For CPG brands and their consumers, Amazon Alexa and Google Home represent two very different versions of how consumers will shop for household items in the future.
Last week Google and Walmart announced that they would work together to enable shoppers to buy goods from the retailer’s vast inventory through the technology brand’s voice assistant Google Home, a clear boon for the platform. The reason for the collaboration is obvious – Amazon. Walmart’s ructions with Amazon are well documented, perhaps reaching their apex in June when it tacitly threatened to cancel the contracts of haulage companies that worked with both Walmart and the e-tailer. For Google, Amazon continues to threaten the search portal’s position as an e-commerce gateway. The 2016 State of Amazon report by BloomReach found that 55% of consumers head to Amazon first when starting their shopping journey online compared to 28% who use search engines and 16% who turn to other retailers online.
The opportunity for both brands is clear. ComScore predicts that by 2020, 50% of all searches will be voice searches, while research by RBC Capital Markets suggests that revenue generated by consumers shopping through the Amazon Alexa platform could reach £3.9bn ($5bn, €4.2bn) in the same period. While this may seem small given that Amazon posted revenues of £33.8bn ($43.7bn, €36.7bn) in the fourth quarter of 2016, it will probably be significant for certain sectors such as consumer packaged goods (CPG), which includes household essentials – on which Walmart’s success is built.
It’s hard to argue against the notion that competition will be as key as ever to getting the best outcome for both sellers and buyers.
For CPG brands and their consumers, Amazon Alexa and Google Home represent two very different versions of how consumers will shop for household items in the future. Amazon’s version is the antithesis of choice – one retailer using one set of metrics to suggest a limited range of brands in response to product queries. According to a study by research firm L2, items that feature on Amazon’s Choice or Best Sellers list are more likely to be recommended for first-time orders than other products, meaning that big, established brands are much more likely to be proffered, giving a whole new meaning to the term ‘household name’.
On the other hand, Walmart will become the latest and largest retailer to be added to Google’s Google Express shopping service, which already provides access to outlets such as Target, Costco, Kohl’s, Bed Bath & Beyond, PetSmart, Staples, Toys R Us and Walgreens. ‘If Amazon is a department store with just about everything inside, then Google Express is a shopping mall populated by different retailers,’ explains Daisuke Wakabayashi, technology reporter at The New York Times. ‘Inside Google Express, a search for ‘toothpaste’ will bring back options from about a dozen different retailers’. And in a blog post, Mark Lore, president and CEO of US e-commerce at Walmart, explained how this is the best situation for consumers: ‘We know this means being compared side by side with other retailers, and we think that is the way it should be. An open and transparent shopping universe is good for customers.’
It’s hard to argue against the notion that competition will be as key as ever to getting the best outcome for both sellers and buyers. Whether this will have an impact on which of these platforms consumers choose to side with remains to be seen.
For more on how voice-activated personal assistants will transform the home, read our Neo-kinship macrotrend.