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Shopping by voice command
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Shopping by voice command

How Alexa and similar devices are changing e-commerce

6/18/2019 Editor Dr. Nicolai Johannsen (guest commentator) Reading time: 5 Minutes
11 million Germans own a smart speaker such as Amazon Echo or Google Home. However, just two percent of these 11 million use the device to make purchases from their home. Dr Nicolai Johannsen, Director of Sales at OTTO, is nevertheless convinced that these new voice assistants will have a revolutionary influence on online shopping. We spoke to him in order to take a closer look at this new trend. Below we will explain precisely what Conversational Commerce can do and how it influences the customer journey.

“Okay Google ... What is Conversational Commerce?”

Conversational Commerce (CC), sometimes called Voice Commerce, is the name given by business experts to a new branch of e-commerce. This term relates to the concept of shopping online via voice command, which is managed by a digital assistant.

This new type of shopping can be carried out through various conversational channels, for example through so-called smart speakers (e.g. Amazon Echo or Google Home), instant messaging (e.g. WhatsApp) or chatbots. In each conversational channel, the user is supported by either a text-based or a speaking artificial intelligence (AI). The aims of Voice Commerce are usually to make shopping online as easy as possible for the customer, to make a note of products to be bought later or to answer simple questions swiftly. The interaction always takes place online, which means each smart speaker, for example, is constantly connected to the internet.

Voice Commerce is the new smartphone

Every new technology grows from small beginnings – when the first smartphone was presented to the public in 2008, it was still in the early stages of development. More functions were only added following concentrated further development. Today, smartphones are all-rounders and function as control centres for the digital aspects of our everyday lives.

Dr. Nicolai Johannsen New technologies are developing exponentially – anyone who underestimates and ridicules them today will be overrun by them tomorrow!

Dr. Nicolai Johannsen, OTTO’s Director of Sales

CC technologies are similar in many ways. Bots, which use machine learning, understand little to begin with and only have very rudimentary functions. Yet very soon better and more complex versions will replace the old, rule-based bots, unlocking many new functions that we cannot even imagine today.

Looking to the future of Conversational Commerce with OTTO

OTTO was one of the first companies in Germany to take a step in the direction of Conversational Commerce through various channels. Since 2013, the group has been fine-tuning Clara, a rule-based chatbot which holds around 12,000 answers that it can provide to questions put forward by our customers at any time. OTTO recognised at an early stage that a good chatbot can be used to relieve the strain on customer services and for good customer communication. The most important thing is that the bot should support our employees, and not replace them.

Dr. Nicolai Johannsen A good chatbot supports people by resolving simple issues. This lightens an employee’s workload, enabling them to deal with more complicated customer concerns.

Dr. Nicolai Johannsen, OTTO’s Director of Sales

Clara can answer simple questions autonomously and filters out complex inquiries in order to pass them on to real service employees. She thereby provides the perfect support for the team.

OTTO also recently became reachable via direct messaging. Customers can use WhatsApp, for example, to ask questions about their customer account or the delivery status of a package. This is extremely beneficial for customers because they can resolve their queries in real time, at any time and in any place. Users of this channel accordingly provide very positive feedback. OTTO processes around 40,000 customer inquiries per month with around four messages per contact.

In December last year, OTTO also began working with Google Assistant Smart Speakers. Customers can use them to retrieve the deal of the day and make purchases or check up on the delivery status of their shipment. OTTO is therefore one of the first commerce cases for Google Assistant.

OTTO is already working to develop and improve the capabilities and commands for its autonomous helper. Further applications are envisaged for the future.

What influence does Voice Commerce have on the customer journey?

Our digital assistants already enable us to order things exactly when they are needed or in demand. A small change with a big impact.

Dr. Nicolai Johannsen We don’t believe that smart speakers will disrupt e-commerce – it is more likely that they will be another step in the customer journey.

Dr. Nicolai Johannsen, OTTO’s Director of Sales

In the future you will no longer need to make a note of products that interest you until you have more time to research them. Instead, you will be able to request all the information you need by voice command, select an offering and go for it. Should you wish to gather more information by yourself, that’s no problem either: the assistant will simply add the item with the necessary details to a watch list. This saves you time, and reduces the risk for the company of you forgetting their product.

