{"id":29946,"date":"2018-11-12T21:55:42","date_gmt":"2018-11-13T02:55:42","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/alexa-lets-go-shopping-voice-shopping-on-amazon-com\/"},"modified":"2018-11-12T21:55:42","modified_gmt":"2018-11-13T02:55:42","slug":"alexa-lets-go-shopping-voice-shopping-on-amazon-com","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/alexa-lets-go-shopping-voice-shopping-on-amazon-com\/","title":{"rendered":"Alexa, Let\u2019s Go Shopping \u2013 Voice Shopping on Amazon.com"},"content":{"rendered":"

The advent of voice-controlled assistants has put speech recognition technology into the hands of consumers at impressive rates. Experts estimate that the number of installed smart speakers will more than double from 100 million units in 2018 to 225 million units in 2020, with Amazon\u2019s Alexa powering around 34% of worldwide units [1]. Despite this rapid adoption, many users remain unconvinced of their value, with only around 55% of users claiming that they \u201cwouldn\u2019t like to go back to life without their smart speaker\u201d [2]. One major area of opportunity for Amazon in this space is the application of voice recognition to the shopping process, creating a thoughtful flow that will encourage customers to increasingly rely on their Alexa units as they shop on Amazon.<\/p>\n

Currently, only 30% of U.S. smart speaker owners use their speakers for shopping \u2013 the most common uses are playing music (70%) and checking the weather (64%) [3]. Most speaker owners only shop occasionally, with\u00a0only 12% of owners shopping once a month or more [4].<\/p>\n

\"\"<\/a>
Figure 1 – What U.S. smart speaker owners use them for [3]<\/figcaption><\/figure>For Amazon, increasing the percentage of voice shoppers could be good for customers and good for business. A study of customers purchasing CPG products on Amazon revealed that customers ordered more frequently from the site after installing a smart speaker in their home, placing 7 more orders each year on average [5]. Consumers have indicated that they find virtual assistants to be faster and more convenient than human interactions, which could lead to an overall better customer experience for Amazon shoppers. Furthermore, 38% of consumers have indicated that they would be welcome to targeted ads during voice shopping, a currently undeveloped feature that could add an additional stream of advertising revenue to Amazon [6].<\/p>\n

Many industry forecasts expect the voice shopping channel to grow in the coming years, with voice projected to account for 5% of Amazon\u2019s revenue in the next three to five years [7].<\/p>\n

One of the challenges underlying voice shopping is the complexity of the interaction as compared to some of the more common voice requests. In order to facilitate the back-and-forth conversation necessary for most shopping transactions, algorithms must learn how to link together different spoken inputs to follow the normal logic of a conversation. They must also learn to deal with the ambiguity that often permeates a conversation as the human speaker omits previously established subjects as the conversation progresses [8]. Amazon has created a platform for third party developers, including partner merchants, to create voice applications called \u201cAlexa Skills\u201d. The decision to open the platform up will help accelerate development towards a more robust voice environment, which will help Amazon grow their voice shopping revenue.<\/p>\n

Although the shopping experience is still underdeveloped, Amazon has worked hard to establish itself as the dominant player among voice assistants. During the 2017 holiday season, the Echo products were marked down from 20 \u2013 40% and were among the site\u2019s best-selling gifts [9]. This will help Amazon quickly scale their volume as the adoption of voice shopping increases in the coming years.<\/p>\n

As the voice recognition technology improves, Amazon has recognized that many shoppers will still rely on some visual information in the shopping process. While customers are more comfortable purchasing familiar products like office supplies through voice shopping, half of customers would not purchase luxury goods, groceries, or furniture through voice shopping [10]. Amazon\u2019s introduction of a paired screen (Echo Show) will help facilitate shopping in additional categories down the road.<\/p>\n

