According to Alibaba Group’s news hub, Alizila, “Chinese consumers are increasingly turning to smart speakers to shop online, instead of their phones.” During Alibaba’s last 11.11 Global Shopping Festival, more than 1 million orders were placed and paid for via Tmall Genie’s voice-shopping feature, and data from Canalys shows that Alibaba sold 3.9 million smart speakers in Q3 2019. Both Alibaba and Baidu increased their market share during Q3 2019. Alibaba’s market share increased from 11.1 percent to 13.6 percent year-on-year while Baidu grew from 4.9 percent to 13.1 percent over the same period.
The global leader in smart speaker sales remains Amazon, with 10.4 million units sold during Q3 2019. The Chinese search engine Baidu came in third with 3.7 million smart speakers.
Baidu, in particular, has seen incredible sales of its smart speakers over the last two years. And the Financial Times rightfully points out that “Baidu is betting that the smart speaker will be the next smartphone.” And according to Canalys, Baidu has further expanded its mobile phone assistant solutions, announcing in July of 2019 that its DuerOS assistant was going to be available on over 400 million devices.
Electronics company Xiaomi is also developing a new smart speaker gadget, but its design is a bit more controversial. Most tech nerds know that Xiaomi is no stranger to polemics, and in the past, it was accused of copying Apple’s design. Unfortunately, the criticism didn’t end with the release of its new smart speaker. According to Voicebot.ai, the patent for its cylinder-shaped smart speaker was published by China’s National Intellectual Property Administration (CNIPA), but the design is almost identical to the Apple HomePod.
Since most smart speakers have similar designs and functions, Chinese technology companies have been forced to engage in an ongoing price war. Abacus News reports that during Alibaba’s Singles’ Day shopping event in 2017, Alibaba cut the price of its Tmall Genie from $72 (499 yuan) to $14 (99 yuan). Xiaomi followed suit by reducing the price of the Mi AI Speaker Mini to $14 (99 yuan), and in June 2018, Baidu released a $12 (89 yuan) smart speaker.
Alibaba’s A.I. Labs states that millions of shoppers took advantage of Genie to buy products varying from packaged snacks to eggs or rice. But the success of smart speakers isn’t surprising when you take into account how easy the feature is to use the customized and highly personal shopping experience it offers. Furthermore, senior citizens who don’t have a familiarity with complicated e-commerce platforms or aren’t accustomed to modern technologies might engage with smart speakers to have a hassle-free experience. This convenience simplifies the entire shopping experience and makes it more personal and straightforward.
Voice assistants like Amazon’s Echo or Alibaba’s Genie are not a recent discovery, as the technology has been around for years. But the technology upgrade from performing simple tasks like playing music or providing event information to streamlining the online shopping process has been nothing short of groundbreaking. In fact, its new AI features are the next big thing in e-commerce because they offer a more personalized and authentic experience for the consumer. Conveniently, this type of interaction between shopper and online retailer rewards both sides. The consumer is guided along a more informed purchase journey while a seller can overcome specific challenges like the high cost of returns or customer indecisiveness.
Let’s look at how and why ‘voice commerce’ will change retail for good:
Enhanced shopping experiences
One difficulty that’s often associated with online shopping is finding the right product in a catalog of millions of items. A shopper familiar with Aliexpress or Amazon knows that buying anything on these platforms usually means searching through millions of products to find the right one. This can be a dreadful or discouraging experience for many people.
I find online shopping to be a tedious experience because I don’t have the patience or time to browse for hours until I find a robotic vacuum cleaner or a dress. Instead, I prefer to pay a premium to shop in a brick-and-mortar store so that a retail assistant can offer me highly-personalized product information. And I’m hardly alone. In fact, McKinsey highlights that “since 2017, Chinese shoppers have made a noticeable shift back to physical stores, especially shopping malls and mono-brand retail stores.”
But voice commerce can simplify the process for those who are too busy or disengaged like I am. Instead of browsing the internet for hours, I can use a virtual assistant that responds to a command such as “find a short-sleeve blue polka dot dress.” Then, in a matter of seconds, the smart speaker comes up with product recommendations in line with my past shopping habits and preferences.
This highly curated offer is more personal, and it helps the shopper better connect with the website or the brand. It also helps buyers overcome “the paradox of choice” and triggers impulse buying.
Providing exceptional customer service leads to increased interaction
“By tapping into Alibaba’s diverse ecosystem and cutting-edge technology, we are committed to bringing more unique experiences to our Tmall Genie users,” said Ku Wei, the head of development for Tmall Genie.
These “unique experiences” give Alibaba a competitive edge in the smart speaker market. Furthermore, they fall in line with the experiential retail model Alibaba consistently promotes by deploying AR/VR solutions that increase interactions with shoppers.
Since smart speakers act as virtual assistants, they can provide real-time advice on sizing, fabrics, colors, models, brands, and even shipping times. They also can offer input on quality issues and flag products that have poor reviews. This leads to increased customer satisfaction and loyalty.
Recommendations in line with the available inventory
Another common issue with online shopping is the “out of stock” problem.
Years ago, I ordered a dress from Asos and received an incorrect item, and by the time the online order reached me, the dress that I originally acquired was out of stock.
What followed was hours of frustrating discussions with chatbots. After a couple of days, I got exhausted by standardized replies, and after one of my most unfortunate customer experiences to date, I deactivated my Asos account. In the end, Asos lost a loyal customer, and I got stuck with an ugly and overpriced top that ended up in my donation pack.
But I’m hardly the only one to have an unpleasant experience like this. In fact, receiving an incorrect item while paying for an out-of-stock product is so common that Asos has created separate pages addressing the issue.
Retailers that use such subpar tactics like these appear unreliable or dishonest, and they greatly risk losing their loyal customers. But this “out of stock” problem can even happen to retailers known for its outstanding customer care, and it can cause serious damage to a company’s reputation.
Fortunately, challenges with inventory management can be addressed and overcome with modern technologies. For instance, smart speakers can be directly connected to inventory, so sales tracking can be completely accurate. This way, the customer receives direct feedback on a product’s availability, and the seller knows what items are in high demand.
Voice commerce is fast becoming the future of retail, but there are still some challenges that lay ahead for the technology. A report by the Microsoft Market Intelligence and Bing Ads Marketing shows that ‘data security’ and ‘passive listening’ are top concerns for smart speaker users, and around 41 percent of those users have concerns surrounding trust, privacy, and passive listening. So until consumer privacy and security are fully addressed, many online shoppers won’t find voice shopping’s convenience worth the risks.