Report reveals hardly anyone shopping on Alexa
With Amazon offering customers the ability to search for and buy products through its AI-powered assistant Alexa on smart speaker devices like Echo, and Ebay doing the same through a partnership with Google Home, voice shopping appears to be on the rise.
But even as retailers like Officeworks in Australia have gotten on board with the voice shopping trend, a report this week by the US-based publication, The Information, has raised questions about how widespread it really is.
According to two unnamed people who The Information said were briefed on the company’s internal figures, only about 2 per cent of people who own an Alexa-enabled device have made a purchase using just their voice so far in 2018. The sources claim that Amazon has sold about 50 million Alexa-enabled devices.
Amazon has not publicly stated how many Alexa-enabled devices it has sold, but in a letter to shareholders earlier this year, founder and CEO Jeff Bezos said that 2017 was the company’s best year yet for hardware sales and that customers bought “tens of millions” of Echo devices.
According to one of the sources who spoke to The Information, 90 per cent of those who made a purchase using Alexa did not make a repeat voice shopping purchase. Rather, 20 per cent are using Alexa to find out about deals or track their orders, while many more people are using their smart speaker to ask about the weather, set timers and play music.
Amazon has disputed the figures published in The Information.
“We do not agree with the numbers represented in the article,” the company said in a statement provided to Internet Retailing.
“Millions of customers use Alexa to shop because it is the most convenient way to capture needs in the moment. It’s as simple as saying, “Alexa, order dish detergent” while you are doing the dishes or “Alexa, order copier paper” as you reach for the last one. We want to enable customers to shop in whatever way is easiest for them.”
Indeed, a Salmat report found that while only 1 per cent of Australians surveyed owned a smart speaker at the end of 2017, 57 per cent said they planned to buy one in future, and 46 per cent said they were willing or excited to use it to shop from retailers.
Even if the uptake of voice shopping has been underwhelming so far, it’s unlikely to phase Amazon.
Much like the hype that preceded the company’s launch in Australia last December, followed by the widespread sense of relief over its perceived low impact, retailers should not underestimate the company’s willingness to play the long game – when it comes to retail or voice shopping.
According to an account filed with ASIC in April, Amazon ended calendar year 2017 in Australia with an $8.9 million loss and an estimated $16 million in sales.
The company reported $6.3 million in “product sales” – which refer to items sold by Amazon – and around $1 million in “service sales” – which refer to third-party seller fees.
Amazon charges different fees depending on the seller’s product and category, but The Age estimates that third-party sales amounted to around $10 million in the month of December, bringing the retailer’s total sales to around $16 million.
While many bricks-and-mortar retailers including Myer and JB Hi-Fi saw significantly higher sales in the month before Christmas last year, Amazon has likely increased its business significantly since then.
It promoted Prime Day in Australia with targeted local offers for the first time this year and blocked shoppers from having items purchased through its US and other global marketplaces shipped to Australia in order to comply with the new GST law.
Since Citi estimates Austrlian shoppers were spending between $500 million and $700 million on Amazon’s global marketplaces before December last year, a portion of this spend is now likely being captured by the local site.