Top Alexa-enabled commands
compiled by Clavis Insight, 2016–2018.
These findings were supported by research carried out late 2017 by Amazon e-commerce analytics firm and Clavis partner, One Click Retail, which found 71 per cent year-on-year growth in sales of home automation devices via Amazon.com that are capable of connecting with Alexa. However, the top device sold via Amazon during that period to shoppers looking to connect to and control the likes of lighting, security and heating systems in their home via Alexa was its rival, Google’s Nest heating thermostat controller. Amazon subsequently withdrew Nest devices for sale from its site in March 2018, clearly demonstrating how ruthless it is in not being afraid to kill the competition.
The main question on every retailer and brand owner’s lips is whether voice will add to or cannibalize sales made in other channels. One Click Retail found that only 32 per cent of Alexa owners have ever used their voice assistant to purchase a product once, much less to make repeat purchases. In fact, it discovered that the numbers using Alexa to buy products drops off dramatically after the first purchase, ie customers are not using it for repeat purchases. But again, that might not worry Amazon as much as individual brand owners and retailers if every sale, regardless of what is purchased, goes through Amazon.com.
In fact, a study conducted by Alpine.AI, in partnership with InfoScout, revealed that while the average Amazon customer made about 19 purchases over the course of the year, Echo owners bought items nearly 27 times, showing that the device encourages shoppers to make additional impulse buys. Of those shoppers who are using Alexa for repeat purchases, the categories most likely to win with voice emerged as those in brand-heavy categories that must be replaced more frequently such as pet food and treats, baking and cooking items, shaving and grooming supplies, and oral hygiene items. The products bought most often were from the health and beauty category, which were purchased 53 per cent more often over the 12-month timeframe.14
The other question worrying retailers and brands with voice is how it will affect the discoverability of their products when the billions spent on marketing and advertising are not transferable to the voice platform. This is why Alexa will only return two results to a search query, as opposed to the pages of results returned when using mobile or desktop Amazon search (along with the ads, recommendations and various other marketing tools that subsume the shopping experience). Based on a consensus of research to date, there are a number of factors that determine which of those two results are returned via voice (Source: One Click Retail):
This means that, to win with Alexa for shopping, the fundamentals of search – keywords, title and product feature bullets and description – still apply. Put another way, it is the same content and attributes used to describe a product that drives both higher click through, and then sales conversion rates, from both traditional and voice search results that will determine how high up the search ranking that product appears.
Companies have also rushed to develop so-called Alexa ‘skills’ to integrate with their offerings, not unlike the rush to develop mobile apps for Apple and Android app stores in the early days of consumer smartphone adoption. In fact, online grocers like Ocado and Peapod were among the first to integrate Alexa globally, overlooking the fact that AmazonFresh is a growing threat to their business. Voice is a natural next step for grocery e-commerce. For example, in 2017, Peapod developed an ‘Ask Peapod’ skill for Alexa that allows consumers to voice order items, which are then added to the shoppers’ weekly grocery carts.15 As we have already said, Peapod is by no means the first company to tap into the ordering capabilities of Alexa – beer lovers, for example, can order Miller Lite in some circumstances on Alexa by saying, ‘Alexa, start Miller Time’. But Peapod sees its skills investment as worthwhile because it enables consumers to immediately add an item to their grocery list, putting the online grocer or its parent company Ahold Delhaize in the best position to fill the order. Otherwise, the shopper may decide later to purchase it elsewhere, or forget to add the item to their online basket altogether.
