E-commerce Berlin Expo 2018 - Conversational Commerce - die nächste Revolution im Handel

Conversational
Commerce
The next revolution in retail
Achim Himmelreich, Feb 15th

presentation_Achim Himmelreich_Ecommerce Berlin.pptx
About me
• Achim Himmelreich
• Family Man
• Alter: so called Best-ager
• Living in: Cologne
• >20 Years Management Consulting
• Since 2016 Capgemini, Head of Digital
Retail Center of Excellence
• Vicepresident BVDW

presentation_Achim Himmelreich_Ecommerce Berlin.pptx © 2017 Capgemini. All rights reserved.
Agenda
Conversational Commerce Introduction
Market Development
• Smart Speakers in Detail
• Examples of Use
Opportunities for Retailers and Brands
4

Conversational commerce is already changing the future of our
interaction in eCommerce and retail
5
“tens of millions
of Alexa-enabled
devices sold
worldwide”
Amazon,  
Dec 26, 2017 1)
Sources: 1) Amazon.com, Inc., Dec 26, 2017, 2) Business Insider, Oct 6, 2017, 3) Walmart, Oct 4, 2017, 4) Business Insider, Dec 26, 2017, 5) Mastercard, Apr 18, 2017
“Customers are now
able to shop on
Walmart.com using
voice commands via
Google Home and
Google Home Mini
devices.”
Walmart,  
Oct 4, 2017 2) 3)
“31% of US adults will
use voice to make a
payment by 2022, up
from 8% this year,
opening up a new field
for search.”
BI Intelligence,  
Dec 26, 2017 4)
“Masterpass-enabled
bots to drive more
seamless shopping on
Facebook Messenger
with FreshDirect®,
Subway® and The
Cheesecake Factory®.”
Mastercard, April 18, 2017 5)

Voice assistants and chatbots take over the role of sales
associates
6
Attention
▪ Conversational
interaction helps
to attract
attention
Interest
▪ Problem solver:
responding to
explicitly
expressed need
Decision
▪ Advisor:
Understanding
needs and
context
Conversion
▪ Testimony
provider:
Reassuring the
customer about
his/her decision
Action
▪ Integration with
sales/payment
systems eases
the execution of
the sale
A
I
D
C
A
Source: Shimazu, H. (2002). ExpertClerk. Artificial Intelligence Review 18, 223-244.
●●● ●●●
●●●
●●●

Speed and convenience
top the list of reasons for
preferring voice assistants
over human interactions
“I would rather interact with the voice
assistant, especially while making purchase
orders. It would just make it more accurate,
because with humans, they could write it
down wrong or get the quantity incorrect or
other factors.”
- US focus group participant
Source: Capgemini Digital Transformation Institute, Conversational Commerce Survey, October–November 2017, N = 1,010 consumers in Germany.
Reason I prefer voice assistant over human interactions in
shops/call centers (top five reasons)
It is faster It provides a better quality customer service
36%
41%43%
46%48%
(based on my recorded history and preferences)

Applications
of conversational
commerce
Beside smart speakers different application of conversational
commerce are emerging and new benefits are created
8
Virtual
assistant
Sales
transaction
processing
Advertising
Service
inquiry
Increased
conversion
rate
Lower
interaction
cost
Emotional
engagement
of customers
Closer
to customer
Smart speaker
Smart home
appliance POS kiosk
Web page
Mobile app
IVR & Call
Center
SMS
IM, Chat
AR, VR

presentation_Achim Himmelreich_Ecommerce Berlin.pptx © 2017 Capgemini. All rights reserved. 9
Commerce is becoming conversational again
Engagement Intensity
Interaction Cost
●●●
●●●
Personal
Assistance
Call
Center
Self
Service
Customer
Service
Chat
Customer
Service
Chatbot
PersonalizedA
ssistance●●● ●●●
EXEMPLARY

Agenda
Market Development
• Examples of Use
10

Source: Amazon, Google, Microsoft, Apple and other company websites and press releases.
2013 2014 2015 2016 2017 2018
Amazon
Echo
launches
Retailers foraying into voice
ordering—Walmart, Target,
Sephora, Ocado, Costco,
Walgreens, Petsmart and
many others
Amazon and Google
launch new classes of
smart speakers and
extend them to new
geographies
Google
Home
launches
Amazon launches
voice ordering via
Amazon Echo
Google voice recognition
accuracy 2013-17
Human accuracy threshold
Expected
launch of
Apple
HomePod
Advances in voice recognition have fueled growth in voice
assistants and their commercial applications

Amazon’s Alexa assistant* is
currently the leader with a 68%
presence in the smart speaker
category.**
Other
8%
Google
24%
Amazon
68%
Amazon Alexa
Currently dominating in the
smart speaker segment
Other
Baidu, Microsoft, ..
Apple Siri will enter
the smart speaker
market in 2018
Google Assistant
Market share has
increased from 7%
since Q4 2016 launch
1 Source: CNBC
Smart Speaker Virtual Assistant Market Share
**Smart
speaker:
Echo, Home,
HomePod,
Invoke, Sonos
Established voice
software platforms
with existing user
bases across
different hardware
*Virtual
assistant:
Alexa, Siri,
Assistant,
Cortana…
Hardware now
mostly produced
by first parties, but
third parties start
to enter the space

