The Clash Of The Voice-Commerce Titans

“The exhilarating ripple of her voice was a wild tonic in the rain.”

Jay Gatsby. Chapter Five. F. Scott Fitzgerald’s magnum opus, “The Great Gatsby.”

You’ve all read the book (or seen the movie starring Leonardo DiCaprio). Rich, decadent protagonist Jay Gatsby becomes a millionaire to impress the love of his life, Daisy Buchanan, who’s married to some other guy. Over the course of five years, Gatsby has been more or less stalking Daisy from his house across the sound in the mythical town of West Egg where they both live. Gatsby’s friend, Nick, takes it upon himself to arrange a meeting between Gatsby and Daisy. The words, quoted above, spoken by Gatsby upon meeting her, describe his mental metamorphosis from uncertain, vulnerable, nervous wreck at the thought of finally being in the same room with her to the confident, compulsive-obsessive narcissist that was his everyday persona.

All trigged by the rapturous sound of Daisy’s voice.

Yes, voice is a powerful elixir.

And today, one powerful enough to motivate the biggest players in technology to invest in using it to create new value for their ecosystems and the ecosystem stakeholders they serve — most notably, the consumer.

Google, Amazon and Apple all recognize the ubiquity of voice and its application to a variety of use cases, especially commerce. Each of these players brings their own set of technologies and assets to the voice-activated party. And each of these players — who collectively account for more than $1.5 trillion in market cap — has a pretty big basket of assets and investment capital to throw into creating exhilarating ripples and wild tonics of voice-activated commerce for consumers and the merchants they like to shop.

But assets and money alone won’t win the day. Winning the next big battle shaping up in commerce — the one that enables shopping via voice-activated personal assistants — will come down to how well they and others understand and then execute on one simple insight:

How consumers decide what they want to buy in a digital world — and where they start that journey.

And, oh my, oh my, how that has changed.

Search Engines Aren’t Where Most Consumers Start Their Shopping Journey

This isn’t exactly good news for the GOOG. But it isn’t exactly new news either or something that it doesn’t already know.

A study that we did in the Summer of 2015 asked consumers to tell us how they start their commerce journeys. Specifically, we asked them to tell us whether they use search, marketplaces, social networks and their favorite merchants to find what they want to buy.

Here’s what we learned.

Forty-eight percent of the time they said they start their search on a particular merchant’s site. Twenty-nine percent of the time they said they start out on social networks.

But, a staggering — if you’re Google, anyway — 64 percent of the time they said they start their search inside of marketplaces. And, since Amazon is the biggest marketplace of all, it’s not an implausible of faith to conclude that’s where the majority of the product searches began for those consumers.   In fact, recent studies suggest that more than 50 percent of consumers start their product searches on Amazon.

But only 40 percent of the time they said they start their search for what they want to buy on a search engine.

If you’re Google, this data is just the tip of a very dangerously deep iceberg of the shifts in consumer shopping behavior.

And it’s access to mobile phones and apps that is driving some of that change.

ComScore reported that 65 percent of a consumer’s digital life is spent on a mobile device these days — up from 53 percent the year before. Time spent on shopping and retailer apps, as you might imagine, consumes only a very small sliver of that time — about 4 percent. Amazon captures slightly more than a third of that time (34 percent).

Wait, there’s more.

Forrester said that 61 percent of consumers have fewer than two shopping apps on their phones. And, since fewer than two can only mean one, it’s probably not too hard to guess which one or even two might have made it to the consumer’s home screen: a marketplace like Amazon and perhaps a favorite retailer that consumers use frequently, like, say, Walmart or Target or Walgreens.

Now, hold that thought — and then mash it up with this one.

A new piece of research from professors at the University of Hong Kong sheds further insight on consumer search and shopping behavior. These guys looked at the behavior of 2 million consumers who were in the market to buy a digital camera. They found that 25 percent of them don’t surf the web at all; they, instead, go to one place to buy what they already know they want to buy. Another 40 percent of all consumers in buying mode are looking for one specific product when they are doing their searching — e.g., a digital camera — and another 20 percent are looking for one specific brand — e.g., a Canon digital camera.

The focus of their research was to help marketers influence purchase behavior.

But these insights also seem to support the behavior that we observed with the 2,000+ consumers we studied in the summer of 2015. Most consumers seem to already know what they want to buy so they either go to one or two types of places that they trust to buy it — marketplaces or their favorite merchant — and then narrow their selection from there based on things like inventory availability and delivery.

What they aren’t doing is swimming in a big pool of search.

Think about how you buy stuff.

Chances are, if you’re looking to buy something that you’ve bought before or already know the product or brand you want to buy because you’ve read something about it or talked to your friends, Amazon and/or your favorite retailer is probably your first and last stop. Searching the web just takes too much time and will probably only end up prompting you to buy on Amazon or your favorite retailer site anyway. That was also one of the University of Hong Kong professors’ findings: People often buy from the first merchant site they visit, even if they did hop around to a few others as part of the buying process.

This is clearly not the kind of story that goes over well in Mountain View — and it’s why Pixel was born.

The Bets Giants Are Making On The Voice-Activated Game

Pixel is a portfolio of hardware and software that runs on Android and will compete with Amazon’s Alexa and her various connected devices and Apple’s Siri and the iPhone. Pixel also includes access to Google’s voice-activated personal assistant, Allo. Google is betting that its core expertise in organizing the world’s information, deep AI and machine-learning technologies and access to the consumer’s Knowledge Graph bundled with cool hardware will offer the consumer a richer, more useful voice-activated experience.

