Hey Alexa, What's The Future of (V for) Voice Commerce 🔈️ 🤖

EDITOR’S NOTE

Dear Readers,

It was 2018, and a dear friend had gifted me an Amazon Echo. It was all the rage back then!

I started with the usual—I asked about the weather, played some music, set alarms, and even requested the top five news headlines.

But then, I decided to push the boundaries of my new gadget.

I attempted to order from a new biryani restaurant that had opened near my home in Bangalore. After a couple of rounds of back-and-forth, Alexa finally identified the right dish and portion size and added it to my cart. Then, it asked for my payment details, even mentioning a discount on my Yes Bank credit card.

I was about to enter my details when I realized I'd have to speak them out loud, including my CVV and potentially the OTP. All sorts of doubts crept in.

Was this even safe? What if it didn't ask for my card details next time? What if a visitor placed an order without my knowledge?

After an hour of wrestling with Alexa and Swiggy, my hunger pangs outweighing my early adopter enthusiasm, I decided to stick with the app and order the old-fashioned way. My hunger was making me hangry!

In this edition of our AI Alphabet, we're turning up the volume on "V" – for Voice Commerce.

We'll explore how this technology is transforming the e-commerce landscape, from reordering everyday essentials to managing your finances with just a few spoken words. We'll also dive into the AI that powers it, the challenges it faces, and the potential it holds to transform the future of shopping.

So, clear your throat and get ready to dive into voice commerce. This conversation is sure to leave you excited about the future of shopping!

WHAT IS VOICE COMMERCE?

Voice commerce (or v-commerce) allows consumers to shop online using voice commands.

This technology relies on voice assistants like Amazon's Alexa, Apple's Siri, and Google Assistant to process and fulfill requests.

Customers can interact with a retailer's website or app by speaking instead of typing or tapping. They can search for products, add items to their cart, check order status, and make payments using voice commands. The process usually involves using a smart speaker or a smartphone equipped with voice recognition technology.

For example, a customer could ask their Google Assistant, "Find me the best deal on running shoes." The assistant might then provide recommendations or ask follow-up questions to refine the search, such as inquiring about brand preferences or specific features.

Here are several ways companies are using voice technology to enhance the customer experience:

• Voice Ordering: Customers can order items using voice commands via smart speakers, smartphones, or other voice-enabled devices. This is particularly useful for repeat orders of essentials or medicines.

• Voice Search: Customers can use voice search to quickly find and compare products online. In India, many consumers, particularly Millennials and Gen Z, use voice search on mobile devices. Flipkart introduced voice search functionality on its platform in 2021, enabling customers to search for products using conversational commands.

• Personalized Recommendations: Artificial intelligence (AI) is being used to power voice assistants, allowing them to understand user preferences and search patterns to deliver more relevant search results and product recommendations.

For example, Starbucks' voice ordering system in China, powered by Alibaba's Tmall Genie, will soon be able to provide personalized recommendations based on past orders and popular items.

• Voice-Assisted Booking: MakeMyTrip, in collaboration with Microsoft, has introduced voice-assisted booking in Indian languages. This feature, powered by Microsoft Azure OpenAI Service and Azure Cognitive Services, allows users to converse with the platform to receive personalized travel recommendations, curate holiday packages, and even book them.

• Virtual Assistance and Customer Service: Voice assistants can provide virtual assistance and customer service. For example, Johnnie Walker uses a voice search feature to offer virtual assistance, giving users insights into their signature whiskey and guiding them to a personalized product recommendation.

• Voice-Activated Marketing Promotions: The National Retail Federation highlighted voice technology as a powerful channel for marketing promotions. With the growing use of voice-activated virtual assistants and smart speakers, brands can target customers based on their preferences, voice commands, and location.

Coca-Cola's "I See Coke" campaign in Saudi Arabia cleverly leveraged voice commerce by allowing viewers to say "I see Coke" to their Alexa device when they spotted the beverage in a movie or TV show, instantly receiving a discount voucher for their next Coke purchase.

People who spot Coca-Cola on screen during a movie simply have to say “Alexa, I see Coke” to receive one of the limited numbers of discount codes via email. 