Similarly, in 2018, Google introduced a rival programme called Shopping Actions, offering a universal shopping cart for shopping on mobile, PC or via a voice-enabled device. Major retailers, including Walmart, Target, Ulta Beauty, Costco and Home Depot, have signed up to the programme to list products across Google Search, in its Google Express shopping service, and in the Google Assistant app for smartphones and on smart speakers like the Google Home.16
For Millennials and other shoppers increasingly turning to the web to buy their groceries, Peapod says its Ask Peapod function is a great way to attract customers who may use the technology as their preferred way of ordering many of their groceries. With Amazon making bigger inroads in the grocery space – highlighted by its recent acquisition of Whole Foods and competitors like Instacart (which was still a grocery delivery partner of Whole Foods at the time of writing, in spite of rival Amazon’s acquisition) – rapidly expanding operators like Peapod are likely under so much competitive pressure that they can ill afford not to participate in the different methods used by consumers to stock their fridges and cupboards, regardless of how often or little customers may use voice ordering. Ocado was the first UK grocer to embrace it, demonstrating the power of voice to drive ‘co-opetition’ and the importance of capitalizing on voice as quickly as possible for online-only grocers. Feeding further into Amazon’s flywheel ecosystem, Alexa is just the latest technology-based competitive tool that forces rivals such as Peapod to build on it in order to fulfil the need to remain relevant against a competitor that is helping to drive unprecedented, technology-fuelled change in the retail space.
‘You do not survive in this industry without being a little paranoid and looking over your shoulder’, Carrie Bienkowski, Peapod’s chief marketing officer, said in an interview just before the launch of its Ask Peapod skill. ‘Ten years ago, just getting your groceries delivered – that was convenient. But one of the things we’re really internalizing is the fact that we’ve got to continue to evolve beyond just the delivery of groceries.’
While Peapod could be applauded for embracing ‘co-opetition’ and developing for Alexa, it is likely that the real winner as a result of its efforts is not the consumer, but Amazon. As Danny Silverman, Clavis Insight chief marketing officer, points out, ‘The reality is that, out of some 30,000 skills that are now available, only a tiny percentage are actually being downloaded and even less are being used more than once.’17 This explains why Amazon has invested to build out its Alexa hardware beyond just facilitating online shopping, adding calling facilities and even, most recently, a screen (which may seem to run counter to the idea of increasingly pervasive computing interfaces that ‘disappear’ into the background). The extension of the Home Skills API in 2018 to control more smart devices, from ovens to TVs, adds to the 800-plus skills and more than 1,000 devices that Alexa can control in the home today.
Spencer Millerberg, One Click Retail managing partner, therefore advises that deciding how much investment to put into Alexa voice search is ‘all about prioritization. ‘If you’re the CEO of a music business, then absolutely, this has got to be one of your first [strategic development] priorities. If you’re the CEO of a consumer brand, it’s going to end up becoming a little bit less [of a priority], because shopping is not a top Alexa use case; whereas if you’re in home automation, maybe it’s the middle ground you have to work in. The main thing we have to focus on is the fundamentals.’18
Silverman adds: ‘At the end of the day, [the fundamentals are that] the same things that drive voice search are what drive search on desktop and mobile. If you have the data and insights to understand what’s working or not [as regards search rankings on Amazon.com], and you optimize against those for desktop and mobile, you will win with voice at the same time.’
So, while it’s hard to chart the evolution of frictionless retail against the drivers in technology development that have enabled it without including Amazon on the map, it is also impossible to envisage its growing influence on this evolution abating.
