggestion list is key to that endeavour.
How FMCG businesses can get ahead
Consumer goods businesses should focus their voice commerce offering on products that are most likely to be shopped through this channel: typically repeat, low price point items. Ensuring products are easily found can also be critical, as 70% of customers know the exact product they are seeking to buy.
The chances of products being ‘found’ can be increased by tailoring search terms to ensure distinctiveness against competitors, such as ‘sensitive toothpaste’.
To ensure voice is a useful channel for consumer goods businesses, maintaining Amazon’s ‘choice’ status and implementing an effective marketing strategy is essential, but difficult. Around 4-5% of Amazon’s ‘choice’ products change daily due to stock or delivery speed issues, which will have a negative impact on a business’ bottom line.
Implications of voice commerce for retailers
To get ahead, retailers can develop ‘skills’ (akin to mobile apps) which are accessed through smart speakers. Currently, the channel has had limited investment by retailers – just 39 ‘skills’ exist within the shopping category. This has allowed Amazon to capture consumer spend as the Alexa ‘default’.
To drive incremental spend, retailers can capitalise on consumers’ spontaneous or ‘distressed’ purchases. Inspiring a new recipe, for example, could encourage additional and higher price point purchases.
Building trust is also essential for retailers to succeed in the voice category. So far, only 39% of consumers trust in the ‘personalised’ product selection of smart speakers and less than half (44%) believe that they offer the best value section of products. Trust is a critical issue to bridge, especially among consumers who don’t currently own a smart speaker.
Will Hayllar, partner and global head of Consumer Goods at OC&C says: “It’s clear that shopping with voice is going to account for a substantial and growing share of the retail market, presenting both a challenge and an opportunity for businesses that can get ahead of the curve.”
Hayllar continues: “There are different paths to success in the voice category. A key consideration for retailers is understanding what business objectives they want to serve, then tailoring their voice proposition accordingly.”
He concludes: “For consumer goods companies, the focus should be on prioritising the products most likely to be shopped through this channel. For both retailers and consumer goods businesses, assessing how their brand plays to the strengths of different ‘skills’, is also crucial to maximise their success.”
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