According to a study conducted by OC&C Strategy Consultants, voice shopping is expected to jump to $40 billion in 2022, up from $2 billion today, suggesting the new channel may well be the next major disruptive force in retail. The growth in the voice segment will be driven by a surge in the number of homes using smart speakers, rising from 13% today to 55%.
Amazon wields the most power in voice shopping
Meanwhile, Amazon is poised to dominate the new channel with the largest market share, which is currently more than twice that of its nearest competitor. Besides that, the study reveals that:
- Only 39% of consumers have trust in the "personalized" product selection of smart speakers.
- Three tech behemoths lead the virtual assistant AI space– Amazon's Echo has 10% penetration; Google's Home has 4%, and Microsoft's Cortana just 2%.
- Apple has been left behind, since Siri lacks the AI capabilities of Google, notwithstanding that Google HomePod has only recently hit the market.
- The three most commonly shopped categories through voice are commoditized: grocery (20%), entertainment (19%) and electronics (17%), with clothing taking the fourth spot (8%).
Amazon has a firm hold over consumers' buying decisions, with 85% of consumers selecting the products Amazon suggests. According to OC&C Strategy Consultants, those products that attain Amazon "Choice" status typically triple in sales boost and losing the "Choice" status has typically the same effect downwards, leading to a 30% reduction in sales.
Retailers need to adapt to succeed in voice shopping
Retailers must develop "skills" or connected applications that integrate into current voice offers, the consultancy recommends, stating that there are currently only 39 such apps within the voice shopping category. To drive additional spending and higher price points, retailers could provide in addition some inspiration, such as e.g. new recipes etc.
However, building trust has a direct correlation with overall ratings. Only 39% of consumers trust in the "personalized" product selection of smart speakers and only 44% believe they offer the best value selection of products.
How consumer packaged goods can succeed
Consumer goods businesses must maintain Amazon's "Choice" status, even though Amazon's "Choice" products change frequently (4-5% daily) due to stock or delivery speed issues.
Ensuring that products are easy to find is in general critical, as 69% of customers know the exact product they wish to buy. Hence, tailoring search terms to insure distinctiveness (e.g., "sensitive toothpaste") increases the chances that a product will be found.
“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”, John Franklin, Associate Partner, OC&C believes."
The speed with which consumers are adopting smart speakers will translate into a number of opportunities (and challenges) for traditional retailers and consumer products companies."
“Businesses must think hard about how their brand integrates with different voice assistant providers’ strengths and how to build customer trust in voice, to maximize their success and improve the bottom line”, OC&C emphasizes.