But where does this journey of innovation towards truly frictionless retail experiences leave the rest of retail? Indeed, with the retail market reeling from the latest round of profit warnings and administrations in the sector, many retailers will be looking towards digital technology differentiation to ride out challenging times and futureproof their businesses. Uwe Weiss, Blue Yonder chief executive, argued that the ‘Amazon Effect’ – in the sense of ongoing disruption and evolution of the retail market caused by the consumerization of technology and the on-my-terms shopper – will now increase its influence as retailers fight to retain market share and customer loyalty. When it comes to its impact on brands, for example, the industry is anxiously waiting to see if voice has a tangible impact on brand loyalty and marketing strategies – particularly if voice systems remain ad-free. The need for sophisticated content and attribute-led management to top search rankings could require some drastic reorganization in some companies.19
Weiss pointed out that, with Amazon already using AI to deliver personalized shopping recommendations and optimize their supply chains, traditional retailers must be all the more aggressive in their adoption of next-generation technologies if they are to retain market share. ‘With the likes of more traditional retailers facing closures, innovation needs to be in the spotlight more than ever’, he said. He rightly highlighted that the field of AI is developing incredibly quickly. Amazon’s recommendation system runs on a totally machine learning-based architecture, so its suggestions on what to buy, watch or read next are ‘incredibly smart’, and Google’s DeepMind division is now giving its AI algorithms an ‘imagination’ so that it can predict how a certain situation will evolve and make decisions. ‘This leads to more conversions and upselling across the business, as well as giving Amazon insight on how to price its products for its customers, and how much stock to hold’, he added.
Rightly so, though Weiss warned against using technology for technology’s sake, especially in areas where Amazon’s advantage of being a technology company first is insurmountable. While it is clear that the potential of AI to boost levels of productivity, efficiency and personalization in the retail industry is promising, he advised retailers to also be realistic about what they can expect from AI and machine learning. ‘AI in retail doesn’t predict the future – at least not yet!’ he stressed. ‘It analyses reams and reams of intricate behavioural and circumstantial data to identify patterns and trends. These trends enable retailers to make informed decisions that result in more accurate stock levels, and pricing that better suits product lifecycles.’
Weiss also rightly pointed out that, if traditional retailers, particularly in the grocery sector, are to survive and compete with online giants such as Amazon, they will need to radically adjust their approach to technology and data. ‘Retailers need to begin thinking of data as one of their most important assets, and as the key that can enable them to build better relationships with their customers, optimize their supply chain and pricing, and compete against online competitors’, he concluded. For example, research has shown that over half of all Amazon Echoes are located in the kitchen, meaning the opportunity for greater category-specific engagement around recipe preparation and ad hoc basket building for household goods and grocery could initially be higher for operators with relevant businesses and brands. Voice expands on the ‘in the moment’ shopping trend and may even become the gatekeeper to the shopper, particularly for grocery retailers and FMCG brands from a retail volume point of view.
It’s perhaps not surprising that those grocers that still don’t want to join Amazon have formed an ‘anti-Amazon’ alliance with Google over its voice assistant, and the internet giant has been more than happy to oblige. Unsurprisingly, Walmart, Tesco and Carrefour have signed up to develop capabilities for their customers to order goods online using Google Assistant via its Google Express shopping service. Carrefour, for example, announced in 2018 that it was partnering with Google to create an online voice assistant called ‘Lea’ as part of the French retailer’s five-year, $3.5 billion digital transformation plans. ‘Lea has been designed to make day-to-day life easier for our customers – they can use it to manage their shopping lists… using just their voice’, the French retail giant stated at the time.
Google is currently the only viable alternative voice platform to Alexa for shopping. Even so, Google trails a distant second to Amazon, with Echo accounting for over 70 per cent of sales during 2017 in the smart speaker category. But the Google Assistant itself can claim far higher penetration levels, and Google has said it is now accessible on more than 400 million devices including home appliances from LG, headphones from Bose and a range of speakers from 15 different companies, as well as all devices running its Android OS. But the supporting Google Express shopping platform is relatively small in scale, scope and fulfilment speed in comparison to Amazon’s Marketplace, Fulfilment by Amazon and Prime Now services.
Other players are also entering the fray. In 2018, Starbucks entered a joint partnership with Shinsegae Group in South Korea to integrate voice recognition ordering with Bixby, Samsung’s voice assistant, which is available on select Samsung Galaxy devices. These features are an extension of Starbucks’ mobile order-ahead-and-pay technology. Apple’s Home Pod device, which was launched early in 2018 and features its voice assistant Siri, has met with lukewarm reviews. While it offers voice-activated smart home and audio-visual control and device integration, as well as news, weather, calendar and mapping functionality, where you can ask it, ‘what’s the best vegetarian food nearby?’ for example, Apple hasn’t yet forged the partnerships or ecosystem required for consumers to do any shopping with it.
