While historians will have no shortage of things to write about at great length when it comes to the year 2020, one of the highlights will have to be how a year spent at home completely rewrote consumer shopping habits end-to-end. That was seen both in terms of the new things consumers did because circumstances forced them — purchasing groceries online for pickup or delivery, seeing a doctor via a telehealth channel, transitioning to a 100 percent work from home environment — and in terms of the new things they were willing to try.
And in that latter camp, buy now, pay later (BNPL) purchasing agreements allow consumers to break their purchases large and small into a series of evenly broken-up installments. BNPL has undeniably had a big 2020 as merchant and financial services players alike have rushed to add such options for consumers. And for good reason, according to the most recent edition of the PYMNTS Buy Now, Pay Later tracker. Consumers want credit options at the point of sale, among which BNPL is numbered. According to the report, 48 percent of consumers who prefer BNPL as an option for payment report they will not shop with a merchant without such an offering. And among millennials, arguably the most valuable demographic as they are in their prime spending years at present, installment-based payment options have an incredibly powerful foothold — as 42 percent report having made at least one BNPL purchase.
And yet for all the potential it packs, and all the headlines it has generated from that very bright path forward, it does bear noting that right now, BNPL’s actual penetration among the mass market of consumers is still pretty small. At the end of November 2020, roughly 4 percent of transactions were made using a buy now, pay later option. That penetration looks fairly limited when compared to voice commerce, which has also seen its penetration among consumers spike as, according to PYMNTS/Visa’s How We Will Pay consumer survey conducted in August of 2020, those customers’ shopping habits have been reoriented to digital.
According to the report, approximately twice as many consumers shopped for retail products from home in the summer of 2020 as they did in the summer of 2019, and three times as many did their grocery shopping from home this summer over last summer, too. Twenty-three million consumers, meanwhile, used voice assistants to make purchases — the share of consumers making purchases who do so via voice assistant is up 42 percent since 2018 and up 10 percent since 2019. When asked, 9 percent had made voice-assisted purchases while shopping for groceries or retail goods in the last 24 hours.
In short, more consumers in the last year have used a voice assistant to complete a purchase than have used buy now, pay later. Why? The short answer is ease of use and ubiquitous accessibility — consumers are increasingly surrounded by connections points to the voice commerce ecosystem. According to the HWWP study, 92.4 percent of consumers watch television, 54.7 percent own a connect start television and 17 percent shop while watching television. Nearly a third (32.6 percent) own a voice assistant and 30 percent drive a connected car.
And Google and Amazon — the two biggest and most advanced players in the U.S. voice commerce market, are pushing the edges of the ubiquity as far as they can make it stretch. The “big show” Google has been famous for putting on in Las Vegas may have been put on hold this year as CES went virtual. Most of the tech giants, coming off a slate of device upgrades in the fall were mostly quiet in 2021.
But brands that support one or both of them abounded at CES this year, according to reports. Smart vacuums, smart refrigerators, sound bars, headphones, light bulbs and routers were all on display from established names like LG and Sony and from scores of startups pushing the next big idea in practical smart technology. And practical was, it seemed, by and large a theme for 2021. There was the off smart essential oil diffuser in the mix getting some attention — but mostly the smart expansions made the goods on offer more autonomous. Instead of the user having to talk to Alexa or the Google Assistant, the next generation of refrigerators will “know” when things are running low and start making the list itself with the voice assistant.
And Amazon, as 2021 is getting off the ground, is apparently getting very serious about extending the reach of its voice assistant Alexa, announcing Monday (Jan 18) that it will be allowing third-party access to the core artificial intelligence underpinning Alexa. This first-time ever offer will allow firms, heretofore able to build skills for Alexa, the latest offering will allow firms to build their own virtual assistants using Alexa as the kernel. The first iteration of the product, according to reports, will be focused on the auto market.
“Building an intelligent assistant is complex, time-consuming, and costly. Further, the rate of innovation and change is accelerating and assistants are always improving and getting smarter, requiring substantial ongoing investments,” the company explains in a blog post. “The Alexa Custom Assistant addresses this challenge by allowing companies to leverage Alexa’s world-class technology stack to create their own intelligent assistant without the investment, long development cycles, and resources to build it from scratch and maintain over time.”
With access to customers, firms will be able to create their own wake words and custom capabilities for their consumers to build a voice assistant that, according to Amazon, will “co-exist” with Alexa as it’s designed to work today. So far Fiat Chrysler is the first firm to sign on to build its own Alexa-based assistant — though the specifics of the deal and whether Amazon is charging car makers to license the artificial intelligence (AI) tech or if they are giving it out freely remains unknown. Amazon’s stated intention is to give all companies, not just automakers, a faster, cheaper, and less complex route for jumping into the world of voice technology and commerce.
Will Amazon convince every brand to build their own Alexa-based assistant? Probably not. Historically retailers have had some trepidation in inviting an Amazon product in through the front door and we imagine, as has been the case in the voice race so far, Google and perhaps Apple might have a competitor offering when it comes to open-sourcing their voice AI.
What remains clear, however, is that voice commerce might not quite have gotten the barrage of press predicting it as the next new thing quite the way BNPL did in 2020. But as it turned out, minus the buzz, voice managed to slowly creep a bit closer to being everywhere that the next iteration of digital consumer might want to transact.
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