True to its reputation, Alexa offers a witty respons e to validate the product placement. 

For example, people seeing a Coca-Cola in Home Alone and triggering the skill will get responses such as, “Ok, Kevin! Here’s a Coke to keep you company while your parents come back. 

The code is immediately redeemable for a refreshing Coke through e-retailer, Nana, in the Kingdom of Saudi Arabia.

• Improving Accessibility: Voice commerce is making online shopping more accessible to individuals with disabilities or limitations that prevent them from using traditional interfaces.

KEY TECHNOLOGIES OF VOICE COMMERCE

Voice commerce relies on the interplay between natural language processing (NLP) and speech recognition. It's about enabling machines to understand and respond to human speech.

When you interact with a voice assistant, it captures your spoken words, transforms them into digital information, and then deciphers their meaning using advanced algorithms.

Let’s take a look under the hood:

• Voice Recognition: This technology acts as the "ears" of the system, accurately converting spoken words into text that the AI can understand.

• Natural Language Understanding (NLU): NLU is the "brain" behind voice commerce, interpreting the meaning and intent of user requests, even if they're expressed in a conversational manner.

• Artificial Intelligence (AI) & Machine Learning (ML): AI and ML algorithms personalize the shopping experience, offering tailored recommendations, optimizing search results, and learning from user interactions to improve over time.

• Text-to-Speech (TTS) & Speech Synthesis: These technologies give the voice assistant a "voice," enabling it to communicate with users naturally and engagingly.

• Integration with AI Assistants: Voice commerce leverages popular AI assistants like Alexa and Siri, providing a familiar and user-friendly interface for voice shopping.

• Large Language Models (LLMs): LLMs like ChatGPT and Bard enhance voice assistants by improving their understanding of complex dialogue, predicting conversation flow, and ensuring order accuracy.

• Ecosystem Integrations: Voice commerce platforms seamlessly connect with various services, such as payment gateways and delivery providers, to fulfill orders and provide a complete shopping experience.

A BRIEF HISTORY OF VOICE COMMERCE

The history of voice commerce spans several decades, evolving from early voice recognition technology to today's sophisticated AI-powered virtual assistants.

Here's a timeline of key developments:

Early Beginnings

In 1961, IBM engineer William C. Dersch created Shoebox, the first-ever voice recognition system. It could recognize 16 spoken words and 9 digits and was primarily used for calculating math problems.

Pre-Modern Era

The 1980s and 1990s saw improvements in speech recognition technology:

• Dragon Systems released speech recognition software for personal computers.

• In the late 1990s, Microsoft introduced Clippy, a text-based virtual assistant that, while unpopular, demonstrated the potential of natural language interaction.

Modern Era

The modern era of voice assistants began in the 2010s:

• 2011: Apple launched Siri on the iPhone 4S, bringing voice-activated virtual assistance to a wide audience.

• 2014: Amazon introduced Alexa with the Echo smart speaker, transforming voice commands for various applications, including shopping.

• 2016: Google Assistant was launched and integrated into various Google products.

Voice commerce has seen significant growth in recent years:

• 2021: Global voice commerce transactions reached $4.6 billion.

• 2023: Voice commerce transactions grew to nearly $20 billion globally.

• 2024: There are 8.4 billion active voice assistant devices worldwide.

While the exact date of the first voice commerce order isn't provided, it's clear that voice commerce began gaining traction in the mid-2010s, with significant growth occurring in recent years. 

The earliest specific example mentioned is Domino's Dom in 2014, but it's possible that other voice commerce implementations existed before this date.

In 2014, Domino's Pizza launched its voice assistant feature called Dom in the US, aimed at streamlining pizza orders over the phone. This was one of the early implementations of voice ordering in the food industry.

ROLE OF GENERATIVE AI IN VOICE COMMERCE

Integrating generative AI, particularly large language models (LLMs) like ChatGPT and Google Bard, significantly impacts the voice commerce market.

Generative AI is transforming the voice commerce market by:

• Making voice assistants more intelligent and capable of handling complex tasks.

