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Voice: a Sound Opportunity? VOI CE Voice: a Sound Opportunity? Voice: a sound opportunity? VOI CE Voice: a sound opportunity? LARGELY DRIVEN BY A $5BN PER YEAR R&D SPEND BY THE THREE LARGEST TECH COMPANIES, CONSUMER USAGE OF VOICE TECHNOLOGY CONTINUES TO GROW RAPIDLY. AT LEAST A FIFTH OF THE US ADULT POPULATION HAS ACCESS TO A VOICE ASSISTANT AND YOUNGER GENERATIONS ARE GROWING UP IN A WORLD WHERE TALKING TO DEVICES IS THE NORM. AS AN EXAMPLE, THE TOY RETAILER MATTEL ANNOUNCED LAST YEAR (IN A COLLABORATION WITH MICROSOFT) THE LAUNCH OF ARISTOTLE, A VOICE RESPONSIVE BABY MONITOR THAT IS “SPECIFICALLY DESIGNED TO GROW UP WITH A CHILD”. MOST OF THE USAGE TODAY IS FOR SIMPLE TASKS WITH AMAZON’S ALEXA HANDLING 130M QUESTIONS A DAY GLOBALLY. PENETRATION INTO COMMERCE IS STILL NASCENT HOWEVER; WHILE ALEXA-POWERED SHOPPING TRIPLED IN THE 2018 HOLIDAY SEASON VERSUS 2017, SOME REPORTS SUGGEST ONLY 2% OF ALEXA OWNERS IN THE US HAVE MADE A PURCHASE THROUGH THEIR DEVICE. Given this context, True has conducted a piece of primary research on voice, using data from a representative sample of UK consumers (1,000+ participants). The findings from the study provide some insight into the usage and attitude towards voice – both today and in the future – and raise some key questions as to how businesses that serve these consumers should think about this channel. 01. The market today: the rule of three We evaluated the relevance of voice technology in relation to both consumer convenience and communication, leaving non-consumer facing voice technology use cases aside. Evidence suggests that voice technology is the next step in the evolution of user interface. Voice has gained traction where traditional alternatives require multi- tasking or multiple actions on a device; cooking is a good example. It’s inhibitive to flick through recipe instructions whilst your hands are covered with food. When driving, it’s safer, and more convenient, for the driver to ask for directions verbally than reaching and scrolling on a screen. It’s natural to replenish products at the point in time where you realise they’re running low, rather than remembering to write the item on your shopping list – “Alexa, add flour to my Ocado shop”. In the final example, it is clearly more convenient or engaging to verbalise some interactions with a retailer or brand. In the UK, our research suggests that 42% of consumers have used a virtual assistant or voice activated device (VAD). Unsurprisingly perhaps, usage is significantly higher among younger generations, particularly digital native 18- to 24-year-olds. However, it is also interesting to note that over a third of 45+ year olds are also users (Figure 1). Across other demographic splits (Figure 2), we’re mindful of drawing firm conclusions given the relatively small sample sizes at sub sector level, but usage is broadly in line with the national average, with two notable exceptions: • Households with an annual income of more than £75k over-index relative to lower income households • Usage is generally higher in England than Wales, Scotland and Northern Ireland FIGURE 1: USAGE OF VOICE ASSISTANTS BY AGE GROUP 02. FIGURE 2: USAGE OF VOICE ASSISTANTS BY DEMOGRAPHIC 03. Across all age groups, consumers today typically look to voice technology for relatively simple tasks – such as answering questions, completing household tasks or getting live information. However, there is a small but significant number (16%) who are using this technology for more advanced tasks such as controlling smart home features – reflecting the desire of the major technology players to ‘own’ this channel. From a retail perspective, the proportion of respondents who have used a voice activated device to purchase something remains low at 10% (Figure 3) but interestingly this is higher than reports from the US market of around 2%. FIGURE 3: VOICE TECHNOLOGY USAGE 04. For the early adopters who have purchased through their devices, “Entertainment” was a clear winner, with purchases of “Groceries”, “Clothing”, “Luxury Items” and “Toiletries” descending in that order. Voice has also touched almost the entirety of the shopping journey as customers use the technology to research products, add them to shopping lists, track deliveries, make purchases, rate products, receive customer support and re-order. It is therefore not just a new channel of commerce, but a new channel of engagement and experience. Given this, retail and consumer businesses should think about an over-arching strategy for voice technology, taking into account all areas that could benefit in the future. When looking at the suppliers of voice technology, the market is currently dominated by the large tech players: FIGURE 4: UK VIRTUAL ASSISTANT MARKET SHARE, 2018 Which virtual assistant provider do you use / which hardware do you use with your virtual assitant? Apple Siri Google Assistant Amazon Alexa Microsoft Cortana Samsung Bixby Other Note: Amazon and Google represent respondents who have used voice assistants through any device, including but not limited to Google Home and Amazon Echo / Dot It is clear this remains a fragmented market, also reflected by the 28% of respondents who use voice activated devices from more than one provider. Microsoft is clearly a laggard but Apple, Google and Amazon all continue to invest heavily in voice technology, and this is likely to remain the case for at least the medium term. The technology is widely available for licensing from all three of the main players in order to increase consumer penetration within their respective ecosystems. However, specifically for retail, it may be the case that one or two will start to emerge with a stronger consumer proposition. 