Managers View on Voice Commerce and Conversational Commerce
Alex Mari • May 27, 2020
The Disruptive Potential of Voice Assistants for Marketing
The world is confronted with the rise of voice assistants, increasingly used for shopping activities. AI-enabled voice assistants like Amazon Alexa or Google Home are likely to radically change the way consumers search and purchase products with severe impact on brands. However, the behavior of these shopping-related machines represents a “black box” difficult, if not impossible, to decode for managers. Our new study, “The Evolution of Marketing in the Context of Voice Commerce”, in collaboration with NetComm Suisse and e-Business Institute, examines managers’ perceptions of the evolution of voice assistants and their potential effects on marketing practice. The study of the managers’ interpretation of a voice-powered marketplace is critical as it is posited to influence future marketing choices. An expert survey with Swiss and European managers (N=62) revealed the expected impact of voice assistants on the shopping process. Findings show that managers consider voice assistants a disruptive technology assuming a central relational role in the consumer market.
Voice Assistants as Middlemen among Consumers and Brands
In the managers’ view, in-home voice assistants assume a central relational role in the consumer market and progressively mediate market interactions, with a severe impact on brands. Remarkably, 87% of managers agree that voice assistants will become “powerful marketing, sales, and distribution channel” and “a technology increasingly able to influence consumer's choices”, for 80% of respondents. The prediction of a severe impact on consumer brands from two-thirds of the study participants reflects the agency role attributed by managers to these devices. While functioning as a “salesperson,” voice assistants are redefining relationships among consumers and brands. In this respect, 75% of the study participants believe that voice assistants will become new middlemen between brands and consumers.
Threats of Voice Commerce to Brands
A key challenge connected to the diffusion of voice commerce is related to the potential bargaining power shift in favor of voice assistants’ manufacturers, especially Amazon. A total of 71% of respondents “somewhat agree” or “strongly agree” that Alexa will disproportionally place its private labels while penalizing other consumer brands. Managers are aware that Amazon's biased placement on voice assistants of its private labels might challenge national brands. As such, ranking algorithms represent a gatekeeper that might contribute to a reduction of brand visibility during the consumer’s search process. Nearly two-thirds (65%) of managers believe that brands will have reduced visibility on voice assistants compared to other touchpoints. In this context, search advertising in the form of voice assumes a paramount role in the marketing practice. Among respondents, 61% agree that advertising cost on voice assistants would be higher than web-based advertising because of the limited space available for sponsored messages (paid recommendations). Also, 44% of managers disagree that “low involvement product categories will be the only affected by the voice assistant's diffusion,” showing an expected “universal” effect of voice commerce across product categories. Moreover, three-fourths of respondents believe those voice assistants will ongoingly re-evaluate the consumer's product choice and suggest better alternatives. In a context in which brands are required to continually justify their positions, competition might increase.
Manager’s Perspective on Voice Commerce Across Industries
Among different industries, “Consumer goods” managers show a remarked distrust towards voice assistants. In particular, they do not trust their integrity, that is, the ability of voice assistants to adhere to a set of principles that the user finds acceptable and provide unbiased product recommendations. Opposite to other industries, in particular, “Fashion and retailer,” managers working for CPG firms do not believe that voice assistants will improve consumer’s decision quality both in terms of the degree of confidence in the shopping decisions and overall decision-making abilities. Opinions’ divergence between these two industries might be driven by the historical dependence of CPG companies from intermediaries (retailers) functioning as the gatekeeper of their distribution. Fashion managers appear significantly less concerned about potentially unfair voice assistants’ manufacturer practices and the influence that the VA might exercise on consumer’s decision making. This might be due to the importance of a multi-sensory experience during the selection process. Besides, automated purchases through product subscription seem less relevant for the fashion industry than others as only a few selected items have the potential to be automatically reordered (e.g., underwear or sneakers). In that context, also given the acceleration of digital practices, the fashion industry might look at the evolution of voice assistants more from a voice marketing perspective than from a transactional standpoint.
Relevance of Voice Commerce for Companies
We conclude that managers have a shared understanding of voice commerce’s challenges and opportunities for their brands. Nearly three-fourths of the respondents (74%) believe that voice commerce represents a “great opportunity for their brand.” At the same time, 77% consider it a significant challenge. This result shows a dual mindset capturing the current state-of-mind of the companies. Voice commerce is seen as a revolution in marketing and brand management, but also a phenomenon with potentially detrimental consequences.
Reviewing the data across geographies, managers operating in Switzerland find voice commerce less critical for their country compared to European managers. This might be due to the underdeveloped presence of Amazon in Switzerland, a fact that drives the penetration of voice assistants (and voice commerce) in other markets. At the same time, European managers believe to a greater extent than the Swiss that voice commerce is “important to win shares in the short-term.” In this respect, the rather stable Swiss economic situation is reflected in the manager’s reduced sense of urgency.
In light of these firm’s radical exogenous changes, researchers and marketers are called to study further the interplay between consumers and brands in response to “machine behaviors.”
Alex Mari
Marketing Researcher
Alex Mari is a research associate at the University of Zurich, where he studies the effect of machine influence (AI-enabled voice assistants) on consumer and brand behavior. He has extensive managerial experience in marketing, working as head of digital marketing and start-ups CEO. Alex teaches digital and AI marketing in business schools.
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