In the current state, Amazon\u2019s voice shopping experience looks to integrate voice into a traditional shopping path. By doing so, Amazon has limited most of the usefulness of the voice interface to only the product discovery phase of the shopping path [6]. To succeed in the future, Amazon will need to take a critical eye towards the entire shopping experience, rather than simply allowing for voice input into their traditional shopping path. The current voice environment is difficult to navigate \u2013 only 35% of users have enabled a single \u201cAlexa Skill\u201d [12]. While Amazon currently enjoys a strong foothold in this space, rapid improvements in voice recognition technology and increased competition will demand that Amazon differentiates their voice shopping experience and leverage the unique advantages that voice can offer to a customer shopping at home.<\/p>\n

Looking forward, there are a couple of key questions that Amazon will need to face:
\n\u2022 How, if at all, should Amazon balance a consistent voice shopping experience across Amazon.com with the specific shopping experiences created by partner merchants?
\n\u2022 What features of voice shopping can Amazon build to add value to the customer outside of a hands-free way to navigate their site?<\/p>\n

(768 words)<\/p>\n

 <\/p>\n

[1] \u201cSmart speaker installed base to hit 100 million by the end of 2018\u201d, Canalys, July 8, 2018, https:\/\/www.canalys.com\/static\/press_release\/2018\/090718%20Media%20alert%20Smart%20speaker%20installed%20base%20to%20hit%20100%20million%20by%20end%20of%202018.pdf, accessed November 2018.<\/p>\n

[2] \u201cThe Smart Audio Report\u201d, NPR and Edison Research, July 2018, https:\/\/www.nationalpublicmedia.com\/wp-content\/uploads\/2018\/07\/Smart-Audio-Report-from-NPR-and-Edison-Research-Spring-2018_Downloadable-PDF.pdf, accessed November 2018.<\/p>\n

[3] Molla, Rani. \u201cVoice tech like Alexa and Siri hasn\u2019t\u2019 found its true calling yet: Inside the voice assistant \u2018revolution\u2019\u201d, Recode, November 2018, https:\/\/www.recode.net\/2018\/11\/12\/17765390\/voice-alexa-siri-assistant-amazon-echo-google-assistant, accessed November 2018.<\/p>\n

[4] Source: More Smart Speaker Owners are Becoming Habitual Voice Buyers, Business Insider Intelligence, accessed November 2018<\/p>\n

[5] Marchick, Adam. \u201cStrong Signals that the Amazon Echo is changing purchase behavior\u201d, Alpine.AI, May 2018, https:\/\/alpine.ai\/amazon-echo-changing-purchase-behavior\/, accessed November 2018.<\/p>\n

[6] Source: Voice as a Channel of Commerce, Business Insider Intelligence, accessed November 2018.<\/p>\n

[7] Gonzalez, Angel. \u201cAmazon\u2019s Alexa could become $10 billion business by 2020, RBC analysts estimate\u201d Seattle Times, March 10, 2017, https:\/\/www.seattletimes.com\/business\/amazon\/amazons-alexa-could-become-10-billion-business-by-2020-rbc-analysts-estimate\/, accessed November 2018.<\/p>\n

[8] Collins, Keith, and Cade Metz. “Alexa vs. Siri vs. Google: Which Can Carry on a Conversation Best?” The New York Times, August 17, 2018, https:\/\/www.nytimes.com\/interactive\/2018\/08\/17\/technology\/alexa-siri-conversation.html, accessed November 2018.<\/p>\n

[9] Source: Echo Dot Leads the Way for Amazon\u2019s Holiday Push, Business Insider Intelligence, accessed November 2018<\/p>\n

[10] Source: Visual Displays will Help Voice Reach its Retail Potential, Business Insider Intelligence, accessed November 2018<\/p>\n

[11] Source: Voice as a Channel of Commerce, Business Insider Intelligence, accessed November 2018.<\/p>\n

[12] Source: Amazon Seeks to Boost User Retention for Alexa Skills, Business Insider Intelligence, accessed November 2018.<\/p>\n","protected":false},"excerpt":{"rendered":"

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