05. What’s next for voice? Thinking ahead, there is still plenty of scepticism in the UK market regarding voice technology; the number of consumers that are looking to buy a device in the next 12 months is significantly outnumbered by those unlikely to buy a VAD (Figure 5). FIGURE 5: LIKELIHOOD OF FUTURE PURCHASE OF VADS IN THE NEXT 12 MONTHS 06. This suggests that adoption continues to be largely driven by a supply push rather than consumer pull. However, with further education and clearer consumer benefits, the large cohort that didn’t know if they would buy one or not, may be persuaded in the short term. It’s important to understand the speed of change: ‘voice’ technology has existed for some time, but Alexa has only been in the market for four years, representing an adoption curve that is in line with, or ahead of many other recent technologies. This cornerstone in commercialisation was based on AI-driven voice computing becoming advanced enough to comprehend and execute useful but basic functions. This is truly a massive achievement; the English language alone has over 171,000 words, and how we can use these words in combination with one another runs into the trillions. Looking to the future, respondents seem to be confident and willing to embrace voice technology for other, more significant tasks than the typical use today (Figure 6). Automation of jobs around the home will clearly be the most popular use case in the future, but also of interest are the 23% of respondents who are looking forward to more personalised online shopping. FIGURE 6: POTENTIAL FUTURE USAGE OF VOICE TECHNOLOGY Two-way ding 07. While there are barriers to purchase and usage today, we believe none of them are insurmountable. When asking consumers why they didn’t use voice activated devices, the main reason was that they “didn’t see the benefits”. The current limitations to voice technology will soon be eradicated because as more voice data is processed by AI (through increased consumer usage), the better voice technology will become – another reason why the three tech players are grappling for domination. The major barriers to purchase include “Lack of technical knowledge”, “Price” and “Security Concerns” (Figure 7). Regardless, consumer adoption has been rapid, and with 42% of consumers already using voice technology today it is quickly moving from ‘niche’ into ‘mainstream’. FIGURE 7: BARRIERS TO USE OF VOICE ACTIVATED DEVICES 08. Voicing our thoughts. The intense technology battleground presents a dilemma for retailers – should they work with multiple platforms until a clear winner emerges, or partner with one? While it is tempting to characterise voice technology as a ‘winner takes all’ market, it’s hard to see any of the three main protagonists slowing down their efforts. MANY RETAILERS HAVE ALREADY DIPPED THEIR TOES INTO VOICE: • Walmart has partnered with Google to enable consumers to ask their Google Home device whether a certain pair of socks are in stock, or to reserve a TV for same-day pick up • H&M has partnered with Google Home to provide seasonal gift inspiration • Siri enables Paypal users to send and request money across 30 countries • Ocado launched an Alexa skill in August 2017 • Uber drivers can be ordered on Siri, Alexa and Google Home The final example – partnering with all three tech companies – instinctively is a smart route for retailers to incorporate voice technology. This option opens up a more personal channel to all consumers that own and interact with voice activated devices rather than just the roughly 30% global penetration offered by each main player. 09. Despite the continued R&D expenditure – leading to machine-learning word accuracy eclipsing the threshold for human accuracy – the main protagonists do not offer solutions focused on specific use-cases. We have witnessed an increasing number of retail and consumer businesses that have engaged with voice startups focusing on specific use cases built on either proprietary technology or on-top of the Big Three platforms. For example, a grocer may engage with a startup to help them offer bricks and mortar ‘search’ (“where can I find the milk?”), whereas an apparel company may engage with a startup to shift ‘search’ from being an item that is typed into a search bar, to a spoken command: “I want a white, slim-fit, t-shirt similar to my recent purchases”.
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