• Expanding the range of voice commerce applications beyond simple ordering.

• Addressing key challenges that have hindered adoption.

Here’s a detailed breakdown:

Enhancing Voice Assistant Capabilities

More Natural and Human-Like Interactions:

Generative AI enables voice assistants to understand and respond to customer requests in a more natural and conversational manner, leading to a more intuitive and enjoyable user experience.

For example, instead of simply listing items in an order like “I have one burrito no guacamole, one burrito no tomatoes,” an AI-powered voice assistant can now rephrase requests in a more human-like way, such as confirming, "That's two burritos, one with no guacamole and one with no tomatoes.”

Improved Accuracy and Reduced Errors:

LLMs are being trained on massive datasets to better understand complex natural dialogue, which helps minimize errors and misunderstandings during voice ordering. By predicting the flow of conversation and anticipating customer needs, these AI-powered assistants can ensure greater order accuracy, ultimately leading to more successful transactions.

Personalization and Recommendations:

AI is key to delivering personalized shopping experiences in voice commerce. It analyzes user preferences, browsing history, and past interactions to provide tailored recommendations, suggesting relevant products, promotions, and content.

Expanding Voice Commerce Applications

Beyond Basic Ordering:

Generative AI is pushing the boundaries of voice commerce applications. It's no longer just about placing orders; it's becoming a more comprehensive tool for engaging with brands and managing the entire shopping journey. For instance, AI can be used to:

• Summarize product reviews, extracting unique traveler impressions.

• Provide personalized travel recommendations based on user preferences, budget, and desired activities.

• Help curate and book holiday packages based on various inputs like occasion, budget, and travel time.

Automating Customer Service:

AI-powered voice assistants can handle a wide range of customer service tasks, reducing the need for human intervention. This can lead to business cost savings and potentially faster customer resolution times. For example, they can take phone orders, update orders, and answer frequently asked questions.

Voice Ordering in New Environments:

The restaurant industry is witnessing a surge in voice automation, particularly in drive-thrus and for phone orders. Generative AI is making these systems more efficient and capable of handling complex orders. For example, some restaurants use AI to personalize recommendations based on time of day, weather, and personal order history.

Addressing Challenges and Driving Growth

Overcoming Accuracy Issues:

Previous voice assistants faced criticism for struggling with accents and dialects, resulting in inaccurate orders. Generative AI, trained on diverse datasets, is better equipped to handle these variations, improving order accuracy and customer satisfaction.

Tackling Security and Privacy Concerns:

While security and privacy are major concerns for voice commerce adoption, AI is being used to enhance security measures. For example, voice biometrics and AI-driven fraud detection systems can help safeguard user data and financial information.

Meeting the Demand for Personalization:

Consumers increasingly expect personalized experiences, and AI is crucial for meeting this demand in voice commerce. By leveraging AI to understand user preferences and behaviors, retailers can deliver more targeted recommendations and promotions.

While voice commerce still represents a small portion of overall e-commerce volume, its growth trajectory is significant. With generative AI driving innovation and overcoming barriers, the future of voice commerce appears bright.

APPLICATIONS OF VOICE COMMERCE

Voice commerce has found noteworthy applications in various sectors, reshaping the shopping experience.

Some of the key areas include:

Ordering food for delivery or take out:

People use voice assistants to order food from restaurants.

For example, Uber Eats showcases Google Assistant Voice Orders and Robot Delivery Services. Voice AI is becoming mainstream in restaurant operations, with brands such as Domino’s, Panera Bread, and Checkers all implementing it in some capacity.

Restaurants using voice AI to enhance drive-thru efficiency:

• McDonald's: McDonald's has experimented with voice AI for drive-thru order taking since 2019, first through the acquisition of Apprente and a partnership with IBM and, more recently, with a Google Cloud partnership to leverage generative AI for improved accuracy and natural language processing.

• Panera Bread: Panera Bread has added OpenCity's voice AI to its drive-thru lanes.

• Checkers: This restaurant chain has partnered with Valyant AI and Presto to incorporate voice AI at its franchise and corporate-owned drive-thru locations.

