1
Flash Insight: Conversational Commerce –How Digital
Assistants Fundamentally Influence Commerce
August 2016
2
The Journey of Voice to Digital Assistants
Over the last years, leading tech companies introduced voice assistants. They...
3
The Development of Conversational Commerce
These technological developments in combination with retail offerings enable
...
4
Salmon with
vegetables and
banana ice cream.
Please order any
missing ingredients.
Conversational Commerce – Future Use ...
5
Conversational Driven Ecosystems
Leading tech giants use a digital assistant to create conversational driven
ecosystems....
6
Conversational Driven Ecosystems – Amazon Echo Example
Amazon was the first to occupy the customer touchpoint at home wi...
7
Impact on Companies
Especially companies in retail have to take action as they face the risk of digital
assistants threa...
8
Michael Mücke
Managing Partner at Mücke, Sturm & Company
More about Mücke, Sturm & Company:
www.muecke-sturm.de
Mücke, S...
9
Copyright and Sources
This document is intended for personal use only.
Distribution is only permitted without any change...
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Flash Insight: Conversational Commerce - How Digital Assistants Fundamentally Influence Commerce

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Based on contextual information, digital assistants are able to influence and manage customers’ purchase decisions. Leading tech giants use a digital assistant to create conversational driven ecosystems. Each of them supports their own core business.

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Flash Insight: Conversational Commerce - How Digital Assistants Fundamentally Influence Commerce