Smart speaker early adoption is expected outperform other devices
13
Source: MIT Auto id Lab Predictions
SoldUnits(Millions)
0
400
800
1200
1600
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Growth and
Adoption of
Smart Speakers
Tablet Mobile
Smart
Speaker
20% 286% 653%
Device CAGR
First 5 Years
FORECAST

Users are shifting towards smart speakers when interacting via
voice
$13 billion smart speaker
industry by 2024 3)
25% of searches are
conducted by talking 3) 5)
94.2 million homes with
smart speakers by 2020 4)
15% decline in use of
Apple’s Siri (-7.3 M users
YOY 2016/2017) 2)
$7 billion in Amazon voice
transactions by 2020 3)
325% increase in use of
Amazon’s Alexa (+ 1.8 M
users YOY 2016/2017) 2)
Sources: 1) Newswire, 2) TechCrunch, 3) Adweek, 4) Voicebot.ai, 5) This figure is expected to reach 50% by 2020
• Apple’s own
smart
speaker not
yet on the
market
• Siri still has
largest user
base
• Amazon has
a first mover
advantage
• Fastest
growing user
base

On October 5, 2017 XMOS launched
a kit designed for developers who are
looking to integrate Alexa into smart
panels, kitchen appliances, and other
commercial and industrial electronics
1)
Amazon is striving to dominate with product expansion,
development kits, marketing, etc.
15
… yet other companies are quickly following
…Source: 1) XMOS

Companies with a strong market share in mobile voice search will
compete in the conversational commerce market
Monthly Unique Users of Virtual Assistants,
May 2017, Millions
2,6
25,6
0,7
23,2
41,4
Siri (iOS)
S Voice (Samsung)
Cortana (MS)
Google Allo + Now Launcher + Home + Text-to-Speech
Amazon Alexa
Source: TechCrunch

Agenda
Market Development
• Examples of Use
17

Amazon Echo Google Home Apple HomePod Invoke (MS Cortana)
Sonos One
(Alexa and Google)
Baidu Raven H Mi AI JD.com DingDong Tmall Genie (Alibaba) Staples (IBM Watson)
Many companies have released or announced
their own smart speaker product
18
“____, add granola bars to shopping list.”
“____, ask ____ to request a ride.”
[wake word] + [command]
[wake word] + [skill word] + [command]

The functionality of digital
assistants is expanded by
voice skills
A voice skill teaches an digital assistant (e.g.
Amazon Alexa or Google Assistant) how to take a
specific action based on a voice command
Quality vs. quality is a factor that needs to be
considered
Most skills currently focus on games, smart
home features, and music rather than commerce
19
Number of voice skills
Q1 2017 Q2 2017 Q3 2017
17000
12000
8000
460300200
Google Amazon
Source: MIT Auto id Lab Predictions

Skills related to commerce allow customers to not only order,  
but interact with the brand and product
20
Alexa, tell Glad Leftovers that
I am adding chicken
soup to the fridge
Alexa, ask Glad Leftovers
what is in the freezer
Alexa, ask REI what
equipment I can rent near
me
Alexa, ask REI what classes
are coming up near Chicago,
Illinois
Alexa, ask Patrón for brunch
cocktails
Alexa, ask Patrón what is dry
shaking
Alexa, ask Oral-B to start
my brushing timer
Alexa, ask Oral-B about teeth
whitening

Alexa is rife with skills, but
there is still uncertainty
surrounding quality
21
33% of skills have
more than a 1-star
rating
5% of skills have a
1-star rating
62% of skills have no
rating
“For every useful skill its assistant gains, it gets
three skills dedicated to telling you egg facts” –
BusinessInsider
?
Therefore, it is important for brands
and partners to develop a strong
product derived from real interest or
consumer need

Google Home is 6x more  
likely to answer your
question than Amazon  
Alexa due to Google’s
superior search abilities 
 
 
 
 
 
 
However Alexa has shown 
considerable strength in
retail search
22
Google outsmarted
Alexa in a 3,000
question quiz
Skill creation is only
open to developers
and not all users,
limiting supply

Staples is capitalizing on a
location other than the home
that can utilize voice: the office
Most offices do not have an
Amazon Prime or a Google
Express account, but they do
have a Staples account
The Easy Button, an iconic
element of the Staples brand,
now features the Easy System,
which is currently free
Outside of major platforms, Staples has partnered with IBM to
release their own platform
23

Agenda
Market Development
• Examples of Use
24

Satisfi + IBM Watson
at Mall of America,
Fashion Island, Macy’s
AI chatbots have been used as
virtual shop assistants
25
Source: IBM, Forbes,

1-800-Flowers.com +
IBM Watson AI ChatBot… and as on-line purchase advisors
26
Source: IBM iX