• White Castle: SoundHound has expanded its voice AI deployment at White Castle's drive-thru locations.

• Wendy's: Wendy's is running a pilot program to take drive-thru orders using a generative AI-powered voice assistant from Google Cloud.

• Hardee's and Carl's Jr.: Both chains are working with OpenCity, Presto Automation, and Valyant AI to bring voice assistants to their drive-thrus.

• Presto Automation: Presto has integrated ChatGPT into its drive-thru voice assistant, leveraging the large language model to create more natural customer conversations.

Presto Automation claims its AI can boost revenue by an average of $330,000 annually while saving $35,000 in labor costs.

Ordering groceries and personal care products:

The most common voice shopping category is groceries.

Some grocery stores even have voice assistants that enable shoppers to browse an online catalog, get product ratings, make a shopping list, check product availability and pricing, place orders, and find the nearest store locations.

• 7-Eleven has a voice ordering option for its 7Now delivery service.

• Walmart introduced a feature that allows customers to order groceries using Siri in 2019.

• Flipkart launched a voice assistant in 2020 that enabled customers to order groceries using voice commands in Hindi and English.

• Amazon allows users to add items to their shopping lists using Alexa and place orders through the Alexa app.

Amazon India entered the voice commerce market by launching a voice shopping experience in Hindi in 2021. 

The company subsequently added support for other regional languages, including Marathi, Bengali, Kannada, Malayalam, Tamil, and Telugu. 

This expansion highlights a strategy to cater to India's diverse linguistic landscape and make online shopping accessible to a broader audience.

• Sephora: Sephora offers a voice commerce app that asks shoppers about their skin tone before suggesting makeup. The company has also partnered with Google Home in France to allow customers to schedule beauty appointments using voice commands.

• Nars Cosmetics: Nars has run a voice-activated sampling campaign on Spotify to reach consumers who use smart speakers to stream audio content at home.

Snapdeal, an e-commerce marketplace, partnered with Bhashini, a (India) government-led initiative, to develop solutions that enhance language translation capabilities. 

This partnership focuses on promoting digital inclusion by enabling voice commerce in various Indian languages, aiming to remove language barriers and make online shopping more accessible to a wider population.

Making restaurant reservations:

11% of consumers use voice technology to make restaurant reservations.

• American Express CEO Steve Squeri noted that the company's Resy platform is seeing record reservation numbers.

• Additionally, Booking Holdings, the parent company of OpenTable, is exploring AI-powered efficiencies for its reservation platform.

Booking travel:

MakeMyTrip partnered with Microsoft to launch a voice-assisted booking platform in 2023. Users can get travel recommendations, make travel plans, and book travel through voice commands in Hindi and English.

Making bill payments:

Niki.ai is a company that offers a Hindi-speaking chatbot to facilitate conversational transactions.

By talking to the Niki bot, users can make bill payments, book tickets, recharge mobile phones, and access various services.

The company plans to expand support for more Indian languages, aiming to make online transactions accessible to users uncomfortable with English or traditional app interfaces.

Repurchasing products:

Voice commerce is particularly useful for buying basic, replenishable commodities that a customer doesn’t need to see to purchase.

Amazon’s line of AmazonBasics products is especially suited to this.

15% of consumers reorder frequently bought items via voice.

In addition, 61% said they would use voice to purchase recurring, “lightweight” household items. If given the option, consumers would be most comfortable buying recurring household items and services via voice, such as groceries, cleaning supplies, entertainment, clothing, and home-delivery meals.

Finding local businesses:

58% of people have used voice search to find information about a local business.

These applications showcase the versatility of voice commerce, making everyday tasks more convenient and accessible. As technology evolves, we can expect even more innovative uses of voice commerce to emerge, transforming how we interact with businesses and services.

THE GOOD, BAD, AND THE UGLY

Challenges

While voice commerce offers exciting possibilities, it also faces challenges that need to be addressed for wider adoption and a smooth user experience.

Accuracy Issues with Accents and Dialects:

Voice AI systems can struggle to understand accents and dialects accurately.