Whether consumers come to trust Alexa and its counterparts to delegate shopping tasks, however, is another matter entirely, given the nature of their operation means some are by design always on and listening, while others require a separate physical interaction with the device before listening for a voice prompt – think Apple and the long home-button press to activate Siri on an iOS device. Instead, a number of reports have suggested that Alexa can mishear words in conversation or even on the TV that it thinks are a cue to leap into action. Such accidental activation has led to reports of Alexa uttering random creepy laughter, or even thinking it had been prompted to record a man and his wife’s conversation and then send the recording to one of his employees.20
The other unknown is how the use of voice may play out in the store, which we explore in greater depth in the next chapter. Meanwhile, Amazon struck a deal with BMW to integrate Alexa in its cars starting in mid-2018 and already has a similar partnership with Toyota. Even satellite navigation manufacturers are getting in on the act, like Garmin, whose Speak Plus is a 1.5-inch dashboard camera that also comes with Alexa integration. Users will be able to use voice commands to get directions, play music, make phone calls, control smart devices in their Connected Car, and place orders for products and services, like takeaway delivery or collection. But here, Amazon must compete with car manufacturers’ own voice prompt systems, as well as the significant traction that Apple has gained with its CarPlay system to connect Apple’s iOS devices to a car for navigation, music and voice prompt-based integration.
If we have learned anything from our study of Amazon’s pivotal role in the development of AI and voice in the pursuit of a more frictionless retail experience, it is that AI holds the ability to improve return on investment both instore and online, by simplifying shopping journeys, improving inventory accuracy and optimizing the supply chain in order to support growth. It is the culmination of development of the technology drivers of change with the use of data generated by the digital shopping tools that technology innovation and development has enabled. The reason AI has become so important in this way is because the likes of Amazon are using it to provide greater convenience, immediacy, transparency and relevancy for today’s on-my-terms shopper, who is seeking to make the functional expedient and the bring the fun parts of shopping to the fore. It is clear that retailers should see technology, specifically AI and digital tools and data, as critical in helping them keep pace with online disruptors in the race to adapt to today’s digitally enabled consumer expectations. In the meantime, it should now be easy to understand why Amazon has, so far, shown them the way.
Table 10.1 Amazon technology hardware launches, 2011–2018
|
Amazon device |
Launch date |
Price at launch |
Functionality |
Kindle Fire |
November 2011 |
$199 |
Tablet computer |
Fire TV |
April 2014 |
$70 |
Smart TV streaming media device |
Fire Phone |
July 2014 |
$199 |
Smartphone |
Dash Button |
March 2015 |
£4.99 (redeemable against first purchase) |
One click, auto-replenishment device |
Echo |
June 2015 |
$100 |
Smart speaker and voice assistant |
Echo Dot |
March 2016 |
$50 |
Mini version of smart speaker and voice assistant |
Amazon Tap |
June 2016 |
$80 |
Smart, battery-powered speaker and voice assistant |
Echo Look |
April 2017 |
$120 |
Smart speaker, voice assistant and handsfree camera |
Echo Show |
June 2017 |
$230 |
Smart speaker and screen, voice assistant and videoconferencing system |
Dash Wand |
June 2017 |
$20 |
Battery-powered, voice assistant-enabled grocery scanner |
Cloud Cam |
September 2017 |
$120 |
Home security camera |
Blink |
September 2017 |
$100 |
Smart home security camera and door bell |
Echo Plus |
September 2017 |
$150 |
Smart speaker, voice assistant, and connected home device hub |
Echo Spot |
December 2017 |
$130 |
Smart speaker, voice assistant and digital alarm clock |
Echo Connect |
December 2017 |
$35 |
Telephony connector to Echo devices |
Echo Buttons |
December 2017 |
$20 |
Gaming control extensions to Echo devices |
Amazon Fire Cube |
June 2018 |
$119 |
Voice assistant-enabled 4K TV streaming set-top-box |
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2 Staff researchers (2018) Artificial intelligence in retail market 2025 – global analysis and forecasts by deployment type, retail type, technology and application [Report] The Insight Partners, February 2018, Available from: http://www.theinsightpartners.com/reports/artificial-intelligence-in-retail-market [Last accessed 1/5/2018].
