The Supply Side: Voice commerce considered next retail disruptor

Voice commerce is seen as the third wave in a retail evolution that began with e-commerce more than two decades ago, and the second wave being the growth of mobile commerce with the advent of the iPhone in 2007.

Voice commerce is still in its infancy. As much of mobile’s growth erupted in the past five years, voice commerce is expected to rapidly gain traction this year and next. Voicebot reported in January that 47.3 million consumers had smart speakers, roughly 18.7% of the U.S. total population.

“Voice has clearly emerged as a truly game-changing technology,” said Keith Anderson, senior vice president of strategy and insights for Boston-based Profitero. “Much of the industry is adapting a little too late to a mobile-first world, but you now increasingly hear retailers, and especially brands, talk about mobile first, voice second.”

Retail insiders believe voice can be as disruptive to e-commerce as mobile was to desktop. Retail suppliers not only must invest in mobile and online, but with Walmart’s partnership with Google in 2017, and the explosion of Amazon Echo sales in 2017, Anderson said suppliers need to have a voice commerce strategy.

Edison and NPR recently reported Amazon Echo had a 69% share in the smart speaker market as of December 2017. Google Home had a 25% share, and 6%  was attributed to other devices. Between April and December 2017, eMarketer reported Amazon’s share dipped from 70.6% market share and Google Home grew its share from 23.8%, with other devices increasing share, from 5.6%. The results were from individuals who use the voice-enabled speaker at least one time per month.

Anderson said more shoppers are using voice search on smartphone, tablets or voice assistants. He said 20% of mobile inquiries were made by voice in 2016, and ComScore predicts 50% of searches will be voice activated within the next three years.

BRAND READINESS
Anderson said suppliers seem to understand voice-activated shopping appeal is growing, but many companies are unsure about where to start with a voice strategy. Profitero recently outlined tactics to help brands focus on optimizing their business to take advantage of the voice growth curve. Given Amazon’s majority share suppliers should aim first at becoming a choice designation by Amazon Alexa.

Anderson said voice search is different from typical e-commerce as shoppers ask a question and then hear an answer, which means there is one spoken result — whatever Alexa and her algorithm-brain decides to recommend. Traditional web-based shopping searches bring up several products based on rankings, some of which are paid promotions.

“Currently there’s no way to sponsor search results on voice devices like the Echo,” Anderson said. “This means that it’s even more important for a brand to appear as the only result Alexa reads if you voice a general search query for things like cereal.”

CHOICE AT THE TOP
Becoming Alexa’s favorite is not easy, Anderson explained. He said Bain & Co. research found if a shopper is making a first-time purchase of a given item without specifying a brand, Alexa frequently recommends Amazon’s Choice products before the top search result.

Amazon’s Choice products are those deemed the best fit in response to the shopper query or voice request. When consumers use Amazon Echo to make purchases, the shopping assistant will look for Amazon Prime-eligible products in the shopper’s order history. If there is no matching item found, Alexa looks for Amazon Choice items and then all Prime-eligible products, the report noted.

Anderson said Amazon has not disclosed how products are included in its “choice” list, but products tend be highly rated, well-priced items eligible for Prime shipping. Bain & Co. found with first-time purchases, 54% of Alexa’s first recommendations were Amazon Choice. The top search result was Alexa’s first recommendation 40% of the time, and products with promotional sponsorships were recommended first 6% of the time.

Anderson said suppliers must also embrace voice-search optimization which isn’t the same as search engine optimization for online orders. If Alexa can’t find an Amazon Choice, it will look for products with the most relevant keyword matching the request.

“Voice search or spoken queries tend to be longer than text queries,” Anderson said, adding content for voice commerce needs to mimic how people talk, not how they text. “A verbal query has a longer query length, which means it has more words, while text queries are typically more concentrated — usually around one to three words.”

Profitero recommends suppliers have product content in good order. When an Amazon shopper asks Alexa to give more details about a product, they hear one or more bullet points found on the online listing page. Anderson said short, bulleted content sounds best when kept free of special characters, capital letters and punctuation such as colons because when Alexa is faced with wordy sentences, she often skips around to select a few of the cleaner bullet points. Short, concise and conversational product detail is needed for page content to garner the best results on voice enabled devices, he said. Profitero cited Unilever as an example to follow for its Amazon listing of St. Ives Blemish Control Face Scrub.

Amazon also offers Alexa Deals, promotional pricing on select items. Anderson said that’s one way companies can boost sales from Alexa devices. He said larger brands with deep pockets are testing Alexa Deals. Profitero’s analytics found Mentos Gum sales rose from a negligible share in the gum category to a 35% share in just a few days by using an Alexa promotion.

Anderson said Amazon developed more than 15,000 skills — or apps — for use with Echo, and more brands are now experimenting with Alexa Skill. He said Campbell Soup Co. became one of the earliest brands to launch an Echo skill in 2015. It enables Echo users to ask for recipes from Campbell’s Kitchen — the company’s portal for cooking-related content — just as they’re in the process of adding items to their grocery lists. He also cites Unilever’s Cleanipedia Skill, which answers questions about home cleaning with a direct link to e-commerce.

CONSUMER SURVEY
A recent survey by Fayetteville-based Field Agent surveyed smart U.S. speaker owners. Field Agent found 74% of respondents owned Amazon Echo, with the Echo Dot being the most popular, and 22% of respondents owned Google Home.

Of the 520 U.S. consumers surveyed as owners of smart speakers, just 29% said they make purchases with them. The primary reasons smart speaker owners are not shopping with them is because they can’t easily compare prices. Most said they haven’t yet tried shopping with the speaker. About one-third want to see products before they buy them, 23% said they are concerned about unauthorized purchases by kids or others, and 21% have security concerns about shopping with the speaker. Safeguarding financial information is at the top of the security list.

Those who do use smart speakers for shopping tend to purchase from Amazon (81%) compared to 16% at Walmart. That directly correlates with the majority share Echo has over Google Home.

The items most often ordered by consumers via voice outside of digital music are trash bags, toilet paper, detergent and other non-durable and household suppliers, according to the Field Agent study.
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Editor’s note: The Supply Side section of Talk Business & Politics focuses on the companies, organizations, issues and individuals engaged in providing products and services to retailers. The Supply Side is managed by Talk Business & Politics and sponsored by Propak Logistics.