Google also claims that Allo is capable of engaging in a two-way conversation with a consumer — context that’s a lot easier to deliver if one is able to tap into those massive databases of search intelligence and consumer history that Google has been amassing since its start in 1998.

But Google, with Pixel, has just thrown an Android-based smartphone competitor into the mobile ring. Google has also said that there will be some things that will only be available on Pixel, which will only inspire other handset manufacturers who also run Android to get their competitive juices flowing. It seems odd for Google to think it can be successful at both licensing Android as an open OS and then forking its own version of it to compete with the other handset manufacturers who are running Android. See Microsoft/Nokia if you want one possible scenario for how this movie could end.

All of this is also coming at the same time Google is staring down the barrel of the European Commission’s threats to strip Google from its big Android revenue driver — the bundling of Google advertising-based apps into Android. And there seems to be a dearth of successful execution in Mountain View outside of its narrow focus on advertising, especially when it comes to incorporating hardware into its software mix. There was the Motorola debacle and what seems like another whack at being Nest which also didn’t seem to end well. Even YouTube, which is now printing money, was a long slog and came only with an acquisition after Google’s own efforts failed.

Google’s betting that it can use voice to pull through commerce by grabbing onto the declining share of consumers who use search when they’re in shopping mode, while also persuading those that already know what they want to buy that there’s value in having a smart virtual assistant anyway.

And who think that combination is cool enough to buy an Android phone and commit to Google’s connected device portfolio.

Maybe that looks a lot easier this morning given Samsung’s issues with the Galaxy Note 7, but it’s  not a slam dunk.  If anything, the issues with the Samsung phone show how tricky the handset business can be.

Neither, frankly, is Apple with Siri.

Siri’s been kicking around since 2011 and is the elder stateswoman of voice-activated functionality in the mobile ecosystem. But she’s been consistently panned over the years for being not so smart, to the point of being off-putting since she gets a lot of stuff wrong. The result is that people just don’t use her that much anymore.

In a boost to get into the voice-activated commerce game, this past summer, Apple announced that it would open up Siri to third-party developers.

Well, sort of, and only if invited by Apple and only for apps in Apple’s App Store.

At the moment, there are a small number (might not need all of your fingers and toes to count them) of apps that are voice-activated. And even though Apple is reportedly working on an Echo-like device for the phone, Siri is available only via Apple’s smartphones and Apple Watch.

Apple’s Siri also faces its own challenges with reconciling how consumers might want to use her to shop and buy and make their own plans for Siri. Apple seems to be cherry picking the apps that it thinks consumers will want to use to buy stuff. But its picks and what consumers might find valuable will likely hit an interesting impasse at some point and probably quite soon.

Apple’s bet is that it can persuade its fan base of consumers to adapt their shopping habits to its portfolio of connected devices and the voice-enabled apps it’s allowed access to Siri.

Seems risky. As I’ve pointed out, not many consumers have a lot — or any — shopping apps on their home screens, and not many of them even use search, which, in iOS, is powered by Google (courtesy of a $1 billion fee). Those who do search on their iPhones can also use Chrome, which includes its own voice-activated capabilities. The apps that consumers do use today to shop and buy a great majority of the time might not be the ones that Apple might be all that gung-ho about voice-activating.

Like, for instance, Amazon.

Speaking of Amazon, then there’s Alexa. She and her Echo device will turn two in November. Alexa’s voice-activated ecosystem has more than 3,000 skills now — a nearly doubling of her skills base since the start of the summer. Amazon said that “millions” of consumers use her to find information and to buy things. Amazon has expanded Alexa’s voice-activated reach into a portfolio of devices now, too, including cars.

Amazon’s vision for Alexa is as an open platform to all comers — anyone with an idea can Alexa-it using its publicly available SDK. Its $100 million investment fund helps it strategically invest in the ideas and applications of her technology to expand her capabilities. Amazon’s reported acquisition of Angel.ai, an AI platform that its website said is about using artificial intelligence to support commerce, seems to support Amazon’s commitment to making the shopping and buying journey for its consumers more efficient.

Amazon’s bet is that it can use Alexa to close the deal with the consumers who already know what they want to buy from a marketplace — AKA Amazon. And then, to persuade everyone who’s left to start their search there, too.

Here’s why that’s not a stretch.

Alexa and Amazon are voice-activating behavior that consumers already do today as part of their shopping experience — and making it available to consumers across a variety of connected devices. The consistency for the consumer is shopping on Amazon, which can be done via any mode of digital media — desktop, laptop and mobile device — via any operating system today that supports the Amazon app. Now, with Alexa, that has expanded to voice-activated devices at home and even in the car with those auto manufacturers that support her.

If there’s one takeaway from the collective efforts to ignite the in-store mobile payments experience, it’s that trying to change ingrained consumer behavior is really hard, especially when what consumers are doing doesn’t create friction for them.

So, that means that winning this next battle in commerce won’t come down to who can write the biggest check or who might have the greatest number of uniques visiting their site each month or even who has the coolest-looking, sleekest and shiniest new technology toys to dangle in front of consumers.

The winners will be decided by the consumer and who does the best job of letting them use their voices with the assortment of connected devices they own today to shop anywhere they happen to be — their homes, their offices, their cars and even inside physical stores.

The way that they like to do it today.

At the moment — and it’s still early days — Alexa seems to be that exhilarating ripple of a voice-activated technology that is like a tonic in the rain of commerce. She’s tapping into the behaviors that Amazon has —  making Amazon a first and only stop when consumers want to buy. The implications of what all of this means for payments, the dynamics of the commerce ecosystem and who gets disintermediated and why could be extraordinary.

And for another column for another day.