For example, McDonald's faced challenges with its AI voice assistant, which had difficulty understanding certain accents and dialects, leading to inaccurate orders. This issue prompted McDonald's to abandon its initial AI-based drive-thru order-taking system.

Security and Privacy Concerns:

Many consumers hesitate to use voice assistants for shopping because of concerns about the security and privacy of their data.

One study found that 31% of U.S. voice shoppers were concerned about privacy in general, and 27% were specifically worried about the security of their financial information when using voice shopping.

Apple even canceled its plans for a Siri voice commerce feature over privacy concerns.

Limited Network Integration:

The lack of widespread adoption of voice commerce by financial institutions creates a bottleneck.

For example, while mobile payment platforms like Venmo and PayPal support voice commands, traditional banks have been slow to integrate voice commerce, limiting customer options.

A customer attempts to pay for their groceries using a voice assistant linked to their bank account, but the bank's system does not support voice-based payments, forcing the customer to use a different payment method.

Technology Limitations:

Current voice recognition and language comprehension technology is imperfect and can lead to frustrating user experiences.

For instance, voice recognition software might misinterpret a command or have difficulty understanding complex requests.

Inability to understand open-ended commands [broad search terms]: 

A customer asks a voice assistant to "find a gift for my partner who loves gardening." The system might struggle to interpret the open-ended request and provide relevant and personalized recommendations.

Upfront Costs:

Implementing voice commerce can require significant upfront investment in technology, infrastructure, and development, which can be a barrier for smaller businesses.

Considerations

Additionally, there are important considerations to ensure this technology is inclusive and benefits everyone.

Conversational Keywords:

When optimizing for voice search, it's important to use natural, conversational language and long-tail keywords.

For example, instead of simply targeting the keyword "desk lamp," a business should optimize for phrases like "Hey Siri, what's the best desk lamp available at ABC Store?"

Product Content Optimization:

Clear, concise, and well-structured product descriptions are crucial for voice commerce because voice assistants need to convey information quickly and accurately to customers.

Focus on Repeat Orders:

Voice commerce is particularly well-suited for repeat purchases, such as consumables or regularly needed household items. Businesses can incentivize these orders through discounts, subscriptions, or loyalty programs.

User Experience Design:

When designing voice interfaces, it's important to prioritize clear voice cues, intuitive navigation, and concise language.

For example, an effective voice ordering system should provide clear prompts, confirm orders verbally, and allow for easy modifications or cancellations using straightforward voice commands.

Personalization and Recommendations:

Voice assistants can utilize user data and purchase history to offer personalized product recommendations and tailor the shopping experience, leading to greater engagement and sales.

For example, in 2020, more than half of smart speaker users preferred finding information about products through a voice assistant.

Accessibility and Inclusivity:

Voice commerce can enhance accessibility for users with disabilities. To make the experience as inclusive as possible, businesses should prioritize alternative interaction modes such as text-based input or adjustable speech rates.

Data Privacy and Compliance:

Businesses must ensure their voice commerce platforms comply with data privacy regulations and handle user data responsibly. They should obtain explicit consent from users before processing their personal information and be transparent about their data practices.

An example of this is providing clear disclosures about data practices through various channels, including voice.

Multilingual Support:

To appeal to a wider user base, businesses must invest in multilingual voice recognition and natural language processing capabilities to ensure accuracy and consistency across different languages.

By considering these challenges and considerations, businesses can work toward creating a more seamless and engaging voice commerce experience for customers.

THE FUTURE OF VOICE COMMERCE

According to Research and Markets, the global voice commerce market is projected to reach $51 billion in transaction value by 2028, up from $21 billion in 2023.

This growth is fueled by increasing smart speaker adoption (particularly in markets like India, where regional language support is expanding access for a wider population), rising consumer interest in voice shopping, and ongoing AI and voice recognition technology advancements.

Consumers are increasingly comfortable using voice assistants for daily tasks, from setting alarms to playing music, making the transition to voice shopping more natural. This familiarity is translating into growing interest and willingness to use voice for purchases, particularly among younger demographics like Gen Z.

