What Is Voice Shopping, And How Does It Work?
Apr 09, 2018
By: Alexandra Barcelona
The success of the eCommerce industry is no fluke. There’s a good reason why mammoth retailers like Toys R Us and Claire’s have gone out of business in lieu of the rise of Amazon, eBay, and AliBaba.
It all boils down to convenience. Opening the lid of a laptop and making a few mouse clicks is immeasurably easier than driving down to the local mall -- and that’s all there is to it.
Today, consumers are embracing a new, IoT-led wave of convenience flood the shopping scene. Voice-enabled devices, in particular, are proving to be even more convenient that mouse clicks ever were. Devices like the Amazon Echo and Google Home are allowing shoppers to dabble in voice shopping, which allows customers to reach their favorite retailers not by lifting any fingers, but by simply raising their voices.
What is Voice Shopping?
Voice shopping is exactly what it sounds like: using your voice to make purchases.
Just as users have become accustomed to using these devices for carrying out simple search requests or for operating devices around the home, they are also using them to make purchases ranging from pizza to paper and from movie tickets to big-ticket items.
Here’s how a typical voice shopping event might take place:
“Hey Alexa, buy shampoo.”
“Okay, according to your order history, I found Maybelline shampoo. Would you like to buy it?”
Devices like Amazon Echo, for example, can remember a user's purchases, remind shoppers when they're due to re-order, and track an order delivery status. It can also automatically include all available coupons and discounts, as well as recommend the best brands of each product according to reviews posted by other Amazon customers. Google Home users in the U.S. can also make purchases with their voices.
How Does Voice Shopping Work?
Voice shopping works in two stages. The first stage requires the user to enter their purchasing information, including their name, address, telephone number, and credit or debit card numbers. The system will hold this information for each purpose. For those users who already have their information recorded with previous orders through Amazon or Google, the user can log into their account and enable voice purchases by following the directions for that system.
The second stage involves placing the order. The user asks the system to order an item, and the system informs the user of the item's brand name and price. If the user has ordered a specific item previously, the system will ask if the user wants to re-order the same item. The user will either confirm the order or change it and add the item to the user's shopping cart. The system will ask if the user is ready to complete the order. When it receives the confirmation, the system will place the order.
Voice Shopping is Here, and it’s Growing
Voice shopping has already become one of the biggest trends in retail. A TechCrunch report showed that just 13 percent of U.S. homes have a smart speaker system, but that more than a third of those who had these systems used it to make purchases on a regular basis. These purchases generated an estimated $2 billion in revenue in 2017.
A 2017 survey of more than 1,600 shoppers showed that about one-quarter of those surveyed owned at least one voice-activated digital assistant, with another 20 percent expected to purchase one in the coming year. While just under 20 percent of those surveyed had made purchases through voice shopping, the survey also showed that more than 40 percent of millennials had used their voice-activated assistants for purchases in the preceding year.
While $2 billion may not be an impressive figure in the world of retail, it only shows that the phenomenon of voice shopping is just getting started. The aforementioned TechCrunch report quoted data from a survey conducted by OC&C Strategy Consultants. The OC&C survey estimated that more than 50 percent of U.S. homes will have smart speaker systems by 2022, up from only 13 percent in 2017.
This explosive growth in system sales will potentially lead to a massive boom in voice shopping purchases. The OC&C report estimates that purchases from voice shopping could total as much as $40 billion by 2022, a twenty-fold increase in only five years.
"Voice commerce represents the next major disruption in the retail industry," said John Franklin, Associate Partner at OC&C. "Just as e-commerce and mobile commerce changed the retail landscape, shopping through smart speaker promises to do the same.”
Many major retailers have taken notice of the voice shopping trend by forming partnerships with smart speaker providers. Retailers such as Costco, PetSmart, and Walgreens have partnered with Google to offer voice-activated orders on the tech giant's Google Home system. In August 2017, Google partnered with Walmart, the world's biggest retailer, to offer hundreds of thousands of products through the Google Home ordering system.
Users of Amazon's Echo Dot system will, of course, often be steered toward making their purchases through Amazon's online retail arm. For users who don't specify a particular brand, Amazon will recommend an “Amazon's Choice” brand, or even an Amazon-branded product where applicable. This capability gives Amazon and their partners a leg up on competitor's brands when it comes to voice shopping.
The Problems With Voice Shopping
Today, only around eight percent of people are using voice commands to make purchases or process smart payments, although analysts expect that number to grow exponentially in coming years. And yet, with many emerging technologies, voice shopping is not without its issues.
With so many stories of data breaches and identity theft, some users are hesitant to use voice shopping out of security concerns. Amazon's system uses a four-digit PIN to ensure that users only make the purchases which they intended, but Google does not use such a system in place for its security.
Another concern is how these systems integrate with payment processors. Banks, credit card issuers, and other financial institutions will need to catch up to the explosive growth of voice shopping, just as they had to catch up to online commerce and mobile purchasing, to make sure that the upward trend continues.
Yet More Voice-enabled Disruption
Voice-enabled devices are changing the way we interact with the world, and voice shopping, in particular, is going to impact a variety of markets.
We’ve already discussed the key elements of IoT devices that CMOs should be aware of, the role IoT devices in the customer experience and the need for brands to consider Content-as-a-Service — or headless content management systems — in order to keep up with the constantly morphing trends in eCommerce and various other industries.
Because one thing is for sure, voice shopping is still in its infancy, and the first-movers will reap the rewards today, as well as tomorrow.