  1. 1. 1 Flash Insight: Conversational Commerce –How Digital Assistants Fundamentally Influence Commerce August 2016
  2. 2. 2 The Journey of Voice to Digital Assistants Over the last years, leading tech companies introduced voice assistants. They have gradually turned them into digital assistants. Flash Insight Conversational Commerce at Home | August 2016 Voice assistants start developing into digital assistants  Natural interaction through voice gets increasingly important in convenient access to information  Technological progress, as in artificial intelligence, machine learning, and natural language processing, enables an evolution of voice assistants. They develop into increasingly intelligent, self-learning assistants which are present at any device – at home and anywhere else  Those digital assistants learn about the user’s life, habits, and preferences through data analysis and machine learning in order to get personalized to the user. This allows a new customer experience that helps turn them into an essential part of daily life management 20132012 2014 2015 Siri (Apple) S Voice (Samsung) Google Now (Google) Cortana (Microsoft) Alexa (Amazon) Hound (SoundHound) 2016 Assistant (Blackberry) Software1 Assistant2 (Google) VIV2 (VIV) 1 Selected ones with high (expected) reach 2 Expected late 2016 Voice Mate (LG) 2007 2011 Vlingo (Vlingo, acq. by Nuance)
  3. 3. 3 The Development of Conversational Commerce These technological developments in combination with retail offerings enable conversational commerce – conducted through digital assistants. Omni-Channel Customer buys through growing number of interconnected channels. The voice assistant gets introduced Traditional Customer buys directly at POS Multi-Channel Customer buys through various channels and mobile devices Conversational Commerce Digital assistant buys triggered by customer interaction . Digital Assistant Development of a digital assistant that interacts with customers, has access to connected devices and conducts many purchase processes. Distribution Channel “Home“ Establishment of a distribution channel at customers’ homes to order products and services – conveniently by voice. 1 2 3 4 POS 01 010 0101 010 01 01010 1010101 10 010 0101 010 01 01010 0101010 Past Present Future Flash Insight Conversational Commerce at Home | August 2016
  4. 4. 4 Salmon with vegetables and banana ice cream. Please order any missing ingredients. Conversational Commerce – Future Use Case Based on contextual information, digital assistants are able to influence and manage customers’ purchase decisions. Note: Future use case as expected by industry experts Flash Insight Conversational Commerce at Home | August 2016 Customer Stock check Order Payment Delivery date Delivery Preheat at 6.45pm Good morning! Your coffee is ready. You have your first meeting at 10am. At 8.30pm, Max and Alex come over for dinner. What do you want to cook? 195° Household Background Order Payment Joint delivery date 01 010 0101 010 01 01010 1010101 10 010 0101 010 01 01010 0101010 I sent a recipe to your smartphone. You run out of salmon, tomatoes, parsley and bananas. Additionally, I suggest pinot blanc from the vineyard Winning on offer for 9€. I’d like to order the vine along with the rest. Please place the order. Your order will arrive at 7pm after your yoga class. I set the oven to preheat. 01 010 0101 010 01 01010 1010101 10 010 0101 010 01 01010 0101010 01 010 0101 010 01 01010 1010101 10 010 0101 010 01 01010 0101010 01 010 0101 010 01 01010 1010101 10 010 0101 010 01 01010 0101010 Warning: short on supply Notification: Reordering of dishwasher tabs Digital assistant Digital assistant Digital assistant Digital assistant Third party provider Sending of recipe Access to calendar Access to recipe databank Access to 3rd party provider cloud
  5. 5. 5 Conversational Driven Ecosystems Leading tech giants use a digital assistant to create conversational driven ecosystems. Each of them supports their own core business. Flash Insight Conversational Commerce at Home | August 2016 Connected to the assistant Own services offered  Focus: Distribution channel  Strength: Variety of own retail services and open ecosystem  Weakness: Extension of functionalities solely depends on third-party providers  Focus: Control (via Smartphone)  Strength: Life management with Smartphone  Weakness: No visual presence at customer’s home yet and limited number of own services to connect  Focus: Organization (data management)  Strength: Google ecosystem  Weakness: Closed ecosystem – extension of functionalities hindered by Google’s selection of allowed third-party providers Info Organizer Entertain- ment ShoppingSupport Health & Nutrition Smart Home Control Additional Services Echo       Info Organizer Entertain- ment ShoppingSupport Health & Nutrition Smart Home Control Additional Services Echo   Info Organizer Entertain- ment ShoppingSupport Health & Nutrition Smart Home Control Additional Services Echo    Home Hardware presence at home Hardware presence at home
  6. 6. 6 Conversational Driven Ecosystems – Amazon Echo Example Amazon was the first to occupy the customer touchpoint at home with an intelligent hardware. Its ecosystem includes a growing variety of commerce services. Support Service Additional Services EntertainmentInformation & Organization Smart Home Control 1 1 Health & Nutrition 1 01 010 0101 010 01 01010 1010101 10 010 0101 010 01 01010 0101010 Shopping all product categories 2 1 1 1     1 Need for products Need for services Note: Extract of relevant, integrated services 1 Connection expected; 2 Ordering of consumer household goods, reordering as well as ordering of echo products possible via Alexa Flash Insight Conversational Commerce at Home | August 2016 
  7. 7. 7 Impact on Companies Especially companies in retail have to take action as they face the risk of digital assistants threatening their core business and customer relationship. Flash Insight Conversational Commerce at Home | August 2016 1 Monopolization of the customer relationship In conversational commerce, digital assistants position themselves as a single contact point to the customer with many connected service offerings. Thus, their provider’s ecosystem holistically manages the customer relationship and is able to specifically orchestrate – or even exclude – the competition. 2 Alternation of purchase decisions by digital assistants Digital assistants open a new commerce channel at home through which they orchestrate the customer decisions and will even anticipate them in the future. In conversational commerce, they become present at and connected to any device. Therefore, current sales channels as POS or online and comparison options become less important. 3 Continuous expansion of ecosystems The assistant providers’ ecosystems will continuously expand in more business areas to capture the value chain as well as to holistically serve the customer (“share of wallet”).
  8. 8. 8 Michael Mücke Managing Partner at Mücke, Sturm & Company More about Mücke, Sturm & Company: www.muecke-sturm.de Mücke, Sturm & Company would like to get in touch with you to discuss and shape your strategy for conversational commerce. Head Office Munich Theresienhöhe 12 80339 Munich T +49 89 461399 0 F +49 89 461399 777 Office Hamburg Brooktorkai 20 20457 Hamburg Flash Insight Conversational Commerce at Home | August 2016  Over 20 years of experience in management consulting  Proven company track record of supporting digital transformation  Expert for digital business models in various industries and IoT expert Contact details: m.muecke@muecke-sturm.de +49 173 3910492
  9. 9. 9 Copyright and Sources This document is intended for personal use only. Distribution is only permitted without any changes or omissions – publication, in whole or in parts, requires prior written consent by MÜCKE, STURM & COMPANY and correct citation of sources. The herein published texts and graphics were used by MÜCKE, STURM & COMPANY in the context of a presentation; they themselves do not represent the presentation in its entirety. All mentioned company names, logos, brands, brand symbols and other copyrighted material are the sole properties of the respective company; they are only used for illustrative purposes. Copyright Slide #1 (Cover): Picture: Connected Lab Slide #2: Company websites Slide #5: Amazon (2016); Apple (2016); Google (2016) Slide #6: Amazon (2016) Sources Flash Insight Conversational Commerce at Home | August 2016

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