Consumers are increasingly outfitting their homes with the latest tech, but many fail to understand the broader implications of these in-home devices. While the internet of things will usher in a new age of convenience, security, and accessibility, we’re also beginning to see large ecosystems form around tech companies’ connected devices.
From speakers to doorbells, tech giants are selling smart home devices in a land grab that may very well determine the future of retail. Choosing a smart speaker to play music on at your dinner parties may feel like a minor decision, but that speaker will likely become your access point to numerous services and largely determine things like where you can purchase items and how convenient that experience is.
Should consumers think twice before purchasing smart speakers, knowing these devices will dictate their future shopping options? Definitely.
The bigger picture
With Amazon Alexas and Google Homes flying off the shelves, voice ordering is likewise taking off. Forty-seven million adults have access to a voice-activated speaker, contributing to the $2 billion in retail revenue that the voice-ordering industry currently generates. Researchers predict retail sales from voice ordering will reach upwards of $40 billion by 2022, and speakers represent a massive opportunity for retailers to develop a stronghold in a fast-growing market.
One way to do that? Sell smart speakers that only order from retailers in your ecosystem.
Amazon is already aggressive in its promotion of Alexa devices. From featuring them in the front of Whole Foods stores to purchasing Alexa-centric Super Bowl ads and offering two-for-one deals over the holidays, Amazon has strategically positioned its smart speaker in a highly competitive market. The result is that Alexa is now leads the pack, accounting for nearly 70 percent of smart speaker sales in the U.S.
Even more devices
Amazon’s launch of Amazon Key, and the company’s billion-dollar acquisition of Ring, are telling signs of the retail future the behemoth imagines. Wi-Fi-connected video doorbell Ring is yet another connected device in the framework of a truly seamless retail experience. Amazon is popularizing secure, in-home delivery, and a trusted security device at the door will play an essential role in facilitating that. After launching Amazon Key, acquiring Ring, and selling millions of Echos, Amazon already holds the keys to the verbal communication and physical entry points of thousands of households.
Customers will be able to tell Alexa to order their groceries and then head off to work and return home to a stocked fridge — a completely integrated experience.
While that may sound like a utopian tech future, a closer look reveals it’s one that limits consumers’ choices — even the groceries will have come from Amazon-owned Whole Foods.
By creating and acquiring more pieces of the connected retail and home delivery experience, companies are creating walled ecosystems that raise barriers for competitors.
Amazon, powered by Amazon
Amazon’s crowdsourced delivery network — Amazon Flex — is available in 50+ markets across the country. Amazon drivers are the only ones who can deliver in-home via Amazon Key. If you are an Amazon Key owner, all of your deliveries from Amazon will be in-home. That means Amazon drivers will fulfill all of your Amazon orders, not UPS, or FedEx, or any other carrier.
Furthermore, if you are an Amazon Key owner, you cannot opt for in-home deliveries from other retailers, like REI or Macy’s, which are delivered by UPS, FedEx, or other non-Amazon carriers. Consumers opting into the Amazon ecosystem are subtly opting out of the options of other retailers — a decision that some consumers are making deliberately but that others may be unaware of.
This practice of creating barriers for competitors runs deep, and Amazon even went so far as to remove various Google Nest products from its Amazon marketplace after purchasing Ring. It recently followed that up by removing third-party vendors from Amazon Fresh.
By providing a speaker, a retail platform, delivery drivers, and a smart doorbell, Amazon is assembling a vertically integrated ecosystem in which it owns every touchpoint of the consumer experience.
- Voice ordering devices — Amazon Echo smart speaker
- Retail sales — Amazon Marketplace
- Delivery services — Amazon Flex
- Smart lock/home devices — Amazon Key, Ring
But even as Amazon attempts to own the entirety of a customer’s shopping and delivery experience, an alternative ecosystem is emerging that is staked on allowing consumers to more openly choose between retailers and delivery options.
Google Home’s alternative ecosystem
Consumers searching for a similar experience can find one with Google, Apple, and a coalition of retailers and services.
While Amazon is building its own ecosystem, other tech companies are creating alternative consumer options. For example, Google Home customers can make voice purchases from national retailers on Google Express or directly from Walmart or a number of other retailers. The ecosystem looks like this:
- Voice ordering devices — Google Home smart speaker
- Retail sales — Google Express, Walmart, and other retailers
- Delivery services — FedEx, UPS, last-mile delivery services
- Smart lock/home devices — August Lock, Nest, and others
The equally seamless retail experience offered by this conglomerate of tech companies, retailers, and delivery services opens the door to an ecosystem of retailers. While consumers can order Amazon’s products through Amazon’s services, the Google Home ecosystem gives them the ability to choose where they shop and who delivers their items.
And it all starts with speakers …
… or smart locks! As coalitions form around the connected devices in consumers’ homes, shoppers should be conscious of what they’re purchasing — and what it means for the future of their shopping and delivery choices.
The $99 dollar price tag on that smart speaker might end up being a bigger decision than you thought.
Daphne Carmelli is the CEO of Deliv, a new last mile delivery solution to power same day delivery for retailers and businesses.