Day 2 for brands – Voice
Jeff Bezos is famous for his metaphor of “Day 1” which serves as his leadership philosophy and manifesto guiding Amazon. Day 1 is an ideal state for the company which Amazon fights to retain as “Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death.” Bezos addressed this concept in the latest version of his annual letter to shareholders identifying four ways as defence to Day 1. These four ideas include customer obsession, a skeptical view of proxies / process, the eager adoption of external trends, and high-velocity decision making. (Jeff Bezos, Amazon 2017)
Amazon was chosen by Fast Company as the most innovative company in 2017 and is famous for investing in long-term growth. One of the strategies to defend Day 1 Bezos mentions is embracing external trends. Amazon has actively invested and worked for years with AI/ML technologies and some of the use cases for them include the Prime autonomous Prime Air delivery drones, Amazon Go convenience stores and Alexa voice enabled assistants. The undeniable success of Amazon’s personal assistant Alexa with it’s rapid growth of over 15,000 apps suggests that AI/ML serve as an enabling technology to a new user experience paradigm. (Fast Company 2017; CB Insights 2017; Techcrunch 2017)
There is an inherit consumer need for convenience which drives behaviour and all the major technology giants have made efforts to address this new demand. As voice is fundamentally a human way of communication, human-computer interaction is now shifting towards a more universal and natural conversational direction. This might pose a significant threat for traditional brand builders who are used to creating experiences in known physical and digital spaces. Data shows that voice searches made with Amazon Echo or Google Home with a brand as a prefix before a request is declining. Amazon is aiming to create a frictionless and brandless way for customers to do their shopping and by combining different datasets such as purchase history and credit card history with Alexa’s intelligence they are emerging as the one and only retailer for customers. (Scott Galloway, L2 & NYU Stern Business School 2017)
The increasing ease of use will enable customers to do their everyday purchases via voice and smart personal assistants will help to optimise their shopping experience. Amazon is using lower prices, discounts and loyalty program specials such as Prime Day to drive customers to use Alexa and is investing significantly to drive customer adoption. (Techcrunch 2017) When customers move to use Alexa to do their shopping they will be offered different choices which are curated by Amazon offering products that will bring them the highest margins. With current voice devices customers don’t have a screen to see the different brands offered by Amazon so Alexa has significant influence over brands in the point of purchase influencing customers preferences. This shift erodes traditional ways of brand building and gives huge advantage for companies such as Amazon to offer their own private label products and preferred partner brands such as Nike. (Scott Galloway, L2 & NYU Stern Business School 2017; Forbes 2017)
Google reports that nearly 70% of mobile requests made with the Google Assistant were with natural language in 5/2017 compared to 20% of voice requests in 5/2016. (Mary Meeker, KPCB 2017) In the end of 2017 there will be 33 million voice-first devices in circulation and in the near future it will be a winner-take-entire-household market. This puts competitive pressure on the hardware providers to distribute devices quickly and Amazon has already gained a significant edge in the distribution race. Besides gaining the winning position inside households with rapid product distribution, there is competition of which device manufacturer will be able to build the most thriving ecosystem around the device as well as develop the most advanced smart personal assistant. This is leading to the direction where the AI assistants have started to specialise in different skills and areas including search, commerce, gaming, professional tasks and media. (Voice Labs 2017)
AI/ML, personal assistants and voice enabled devices are making a huge impact on different verticals from commerce to finance but they also offer a major innovation opportunity to the public sector. Many countries and states including California could utilise these technologies to better serve their residents and provide smarter solutions to citizens. Some potentially interesting case examples where adding intelligence to the service will totally augment the experience include healthcare, education, transportation, taxation and voting. (McKinsey Global Institute 2017)
The larger implication of voice-enabled devices is that it helps to democratise technology making it more inclusive as consumers from all backgrounds, languages and education levels can access information more easily. The voice revolution is emerging as an equally important change as the introduction of the first iPhone 10 years ago. Voice will become the new touch screen and help consumers adapt into a more natural way of using products and services, be more productive and collaborate with machines. (MIT Media Lab 2017)
Sources:
Jeff Bezos, Amazon Annual Letter to Shareholders 2016 https://www.amazon.com/p/feature/z6o9g6sysxur57t
Fast Company, Most Innovative Companies 2017 https://www.fastcompany.com/company/amazon
CB Insights, Amazon Strategy Teardown 2017 https://www.cbinsights.com/blog/amazon-strategy-teardown/?utm_source=CB+Insights+Newsletter&utm_campaign=232db166fa-Top_Research_Briefs_6_24_2017&utm_medium=email&utm_term=0_9dc0513989-232db166fa-88523997
Techcrunch 2017 https://techcrunch.com/2017/07/03/amazons-alexa-passes-15000-skills-up-from-10000-in-february/?ncid=rss
Scott Galloway, L2 & NYU Stern Business School 2017 https://www.youtube.com/watch?v=3MOwRTTq1bY
Techcrunch 2017 https://techcrunch.com/2017/07/05/amazon-pushes-alexa-ordering-with-10-for-first-time-voice-shoppers-and-prime-discounts/
Mary Meeker, KPCB – Internet Trends 2017 http://www.kpcb.com/internet-trends
Voice Labs 2017 http://voicelabs.co/2017/01/15/the-2017-voice-report/
McKinsey Global Institute – Artificial intelligence the next digital frontier?http://www.mckinsey.com/business-functions/mckinsey-analytics/our-insights/how-artificial-intelligence-can-deliver-real-value-to-companies
Michael Hawley, MIT Media Lab & EG Conference 2017 https://www.facebook.com/membrainllc/videos/1522989721062906/
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