McDonald’s + Microsoft
Cognitive ServicesConversational commerce interfaces also
enter the point of sales, e.g. drive-throughs
27
Source: itnews

Agenda
Market Development
• Examples of Use
28

The Tide Stain Remover skill will tell
you how to remove stains like blood,
coffee, or spaghetti
The Campbell’s Kitchen skill
will make dinner suggestions
and walk you through
thousands of recipes
The Fitbit skill can tell you how well
you slept last night, how many
calories you have burned, and how
many steps they’ve taken
29
There is an opportunity for brands to,  
quite literally, develop their voice
"In the past, 'brand voice' has
been metaphorical. Now it has
the potential to become real“
“What does Nike sound
like? Tide? Ford? The
decision to develop a
unique brand voice is a big
one”
“People are talking, devices are
listening and brands are
attempting to insert themselves
into the conversation”

“How do you market and brand yourself over audio
channels where you can’t be seen and cannot market
in the same way?”
Branding and consumer preference
may get lost in the new world of voice
30
“…unless the consumer identifies the brand — ‘I want Ritz crackers/
Crest toothpaste/Tide laundry detergent’ — Alexa and Siri will be left
to make that decision by choosing what to show the customers first”
"So you go to Best Buy and you
buy an Alexa, but when you say
‘hey Alexa, buy me more printer
ink,’ she’s buying it from Amazon,
not Best Buy"

There will be a race to get to the front of voice searches
“Ask the Good Housekeeping skill how
to remove a grass stain and it will ask
if you want to add bleach, detergent
and stain remover, without specifying
a particular brand. Will brands one
day be able to buy that
recommendation? Amazon isn’t
saying”
“There’s going to be a battle for shelf
space, and each slot should
theoretically be more expensive. It’s
the same amount of interest
funneling into a smaller landscape”
“For a lot of these searches, there’s
just an answer,” he said. “And if
you’re not the answer, you’re
screwed, right?”
Consumers tend to only consider the first few
options of a web search. They are unlikely to
listen to Google or Alexa vocalizing a list of
choices
Source: Search Engine Watch

Voice interfaces still have work to do to remove constraints 
and humanize interactions
“The biggest thing for me about voice
assistants is to be able to do what I
want to do hands-off, like if I am
cooking. In such situations I don’t
want to touch the phone or the tablet
and would just like to use the voice
assistant for convenience.” - US focus
group participant

Convenience and security top the list of reasons for
preferring voice assistants over apps or websites
“With two kids and a life
that's going so fast, I think it
would save a lot of time to
automate daily chores. For
example, during driving,
checking maps or finding a
parking space would be much
more practical.” -
French focus group
participant
I would prefer a Voice Assistant over a webs
app because (top five reasons)
My data is more secure
It is more convenient
It provides better deals/offers
It feels more personalized to my needs
They help me automate my routine shopping tasks 37%
39%
41%
47%
48%

Providing  
a voice assistant to
consumers elevates a
brand’s NPS by 16
points for voice
assistant users 
Change in NPS for brands that
provide a voice assistant over
brands that do not
Source: Capgemini Digital Transformation Institute, Conversational Commerce Survey,  
October–November 2017, N = 368 users in Germany.
PS without voice assistants (from users)
Increase of 16 p. p.

Brands must act quickly to develop a presence in the space 
of conversational commerce
Risks of Developing Voice Mitigation Opportunities
Visual and physical branding may be lost
There is an opportunity to develop a ‘voice’ to go alongside a logo
and a brand, which can provide a memorable experience for
consumers
Platforms control the point of sale
Developing a skill in voice commerce can allow customers to interact
with the brand, ask questions, and consequently order products
Platforms control the search and selection
Similar to web searches, brands need to be prepared to optimize
their voice SEO and work with platforms to showcase their products
Risks of NOT Developing Voice Mitigation Opportunity
Missed opportunity of sales
Conversational commerce is a rapidly growing industry that has
the potential to be in the majority of homes worldwide. Brands and
retailers must consider developing voice skills and working with
major platforms in order to remain competitive in today’s market
Perception of company as not innovative
Missed opportunity to connect with
customers

A global leader in consulting, technology services and digital transformation,
Capgemini is at the forefront of innovation to address the entire breadth of clients’
opportunities in the evolving world of cloud, digital and platforms. Building on its
strong 50-year heritage and deep industry-specific expertise, Capgemini enables
organizations to realize their business ambitions through an array of services from
strategy to operations. Capgemini is driven by the conviction that the business value
of technology comes from and through people. It is a multicultural company of
200,000 team members in over 40 countries. The Group reported 2016 global
revenues of EUR 12.5 billion.
About Capgemini
Learn more about us at
www.capgemini.com
This message contains information that may be privileged or confidential and is
the property of the Capgemini Group.
Copyright © 2017 Capgemini. All rights reserved.
People matter, results count.

E-commerce Berlin Expo 2018 - Conversational Commerce - die nächste Revolution im Handel

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