voice shopping set to reach US$40 billion by 2022 as smart speaker adoption grows: Study

voice shopping set to reach US$40 billion by 2022 as smart speaker adoption grows: Study
Voice shopping is expected to jump to US$40 billion in 2022, up from US$2 billion today, according to a study conducted by OC&C Strategy Consultants, which predicted that voice commerce could be the next disruptive force in retail.

The growth will be driven by a surge in the number of homes using smart speakers, rising to 55% from 13% percent today. Amazon is poised to dominate the new channel with its largest market share, currently more than twice that of its nearest competitor.

In the U.S. the voice assistant market is dominated by three global tech brands – Amazon’s Echo has 10% penetration, Google’s Home has 4% and Microsoft’s Cortana 2%. Apple has been left behind. Siri lacks the AI capabilities of Google, OC&C said.

According to the study, voice purchases tend to be stand-alone, lower-value items. The three most commonly shopped products are in the grocery (20%), entertainment (19%) and electronics (17%) categories. Clothing is fourth (8%).

Amazon has a firm hold over consumers’ buying decisions, with 85% of consumers selecting the products recommended by Amazon. Those products that attain the Amazon Choice status typically realize a sales boost of more than three times, and losing the status typically leads to a 30% reduction in sales, although Amazon’s Choice products change frequently (4-5% daily) due to stock or delivery speed issues.

Establishing trust to boost consumption

Currently 45% of grocery orders are replacing existing store or online purchases, while the vast majority are made through Amazon Fresh, the study shows. Retailers must develop Alexa skills, OC&C says, adding that there are currently only 39 skills within the voice shopping category.

To drive additional spending and higher price points, retailers should provide inspiration in the form of new recipes, for example. Ensuring that products are easy to find is critical, as 69% of customers know the exact product they wish to buy. Tailoring search terms to insure distinctiveness (e.g., “sensitive toothpaste”) increases the chances that a product will be found.

Building trust has a direct correlation with overall ratings. Only 39% of consumers trust in the “personalized” product selection of their smart speakers and only 44% believe they offer the best value selection of products.

Comments from experts in the field

“Voice commerce represents the next major disruption in the retail industry, and just as e-commerce and mobile commerce changed the retail landscape, shopping through smart speaker promises to do the same,” said John Franklin, Associate Partner of OC&C, Commented:

The speed with which consumers are adopting smart speakers will translate into a number of opportunities and even more challenges for traditional retailers and consumer products companies, Franklin added.

Coye Nokes, Partner of OC&C said, in order to properly position themselves, retailers must ask themselves key questions like: What objectives am I trying to meet? How should I tailor my voice proposition to meet those objectives? Which AI system is best suited to enabling those objectives? How can I build consumer trust in my product recommendations? How can I make the order economics work?

The companies that are able to answer those questions most clearly are likely to be the winners in this next phase of retail disruption, Nokes noted.

According to OC&C, smart speaker owners skew younger and more affluent, and are more likely to have children. The report’s findings are based on a survey of 1,500 smart speaker owners in December 2017. OC&C Analytics recorded product sale rates for 2000 products listed on Amazon over a month period tracking the impact of ‘choice’ on product sales performance.
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