Voice Growth Will Further Amazon and Google’s E-Commerce Dominance
For most people, e-commerce starts with a Google or Amazon search on our computer or phone. We read reviews, compare prices, and analyze how something will look or fit in our lives. We don’t know where we will end up, but we browse options from our favorite retailers until we find exactly what we are looking for.
What happens when we stop using visual cues and start searching with our voice? And what happens when the results that our voice triggers are controlled by the device interpreting those questions or commands?
Let’s explore the direction e-commerce is heading, the impact of voice search on that journey, and the effects that the smart speaker market will have on the monopolization of online shopping.
E-commerce Is Outpacing All Expectations
2020 has seen an acceleration in e-commerce due to the global pandemic. Consumer spending online is pacing to hit levels this year that had previously not been forecasted to be reached until 2022. Much of the increase comes from the shifting consumer behavior of purchasing groceries and household items online rather than in person at brick-and-mortar locations. Online grocery purchases are pacing to make up 10.2% of the overall grocery market this year, which is up from only 3.4% in 2019. By 2025, it stands to increase to 22% of the overall market.
If you look at the individual retailers, you can see the dramatic impact online grocery and household item purchases are having. Year over year, Target and Walmart are leading retail e-commerce growth, outpacing even Amazon. Walmart has seen its revenue grow annually over the last five years. However, Amazon may just have the upper hand when it comes to the rise of voice search.
The Rise of Voice Search
Like e-commerce, voice isn’t slowing down. It is estimated that voice search will make up 50% of all searches in 2020. eMarketer forecasts that 83.1 million people will use smart speakers in 2020, a +13.7% YoY growth, with 34.7 million consumers estimated to shop using voice search.
Going deeper, it is estimated that 70% of home smart speaker users have Echo and other Alexa enabled devices, while about 32% of smart speaker users have a Google Home device, and many have both.
One of the reasons for the rapid adoption of smart speakers is the virtual assistant and convenience that follows. Virtual assistants are used for a variety of reasons. The most common are music, weather, reminders, alarms, research, and checking the news. Eighth on the list is “shopping and ordering.” eMarketer estimates that 128.0 million people in the US will use a voice assistant at least monthly in 2020.
Even with the increase in voice search adoption, only 5.5 million adults in the US make purchases with their smart speakers on a regular basis. There is significant growth opportunity within the voice commerce arena.
Looking Toward the Future
The pandemic has pushed consumers beyond their comfort zones, not only in what they are willing to buy online but also in how they shop online.
Grocery items have become particularly conducive to voice search. Consumers are familiar with their favorite brands of staples like cereal or bread and don’t require the same user experience of added ratings, pictures, and reviews, as they might for other goods. It’s not hard to imagine a world where your virtual assistant preempts your need-based voice search by reminding you what you need to purchase based on prior shopping behaviors.
The increased adoption of smart speaker voice search and virtual assistants has Amazon particularly well set up to expand their dominance of the e-commerce market. Amazon can control the entire funnel, from handling the voice search through their smart speaker, to fulfilling those requests through their Whole Foods grocery store, and finally to delivering those goods the same day for free via their Prime membership. In essence, Amazon will have 100% of any voice commerce that goes through their smart speakers, which comprises 70% of the market share.
And Amazon isn’t the only player in a prime position to take advantage of the shifting landscape. Google, which is in 32% of homes with smart speakers, can similarly leverage control of the smart speaker into massive windfalls in the burgeoning voice commerce landscape. While Google doesn’t have the same vertical dominance that Amazon does, they still determine which retailers the consumer can access through their Google Home device. Being the gatekeeper between consumers and retailers like Walmart and Target puts Google in a position to grant or deny access to those retailers or to monetize the space with advertising. Either way, their share of the smart speaker market puts Google in a strong position going forward.
COVID-19 has forced most of us to change the way we shop, for better or worse. Just as shopping on mobile devices has gone from something that seemed far-fetched to commonplace, so too will the voice search revolution be upon us. And with it, the further monopolization of e-commerce by the big voice players.
David Grow is Search Solutions Advisor at Goodway Group.