According to the 2024 PYMNTS Intelligence Report, younger generations, particularly Generation Z and Millennials, are the most likely to use voice search to find product information.

Future Integrations and Innovations:

Expanding Beyond Smart Speakers:

Voice commerce is moving beyond smart speakers to integrate with other platforms, including smartphones, cars, and TVs. This multi-channel approach aims to make voice shopping more accessible and integrated into everyday life.

According to Think With Google, 52.8% of the people use voice assistants while driving for tasks like navigation, calls, and texting and about 31% specifically seek voice control when shopping for vehicles [according to a survey done by Adobe Digital Insights]. 

Future in-car voice commerce could streamline tasks like paying for fuel, reserving parking, ordering at drive-thrus, and purchasing entertainment content, enhancing convenience and safety for drivers.

Multimodal Approach: The Power of Voice & Screen

A significant problem with voice-only commerce is that customers can't easily compare products, view images, or confirm details before purchasing. This can lead to errors and frustration, especially for complex or unfamiliar products.

While voice commands are convenient for simple purchases, more complex shopping decisions often require visual input. 

For example, if you ask your voice assistant to buy a "mini black leather skirt from Zara," you'll likely want to see images of the different styles and sizes available before making a selection.

Combining voice with a screen solves this problem by allowing customers to browse visually while using voice for navigation and input. This multi-modal approach allows shoppers to enjoy the convenience of voice while having the visual reassurance of a screen, resulting in a more comprehensive and confident shopping experience.

Custom Voices:

Businesses are using custom voices to create a more personalized and engaging experience for voice commerce.

For example, Alicia Keys partnered with Amazon to create a custom voice experience for her beauty brand, Keys Soulcare, on Echo devices. This allows users to hear Keys' voice offering beauty tips and product information and shop the brand through voice commands.

Another example is Presto, a restaurant voice AI developer, which introduced a Custom Santa voice for drive-thru voice assistants. This seasonal offering aims to enhance the customer experience and attract more return visitors during the holidays.

Focus on Enhanced Customer Experiences:

The development of voice commerce is increasingly focused on creating a more engaging and intuitive customer experience. This includes leveraging AI for personalized recommendations, offering voice-activated promotions, and providing real-time order tracking and customer support.

Voice commerce is expanding beyond smart speakers and voice assistants.  By integrating with other smart home devices like refrigerators, it enables users to effortlessly reorder household essentials using simple voice commands. This seamless integration further enhances the convenience and potential of voice-activated shopping.

Generative AI for More Natural Interactions:

Integrating generative AI, such as ChatGPT and Google Bard, into voice assistants is expected to enhance the conversational nature of voice commerce further, enabling more natural and human-like interactions. This could lead to improved order accuracy and a more seamless shopping experience.

Imagine ordering groceries from your local neighborhood store in a small town in India, just by using your voice. This is the potential of voice commerce to bridge the digital divide and empower the next billion users. By integrating with local businesses and making technology affordable and accessible, voice commerce can unlock new opportunities and drive economic growth in underserved communities. 

LAST THOUGHTS

A nagging voice in my head still stops me from completing the payment for my Swiggy Order on Alexa.

Voice Commerce, with all its glory, has a long way to go before becoming a common practice in every household. But we can not ignore the impact it’s set to make in people’s lives and how we shop.

Businesses might have to rethink their content and product listing strategies to stay relevant and optimized for the next command: “Hey Alexa, I want to buy a 500 ml sulfate-free shampoo from [insert any company’s name].“

As you part with us today with a plethora of information and insights on voice commerce, I want to leave you with these questions as food for thought:

• As voice assistants become more integrated into our lives, will companies exploit our voice data to manipulate our shopping habits and influence our purchasing decisions?

• In a world where our homes are filled with "listening" devices, will we have to sacrifice privacy for the convenience of voice commerce? Who will control our voice data, and how will it be used?

• Will voice commerce create a new digital divide, excluding those with speech impairments or language barriers from participating in the digital economy? How can we ensure inclusivity and accessibility in the age of voice technology?

That’s all, folks! 🫡 
See you next Saturday with the letter W.