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So-called conversational commerce was going to change the way we bought things. And ordering products by talking into a smart speaker was not only going to alter how we shopped, but also revise the way business did business.
During a recent developer conference, Alphabet's Google made a big show of its artificial intelligence (AI) Google Assistant making a hair salon appointment. Amazon.com (NASDAQ: AMZN) partnered with home builder Lennar to convert some model homes into showcases for its Alexa voice assistant, to show homebuyers the technology's potential by turning the lights on and off, controlling the TV, and ordering products.
Image source: Amazon.com.
Some analysts even "conservatively" peg the market opportunity for conversational commerce at $35 billion by 2020. Others forecast it could go as high as $40 billion.
Yeah, that's not going to happen, at least not with Echos, Google Homes, or even Apple Homepods.
Not the revolution that was imagined
Smart-speaker sales are expected to hit 100 million units this year, and reach 225 million units by the end of 2020. Amazon's Alexa-enabled devices own two-thirds of the smart-speaker market, while Google has about a 30% share. Yet despite these devices' proliferation, people aren't really using them to buy stuff, nor does it seem they really want to.
The tech news website The Information reports that out of some 50 million Alexa users, only 1 million have tried to buy something with the device. And of that total, just 100,000 completed a transaction. Amazon disputed those figures, saying that "millions of customers use Alexa to shop." But it seems that people are more interested in using their devices for listening to music and other entertainment, controlling other connected devices like the lights or the TV, and checking the weather.
Still, Amazon has tried to make it as convenient as possible for shoppers to make purchases by suggesting products if they ask Alexa to do a search. For example, ask Alexa to buy toothpaste, and it will recommend the Crest brand.
Amazon reportedly held talks with companies like Procter & Gamble and Clorox on allowing them to pay for higher placement in search results as a means of targeting consumers based on their shopping habits. It had also toyed with the idea of allowing overt advertising on the platform, but ultimately killed it.
The risk for such companies is that Amazon has expanded its line of private-label products across numerous categories, and it could choose to suggest its own items ahead of the name brands.