July 12, 2016 might go down in history as the day when voice commerce has finally entered the world of retail. It was the day when Amazon hit its first big success with Alexa by offering exclusive deals for customers, who placed their Amazon order via the personal voice assistant during the second annual “Prime Day” – Orders were placed every second. The event has marked the beginning of voice commerce as a part of our daily lives. At least some day it will. Maybe we are peeking too far into the future just yet, but let’s face it: V-commerce is here to stay and retailers need to understand its implications and opportunities before it’s too late.

The new concept of shopping is on its way to becoming the status quo of retailing – or is it?

Amid all the enthusiasm surrounding this topic, let’s take one step back and dive into the conversation from the beginning.

“Hands-free technology” – What is voice commerce?

Even though the idea itself describes a revolutionary change in shopping, v-commerce is rather taking us back to the roots of conventional communication – and there lies the secret of its power: After years of teaching our fingers to do the talking, voice assistants are now enabling us to use our mouths again when making a purchase. In this transaction, however, your conversation partner is a virtual shopping assistant.

More precisely, v-commerce describes an interaction between the user and, in most cases, a commercial website solely by using speech recognition technology to place and check orders, or to obtain web-based information, anytime and anywhere. Advanced speech technology lets computers understand and respond to natural human speech, paving the way for fully automated merchandising and thus, replacing the traditional point-and-click method in online shopping.

• ComScore predicts that by 2020, 50 percent of all searches will be voice searches (TechCrunch).
• A study in 2014 conducted by Northstar Research and Google found that more than 50 percent of US-teenagers use voice search daily, while 41 percent of adults are talking to their phones every day.

Alexa – The new voice of commerce?

When Apple integrated Siri in 2011, Smartphone users were able to use mobile speech recognition technology for the first time, for example, to do search queries, play music, or read the news. Voice assistants have come a long way since. Today, four products are dominating the market:

• Amazon Alexa (part of hands-free and voice-controlled speaker Amazon Echo)
• Google Assistant (part of voice-activated speaker Google Home)
• Microsoft Cortana
• Apple Siri

Amazon Echo launched its digital assistant Alexa in 2014 and was soon able to leave its competition behind. In comparison to other software, such as Siri, which used to be the forerunner in the field, Alexa can do much more than just search the web, tell the weather forecast, or call your mom. Thanks to the  (a collection of self-service APIs, tools, documentation, and code samples), Alexa has access to over 10,000 skills (see ), ranging from navigating your smart home or car, to carrying out simple tasks. The true power, however, lies in the smooth integration with Amazon’s ordering system and payment process.

• Amazon Echo has been a surprise hit: Over 3M units were sold within less than 1.5 years (Chatbots Magazine).
• Echo sales jumped 400 percent from last year, according to .

Voice payments are the new frontier

Voice payments allow users to make payments by linking their shopping account and credit card information to the voice assistant device, which enables them to make purchases through simple commands. Alexa has access to Amazon’s full range of products as well as consumers’ purchase history, and allows users to re-order at any time. Amazon’s virtual assistant can also hail a cab, make a reservation at a restaurant, and buy tickets for a movie simply by using voice commands. In fact, both Google Home and Amazon Alexa grew their third-party developer bases by more than 1500 percent, according to . This gives them access to a  from calling an Uber, to ordering Pizza at Domino’s, or playing your favorite Spotify playlist. Alexa also features a . Users can order the list items via voice command or access the list in the Alexa App and shop their groceries at a local supermarket. There are numerous use cases: Santander, for example, now allows customers to make payments by using the voice assistant of their Smartphone app, a big step for the future of mobile banking (Telegraph.co.uk).

What are the benefits to consumers and retailers?

The main advantage for consumers is the flexibility and personalization that voice assistants provide. The innovation simplifies the entire purchasing process from research to delivery and creates a groundbreaking customer experience.

1. Consumer-First: The modern day consumer expects convenience, personalization, and entertainment – and this is where systems like Alexa have an edge. By opening the door for third party skills, Amazon enables consumers to adjust the system to their personal demands. The new form of commerce moves away from “mobile-first” or “digital-first” strategies and puts the consumer in the center of focus. Being a “customer-first” technology, voice recognition systems align invisibly with the routines of the customer and not the other way around.
2. CRM-Data: With the help of Artificial Intelligence, the system is able to adapt to our language and to learn our shopping preferences, online as well as offline. The mobile App can even localize where consumers are buying their products in brick and mortar stores. The insights create a valuable data pool of consumer information that can help retailers provide more personalized customer experiences across all channels.Retailers should jump on the bandwagon: By integrating their service with platforms like Alexa, brands are able to personally communicate with consumers regardless of time and place, to predict demand and to better cater to their needs.
3. Frictionless Shopping: The convenience of voice recognition in e-commerce turns out to be a big advantage for consumers and merchants alike. Since it simplifies the transaction process by removing the point of sale, it is not only making shopping less time-consuming for consumers, but also increases the urge to buy.

“Voice-First”: What are the implications for Marketing?

Voice assistants are providing an innovative platform for retailers to market their products. In fact, the new channel might fundamentally change the way consumers interact with the internet, including searching for and purchasing products. SEO is a major part of every marketing strategy but might radically change with the advent of voice interfaces. Natural language processing will play a key role in SEO and online platforms will need to be optimized for natural language search. Metadata and keywords will not be enough anymore. Furthermore, retailers will face new creative challenges in marketing their products on those platforms, since visual content is not an option.

How to integrate v-commerce in-store?

Voice recognition reduces the cost of human capital. Voice assistants can provide relevant information much faster, enhancing the store productivity. Companies such as Theatro are equipping retail staff with earpieces that enable them to communicate directly with inventory and point-of-sale software. Instead of wasting time checking product availability, associates can lend their undivided attention to the customer.

Are retailers ready for V-Commerce?

V-commerce is a promising new concept for the future of retail. Some questions remain, however: How will the channel transform retail as we know it today and when will it become an established system – in consumers’ households, as well as inside retail store environments? One thing is for sure: The technology has arrived; in fact, natural language processing counts a 90 percent accuracy in understanding spoken requests.

But will consumer really follow this trend?

We think so and here’s why: With the exploding growth in usage of mobile messaging apps and Chatbots, commerce is becoming more and more conversational. A new way of interaction between consumers and businesses is emerging. Recent innovations like Smartwatches, which provide a limited physical interface and are thus dependent on new, minimum-touch ways of interaction, such as voice control, are supporting this trend.

However, this development poses new challenge for Amazon and Others. Multiple sources of consumer data are tapped on and combined, to predict behavioral patterns and to provide a more personalized commerce experience. User privacy will need to be taken very seriously. Another issue that Amazon had to deal with is the need for improved security. When a little girl in Dallas asked Alexa to get her “a dollhouse and cookies”, her parents were baffled when the expensive gift arrived. Subsequently, a PIN-verification was added to avoid such issues. But who wants to say their PIN out loud, risking someone overhearing it? If the PIN was sent to a mobile device, it would impair the concept of convenient shopping, using nothing but your voice.

Finally, voice recognition still needs to become smarter, even though the error rate of speech recognition is  With these hurdles in mind, v-commerce still has a long way to go, but it is on the path to become a household concept for retail 2020. As consumers’ expectations evolve, retailers need to find matching solutions to make shopping easier and more fun. The latest developments in v-commerce are tackling this challenge and are promising new and exciting retail concepts we can all look forward to.