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Industry News

Published on August 5th, 2019 | by The GC Team


Smart speakers “too dumb” to use as a purchasing tool

Early last year, analyst OC&C Strategy Consultants predicted that smart speaker shopping will reach $40bn (£32bn) by 2022, up considerably from $1.8bn (£1.4bn) in 2018 in the US and $0.2bn (£0.16bn) in the UK, but a new study by e-commerce delivery firm ParcelHero views the predictions as “wildly optimistic” and warns retailers to be cautious about building strategies based around “the siren call of Voice” just yet.

ParcelHero’s Head of Consumer Research David Jinks MILT maintains that there is still a long way to go before smart speakers become a significant part of retail sales.

“Our latest research looks at all the loud claims that have been made for Voice sales, but finds smart speakers don’t stand up to a grilling,” he says.

The study, Shoppers are Slow to Find Their Voice, reveals that around 13% of US homes currently have a smart speaker, such as Amazon’s Echo and Google’s Home, while in the UK, 10% of households own one.

Respectable figures, according to Jinks, but if the $40bn sales prediction is to come true by 2022, a lot more speakers are going to have to be sold in the next few years, he comments.

“Our research reveals just 0.5% of all US online spending is by smart speaker and 0.1% of UK online spending currently.”

The research identifies three key reasons why smart speakers are “still too dumb” for most consumers to use as a purchasing tool. The first is privacy.

“The disturbing news that Amazon doesn’t always delete the stored data that it obtains through voice interactions with the company’s Alexa and Echo devices (even after a user chooses to wipe the audio files from their account) won’t help its progress,” Jinks points out.

“And, similarly, Google has just admitted its employees listen to Google Home recordings to improve voice recognition. With all this in mind, it’s little wonder that 43% of consumers cite a lack of security features as the number one reason they won’t make more Voice purchases.” 

The second reason is that smart speakers are simply not a great way of searching for products, according to the report.

“The problem is that the vast majority of smart speakers are just that: speakers,” says Jinks. “Some, such as the Echo Show, do feature screens, but most do not. This makes browsing for items difficult. It’s far faster to look at a picture or read a description on a tablet or PC than hear that description read out. This is a considerable drawback and part of the reason ParcelHero’s own research reveals less than 10% of smart speaker owners actually use them for regular purchases – and these are mainly repeat low-value items such as bin bags.”

The third, and perhaps the key barrier, is that it is simply impossible to complete a purchase on the vast majority of sites, according to Jinks.

“For example, Argos, a trailblazer for omni-platform sales, was first to introduce a UK Google App in September 2018. It certainly proved great for checking product availability and reserving an item, but the final purchase still has to be completed in-store or manually online.

“And the same is true with Amazon’s Alexa. Ocado, Morrisons and Sainsburys have been quick to introduce Voice-based Skills Apps, enabling customers to add items to an existing order, remove an item from the trolley etc. But again, it’s not yet possible to complete the purchase using the speaker alone.”

The study reveals that perhaps the most useful feature of smart speaker technology in e-commerce is for tracking, and Jinks highlights a leading US and European supply chain company, XPO Logistics, which is already integrating Google Home and Amazon Echo capabilities with its last mile network.

“One day soon,” he adds, “you may well be able to book your ParcelHero shipment using Voice technology – indeed if it’s a regular repeat booking, that seems quite probable. But by 2022 as part of a $40bn Voice revolution?”

“For now, industry claims for smart speaker sales are likely to fall on deaf ears.”

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