Here at OTTO we like to cite the example of tea towels. You notice when drying some plates that you need a new tea towel. Your hands are very wet which means you can’t use your smartphone. So you simply say, “Ok, Google, I need new tea towels”. A new tea towel is not ordered immediately, but in the background the assistant searches for a personalised selection of the top 3 tea towels and adds them to a memo. The next time you look at a device with a screen, you will be reminded about your watch list and can go through the checkout with a screen device. The customer journey is therefore considerably shorter.

Dr. Nicolai Johannsen You could even call it “Step 0” in the customer journey. I can very easily fill out my shopping list whenever a thought occurs to me, and not just when I’m in shopping mode.

Dr. Nicolai Johannsen, OTTO’s Director of Sales

Digital assistants moreover automate certain parts of the purchasing process. Google Home and similar devices do this by not only ordering on command, but also making a note of preferences and then autonomously ordering low-interest products based on the user’s archived purchase history.

Since listings, offers and suggestions can be influenced by the provider, companies are gaining direct access to and influence over the customer journey for the first time, and especially to its early stages. This particularly gives smaller companies exciting new opportunities to compete with larger ones.

The customer is still king

A few things are going to change for customers in the future as far as interacting with companies and products is concerned. The transition will be characterised by communication.

More communication comes about as a result of companies entering the customer’s private sphere. Providers can thus not only create more personalised offerings, but also establish a better relationship with their customer through dialogue.

The flow of communication particularly benefits from the variety of devices that open up new channels of conversation and which are flexible yet easy to use. If desired, this means customers can communicate with providers at any time and share their feedback, opinions and expectations. In this way, the company gets to know the customer and their behaviour, and can accordingly develop better products and services that correspond even more closely to the customer’s preferences. The customer, on the other hand, feels that their requirements are being taken seriously. An emotional bond is formed.

Ultimately the customer also benefits from the automation of everyday life. Products can already be ordered directly, information requested and shopping lists managed autonomously. With numerous new functions, the on-demand sector will continue to develop steadily going forward. The opportunities that this technology may open up and the efficiencies it may make are scarcely imaginable.

Dr. Nicolai Johannsen In the long run, Conversational Commerce will change the entire customer journey – our task is to make the most of the opportunities presented by this Voice Commerce vision.

Dr. Nicolai Johannsen, OTTO’s Director of Sales

What challenges does Conversational Commerce currently entail?

The future of digital assistants already looks very promising. At present, however, they are a long way from reaching their full potential. And yet this certainly does not stop American customers from using these devices. It is only in our part of the world that progress is painstakingly slow.

Although 11 million German households own a smart speaker, only two percent of them use these devices to place orders. In 90 percent of cases, the first order they place is also their last. The main reason for this is concerns over data privacy. Customers are alarmed at the use of their data as there is currently a lack of clear systems and transparent communication with regard to data privacy.

A further challenge is presented by the need to make a solid platform available to customers. Should the CC system contain only core functions or a multitude of sophisticated skills? Finding the right balance requires that the needs of the customer be scrutinised at length. Nobody will want to or be able to memorise thousands of voice commands. For many, it is sufficient for the assistant to provide a little help with day-to-day tasks. Not until companies have developed a certain degree of know-how with regard to the behaviour and needs of the user will Voice Commerce have a future.

An important aspect of this will be continuing to improve the ability of virtual assistants to learn. Machine learning has already made it possible to make a wide-ranging platform available to the user. However, depending on the background, accent, situation and other conditions, they will use different voice commands which the assistant may not recognise. With chatbots, for example, a wrongly spelt word can result in an erroneous answer. In order to prevent a frustrating experience for the customer, we must constantly find solutions to improve voice searches and voice recognition.

All of this demands a lot of the company. Processes and web presences must be improved accordingly. This includes new online marketing strategies, product catalogues, descriptions and more. Companies all over the world are still lagging behind in this respect. According to the Uberall Report 2019, currently just four percent of companies are ready for Voice Commerce. The principal problem lies in a lack of improvements to web presences, as well as smaller issues such as missing opening hours. This information was missing on Google and Bing for almost half of all the companies assessed. This is problematic for customers who most likely want to visit the shop with the intention of making a purchase.

There is still much to do in order to make Voice Commerce socially acceptable in the future. Not until companies take the plunge and focus on the technology and its opportunities will owners of smart speakers become accustomed to voice commands and use them accordingly to make purchases.

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