You’re the voice: Retailers grab new opportunity

Matthew Elmas

30th Jan 2018

A fight is stirring between some of Australia’s largest e-commerce businesses to get in on the ground floor of an expected explosion in voice shopping in 2018.

Following its local launch last month, Amazon has prioritised the release of its suite of smart speaker devices, announcing last week that it will begin shipping Echo devices from the start of February.

It comes less than a month after local competitor eBay unveiled a partnership with Google Assistant that has enabled voice shopping on its platform through Google’s own smart speaker products, which were launched in Australia last year.

Now, both Catch Group and Kogan.com are looking to join the party. According to Fairfax Media, the latter’s founder Ruslan Kogan is now working on branded speakers with Google Assistant built in.

Meanwhile, Catch Group’s head of marketing Ryan Gracie confirmed that the online marketplace is exploring its options for Google-enabled voice shopping and will likely look towards a partnership with the tech giant.

“Voice will be the future of search, there’s no doubt about that,” Gracie says.

Weighing the opportunity

Catch and Kogan are set to benefit from Google’s decision to open up its smart speaker technology, following the announcement of partnerships with the likes of Sony, LG, Bang & Olufsen and others earlier this month on a range of Google-enabled, but not branded, devices.

The size of the opportunity is significant. Marketing services business Salmat estimates that the number of smart speakers in the US will approach 40 million this year, with Atlas pegs Amazon’s share of the market at over 70 per cent.

More than 16 million Echo devices have already been sold in America, while Google has reportedly sold over six million speakers in 2017.

Comparatively, Australia is still a nascent market. According to a recent Salmat survey on the topic, just one per cent of respondents currently own a smart speaker.

But voice is expected to take off locally over the next few years – 47 per cent said they are aware of the technology and 46 per cent are excited to try it out.

Ebay’s senior director of product and shipping Dave Ramage says the initial response to Ebay’s voice shopping function has been encouraging, with as many as 3,000 voice requests made in a single half-hour period on 5 January.

“Voice is one of a series of investments we’ve made in new types of consumer shopping experiences…Australians are naturally early adopters of new technologies,” Ramage says.

The developments foreshadow a local replication of the so-called ‘race for the living room’ currently taking place in the US and UK markets, where Google is looking to challenge Amazon’s dominance in the voice-shopping and connected device market.

Australia is then an opportunity for Google to level the playing field in a market where Amazon has yet to launch its broader suite of services, such as Amazon Prime and Fulfilment by Amazon, which tie together with Alexa in the US to round out a compelling consumer proposition.

Picking sides

As its competitors align with Google, Amazon appears more interested in laying down an initial foundation of voice services rather than shopping in Australia, with the company confirming with Internet Retailing that customers will be unable to purchase marketplace products with Alexa at launch.

However, they will be able to access news reports, Amazon music, and 10,000 other third party functions that range from booking an Uber to ordering a Domino’s pizza or banking with Westpac or NAB.

Amazon does plan on launching shopping on Alexa and will likely do so when it further fleshes out its local offer later this year, but for now, Ebay’s partnership with Google makes it the go-to destination for those shopping with Google Home speakers.

Google is also advantaged by Google Assistant’s presence on Android devices, which stand to serve as a natural progression to voice shopping for local consumers. However, Amazon has been busy charting its future as a staple of the connected home and has announced deals to embed Alexa in a range of household fixtures this year, such as TVs and bathroom cabinets.

The hardware itself is comparable in price, with both Google Home speakers and Echo products set to retail for around $149, although Amazon’s smaller Echo Dot device is just $79.

Keeper at the gates

However, the emergence of voice shopping locally has raised some important questions among retailers about the role marketplaces plan to play in what many have called the future of search.

For those such as Amazon, Catch and Kogan, who maintain their own private label business alongside that of their retail partners, voice could potentially serve as a medium to promote their own products at the expense of retailers.

As J. Walter Thompson’s Asia Pacific digital director Josie brown explains, consumers are likely to make convenience purchases using voice, rather than using the medium to research a variety of different brands.

“I haven’t seen any evidence that you could really do detailed research with voice. You really need visuals,” she says.

Brown, who has been studying voice shopping in Australia and other markets for several years, believes it’s still too early to tell how marketplaces will adopt the channel and what that will mean for retailers.

But in the US, Amazon has successfully pursued the synergies between its Prime loyalty program and Alexa.

Ebay Australia managing director Tim MacKinnon previously told Internet Retailing that the voice shopping service uses its ‘best match’ algorithm, which considers a variety of factors including price, condition, format and location.

Gracie says that while Catch does have its own private label, it prioritises promoting brands to drive customer engagement.

“We’re in the business of driving known brands. We have our own private label, but primarily, customers want our big brands,” he says.

Gracie adds that the marketplace model already works on a promoted product model, and it is in Amazon’s interests to promote products which deliver them the best margins.

“Amazon is always going to serve the product that drives the most margin for them, so of course, they’ll offer up their own products,” he explains.

But ultimately, according to Gracie, optimising product listings will be of primary importance for retail partners as voice shopping becomes more popular.

“Those who optimise the best and match up phrases with products will also rank the best. Google always wants to present the best experience. If someone is searching for a black t-shirt and knows about their shopping history, it should present them with the best t-shirt,” Gracie says.

Ramage agrees, explaining that Ebay has been investing more in working with retail partners to promote the use of structured data to prepare for changing shopper behaviour.

“One of our key focuses working with retail partners is to increase the use of structured data, and it helps new experiences like voice search, as well as having general goodness through general web search,” he says.