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6 Staff writer (2018) In algorithms we trust: how AI is spreading throughout the supply chain, Economist Special Report, 31 March. Available from: https://www.economist.com/news/special-report/21739428-ai-making-companies-swifter-cleverer-and-leaner-how-ai-spreading-throughout [Last accessed 1/5/2018].
7 Kopalle, Praveen Prof (2014) Why Amazon’s anticipatory shipping is pure genius, Forbes, 28 January. Available from: https://www.forbes.com/sites/onmarketing/2014/01/28/why-amazons-anticipatory-shipping-is-pure-genius/#4011e6ba4605 [Last accessed 1/5/2018].
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9 Amazon (2018) Amazon Prime Air, Amazon.com. Available from: https://www.amazon.com/Amazon-Prime-Air/b?ie=UTF8&node=8037720011 [Last accessed 1/5/2018].
10 Harris, Mark (2017) Amazon’s latest Alexa devices ready to extend company’s reach into your home, Guardian, 27 September. Available from: https://www.theguardian.com/technology/2017/sep/27/amazon-alexa-echo-plus-launch [Last accessed 12/11/2018]!]
11 OC&C News (2018) Alexa, I need … everything. Voice shopping sales could reach $40 billion by 2022, occstrategy, 28 February. Available from: https://www.occstrategy.com/en-us/news-and-media/2018/02/voice-shopping-sales-could-reach-40-billion-by-2022 [Last accessed 10/6/2018].
12 Ovide, Shira (2018) Amazon won by losing the smartphone war, Bloomberg, 28 September. Available from: https://www.bloomberg.com/gadfly/articles/2017-09-28/amazon-leaped-ahead-on-gadgets-by-losing-the-smartphone-war [Last accessed 1/5/2018].
13 ibid.
14 Marchick, Adam (2018) Strong signals that the Amazon Echo is changing purchase behaviour, 30 May. Available from: https://alpine.ai/amazon-echo-changing-purchase-behavior/ [Last accessed 24/6/2018].
15 Peapod (2017) Ask Peapod Alexa Skill, Amazon.com, 25 June. Available from: https://www.amazon.com/Peapod-LLC-Ask/dp/B072N8GFZ3 [Last accessed 1/5/2018].
16 Blog (2018) Help shoppers take action, wherever and however they choose to shop, Google Inside Adwords, 19 March. Available from: https://adwords.googleblog.com/2018/03/shopping-actions.html [Last accessed 24/6/2018].
17 Clavis Insight (2018) One Click Retail: the double click episode (video podcast), 15 March. Available from: https://www.youtube.com/watch?v=218LelVkGDQ&t=11s [Last accessed 13/9/2018].
18 ibid.
19 Blue Yonder (2018) Media alert: ‘Amazon effect’ will grow as retail challenges increase, say Blue Yonder, 16 April. Available from: https://www.blueyonder.ai/sites/default/files/media-alert-amazon-effect-will-grow-as-retail-challenges-increase.pdf [Last accessed 11/9/2018].
20 Chokshi, Niraj (2018) Is Alexa listening? Amazon Echo sent out recording of couple’s conversation, New York Times, 25 May. Available from: https://www.nytimes.com/2018/05/25/business/amazon-alexa-conversation-shared-echo.html [Last accessed 10/6/2018].