US Insights

Amazon Readies for a Holiday Battle for Your Home

Meaghan Werle

Analyst

Retail 09.26.2018 / 08:00

NewDevicesSept18

Amazon announced its biggest and most diversified device launch yet.

An early mover in voice, Amazon leads the voice-controlled device market, with 15% of primary household shoppers now owning an Echo. To assert its dominance in advance of the holiday season, last week Amazon introduced several new Echo and Echo-compatible devices, including the all-new Echo Dot, the all-new Echo Plus, the all-new Echo Show, Echo Auto, Echo Wall Clock, Echo Input, Echo Sub, Echo Link, Echo Link Amp, AmazonBasics Microwave, and Amazon Smart Plug. This move is Amazon’s biggest and most diversified device launch yet, reinforcing the retailer’s role in managing the smart home.

Amazon Goog Device Ownership Sept 18

In Amazon’s latest wave of device innovation, mainstay Echo products, such as Dot, Plus, and Show, received hardware and software upgrades, in addition to new companion devices that enhance native Echo features like timers, alarms, and speakers. However, Amazon has branched out from its core offering of in-home smart speaker systems with differentiated devices like Echo Auto, AmazonBasics Microwave, and Amazon Smart Plug. To complement its expanded tech lineup, Amazon also improved Alexa’s conversational skills, with new capabilities designed for entertainment, convenience, and security. As the retailer continues to broaden its portfolio of voice-controlled devices to serve various needs, competitors like Google Home will need to keep up with Amazon’s pace of invention or risk losing share after the 2018 holiday season. Ultimately, these enhancements to Amazon’s tech portfolio shift the retailer beyond the voice space into the Internet of Things.

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Given the magnitude of Amazon’s announcement, here are two points to consider in assessing these devices’ impact on retail:

Increasing shopper reliance on Amazon

The diversity of Amazon’s new device portfolio is reflective of Jeff Bezos’ ambitions for the technology. “We want customers to be able to use Alexa wherever they are,” he said when announcing Amazon’s Q2 earnings in July. It is clear that Amazon’s strategic priority for voice has shifted: While initially focused on driving voice shopping, Amazon is now pushing shopper dependence on these devices. This mentality was evident on Prime Day 2018 when Amazon highlighted new use cases for voice, including cooking, parenting, fashion, and back to school, rather than offering Alexa-exclusive deals. Now with extended reach into shoppers’ car, Amazon is creating an always-on, interconnected experience, likely with the hope that shopping through these platforms will come naturally over time.

Providing a deeper understanding of shopper behavior

By expanding the number of interactions it has with shoppers through Alexa, Amazon can gather data on shoppers’ habits beyond the transaction. Devices like Echo Auto and AmazonBasics Microwave have a low barrier of entry for shoppers, but provide Amazon with a more holistic view of users’ routines. For example, Amazon can leverage insight gathered from microwave use to inform private label investment and meal-kit development. With Echo Auto, Amazon could potentially connect location-based Alexa features with Whole Foods’ Prime Now pickup service. That would allow employees to detect when a shopper’s car is approaching the store to reduce click-and-collect wait times. In turn, embedding Alexa into its shoppers’ everyday lives allows Amazon to elevate predictive personalization and optimize the retail experience across online and offline touchpoints.

Key Implications for Suppliers

  • If you haven’t already, begin formulating a strategy for voice, recognizing that these devices will soon be widespread.
  • Acknowledge that these devices open new opportunities to bring products closer to shoppers’ point of need. To drive shopper adoption of voice shopping in the long term, first position Echo devices as a basket-building tool and create incentives for this behavior.
  • Explore the intersection of voice and the screen to reduce purchase uncertainty and aid conversion.
  • Watch for continued appliance innovation and potential new partnerships from Amazon as it seeks to outfit the smart home. Prepare for tie-ins with Dash Replenishment, since it is already a feature of the AmazonBasics Microwave, which can automatically reorder popcorn.

Source: Kantar Consulting

Editor's Notes

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