BRIEF

'Alexa, make grocery shopping easier': How voice-activated technology can disrupt the industry

AUTHOR

Alicia Kelso@BGbunster

PUBLISHED

May 1, 2018.

Dive Brief:

• Voice-activated technology is swiftly making its way into retail channels and, driven by Amazon’s purchase of Whole Foods, could disrupt how consumers shop for groceries.
• According to research analyst Josh Cummings, data shows that approximately 25% of U.S. households own a voice-activated home assistant. “Recent data suggests that home speaker penetration and usage are beginning to surge in ways that remind of us mobile several years ago,” he wrote on Seeking Alpha.
• According to The Wall Street Journal, consulting firm Capgemini predicts within three years, consumers will use voice technology for 18% of their total spending — up from 3% now. 

Dive Insight:

With voice-activated technology, it’s not so much a matter of if it will disrupt the grocery industry as much as when and how. As online and mobile before it, this next iteration of convenience technology is on a swift growth trajectory driven by digital-savvy millennials, which means it has some staying power.

The grocery industry is in the middle of this growth path thanks to Amazon’s acquisition of Whole Foods. Data shows approximately 25% of U.S. households already have a home assistant, and analysts predict these consumers will drive a swift adoption of voice commerce in the grocery space.

Voice assistance technology has the potential to remove common points of friction for the consumer — no sitting down at a computer, no mobile app to download, no driving to stores and dealing with crowds, no manual lists to manage, and so on. As consumers become more familiar and comfortable with voice commerce, the convenience factor could simply win out.

For CPG brands, the biggest disruption is from a marketing standpoint. Brands are used to the pay-to-play model that comes with prime shelf space or Google Ads. Right now, voice-activation search algorithms tend to favor products earning high marks on Amazon thanks to the ubiquity of Alexa, which makes up 70% of the smart-speaker market. According to The Wall Street Journal, Bain & Co. found that customers making a first-time purchase on Alexa without specifying a brand received a product recommendation from Amazon’s algorithm more than half the time. Some brands, including Peapod and Procter & Gamble, have added branded Alexa apps to leverage this domination.

Grocers barely have their toe in the water when it comes to voice ordering, but that will likely change as they continue to update their e-commerce platforms and mobile apps. The question is, will they be able to bypass industry giant Amazon on their way to implementing it?

Walmart offers voice ordering through Google Home on more than 2 million items, while Peapod recently announced an integration with Amazon's Alexa device. Instacart, the leading third-party e-commerce provider serving grocers, will probably jump on board soon. It recently boughtcompetitor Unata, which was developing its own voice-ordering technology.

A timeline for adoption is unclear at this point. But it's becoming increasingly clear that, as with the broader e-commerce trend, grocers will need to get involved in voice ordering. In an intensely competitive industry, grocers that offer the most convenience will have an upper hand, and it doesn't get more convenient than voice command