US Insights

With Six New Amazon Devices, Alexa Voice Assistant Takes Root

Meaghan Werle

Analyst

Retail 09.29.2017 / 11:00

NewAmazonDevicesScreenGrab

Amazon looks to reach deeper into consumers' lives.

The Echo family tree is growing once again. Three years after Alexa was born, Amazon unveiled six all-new offshoots of its Alexa-enabled devices: the next generation of Echo and Fire TV, as well as Echo Plus, Echo Spot, Echo Connect, and Echo Buttons. What’s more is that Amazon has expanded its partnership with BMW, with plans to integrate Alexa in every BMW and MINI vehicle by mid-2018.

These are timely announcements as shoppers begin to craft their wish lists and search for gift-giving inspiration for the holidays. Last year, Alexa devices were among Amazon’s best-selling holiday items. As a result, voice device penetration spiked significantly in January 2017, making 12% of U.S. households — and nearly 20% of Prime members — owners of voice-enabled smart home assistants.

Voice Assist Penetration

To repeat this holiday sales success, Amazon needs to enhance Echo with new features and capabilities, especially as competitors like Google and Apple develop their own voice platforms. In turn, Amazon is further differentiating its voice portfolio in three ways:

Integrating voice with the screen

As a smaller iteration of the recently launched Echo Show, Amazon’s new Echo Spot is, in essence, a hybrid of that and the more compact Echo Dot. Ideally placed on a user’s nightstand or desk, the Spot is positioned as a smart alarm clock that can perform all of Alexa’s functions with the help of a visual display.

While listening to music, accessing weather updates, and setting timers/alarms are currently among the top uses for voice assistants, incorporating the screen will help Amazon drive Alexa voice-shopping adoption, which, at 17%, still has a relatively low penetration rate among all primary household shoppers who have used voice to purchase items, according to July 2017 Kantar Retail ShopperScape® data. However, Amazon is already facing obstacles when it comes to the video streamed via the Show and Spot in light of recent news that Google withdrew YouTube’s services from Amazon’s devices. 

Elevating smart home solutions

Amazon is intent on establishing its authority in smart home management with the introduction of the Echo Plus and its built-in smart home hub, which allows users to easily connect compatible devices. This technology eliminates the need for additional hubs or apps to control smart lighting, locks, plugs, switches, and more. In turn, Amazon is bundling Philips Hue smart lightbulbs with Echo Plus purchases (while supplies last) to create incentives for smart home implementation. This promotion is well-aligned with recent efforts to highlight Amazon’s new Smart Home Consultations, which are now available via Amazon Home Services in select markets.      

Other improvements to Alexa also ease daily household tasks. Alexa Routines, for example, allow users to automate a series of actions (like turning off lights and securing the home at bedtime) with a single voice command, while smart home groups can now be activated without referencing a specific name. Ultimately, Amazon is alleviating friction points in Alexa exchanges to facilitate more natural and frequent conversations. 

Increasing Alexa interactivity

Launched just four months ago, Alexa voice calling and messaging is highlighted as a key selling point for these new Echo devices. In fact, Amazon is broadening this capability to support free outbound calling to phone numbers within the United States, Canada, and Mexico. Combined with the Echo Connect, a new Alexa accessory that transforms Echo into a hands-free speakerphone for landlines, Amazon is, in effect, replacing home phones with these devices. Having the ability to initiate a call, videoconference, or text via voice is an attractive option as multitasking users move about their homes. 

Alexa Gadgets also have an experiential proposition: Echo Buttons are an early manifestation of this new collection of accessories. These buttons gamify Alexa interactions, connecting users to a variety of Alexa-powered playful experiences, such as Trivial Pursuit from Hasbro. In turn, this new type of engagement hints at future opportunities to bring products (like toys) to life by connecting to Alexa, making for more immersive and exciting brand interactions.     

What Is the Impact on Manufacturers?

Ultimately, Amazon is leveraging voice to embed itself in shoppers’ daily routines. Building out various platforms with unique roles in the home — and branching out to other private domains like the car — open up new touchpoints to intersect, add value, and influence shoppers. As such, brands need to ensure that they have an Alexa strategy in place as it becomes shoppers’ go-to smart assistant and continues to change the path to purchase. This will involve:

  • Monitoring the uptake of various voice devices among your core shoppers, and anticipating that adoption will continue to escalate. 
  • Including voice devices in shopper path-to-purchase research, understanding how these devices will increasingly impact shopping for your category. Identifying these voice intersection points can bring your product closer to shoppers’ point of need. 
  • Checking that your brand names are easy for your shoppers to pronounce to ensure that pronunciation is not a barrier to voice search. If it is, work with brand teams to address this issue immediately.
  • Exploring ways to connect brand marketing and content to voice devices, encouraging shoppers to search for the category by your brand name. 

Source: Kantar Retail

Editor's Notes

To learn more about Kantar Retail’s holiday predictions — and Amazon’s approach — join us for our Digital Retailing Webinar on Oct. 5. Our upcoming Amazon Workshop in Seattle will also dive deeper into the topic of voice — hope to see you there.

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