How Retailers Can Manage The Coming Voice Disruption

Think back just five years ago. In 2012, we were five years into the smartphone revolution, and most people thought we were crazy writing about the demise of physical retail … and absolutely no one could imagine a world in which consumers would be talking to cylinders on their kitchen counters, ordering pizzas, Ubers and groceries.

Five years ago, eCommerce was just coming into its own and not something that many retailers were overly obsessed with, Andrew Wind, Vantiv’s Principal Product Manager for Mobile, who ran mobile payments at Target before joining Vantiv, told Karen Webster in a recent interview. “When we talk with retailers now, eCommerce is driving almost all of the conversation. I think getting retailers to understand voice … will pay big dividends in the long term because the field is moving so fast.”

Unlike eCommerce, though, Andrew Wind says that the good news is that 2017 is still the very early days of voice activation technology. Although there is no shortage of ideas about how voice will impact retail, it’s still too early to know how it will play out. But being early shouldn’t be confused with sitting back and waiting to see what happens. Although we’re really just three years into using voice-activated speakers for commerce, the PYMNTS/Visa How We Will Pay study shows that already, 4 percent of consumers have used a voice-activated speaker to buy something.

Which is interesting, in that consumers want a seamless commerce experience that fits into their lifestyle, and they’re are willing to experiment with a number of connected devices to get it, Webster observed. It’s an opportunity Wind said merchants must be ready to accept, because the consumer brand relationship is about to change fundamentally.

“What’s critical to keep in mind is that the key [voice] players are going to be the distributors of this new commerce experience, because they have so much control over the interface and what customers see,” Wind noted. “That has to be terrifying for retailers, whose products are more or less commodities because your existing connection to people and customers is via a connection point in the pipeline.”

That makes the name of the game upstream differentiation to build a relationship with consumers so that merchants can maintain that connection.

The New Page Two

One can think of any number of ways a consumer might order something using a voice-activated device: “Siri, I need crackers.” “Alexa, I’m out of toothpaste.” “Allo, yikes, I’m all out of laundry detergent.”

Or, as Wind said, a world in which these voice-activated devices prompt us to make an order by letting us know that we are on the verge of running out of milk.

But 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.

The analog, Wind noted, is Google.

Searching a simple term will often pull up millions of results spread across thousands of pages — but the average customer rarely gets beyond page one before making a choice. With voice activation, Wind said, retailers must face the reality of being one on that first page, to being one of the top two.

“No one will be patient enough to listen to a list that is more than a few items long; they will pick from probably the top two,” Wind said — even though, he added, the integration of a screen may change things and could mimic the search experience of what exists today.

The opportunity for retailers, Wind noted, is to actually shift strategy by focusing on new ways to reach the consumer and create a relationship. That, he noted, will require some hard work for retailers that sell commodity-type goods. But the flip side to that, he noted, is also a world that allows new players and businesses to emerge that may be best suited to power the evolution of consumer discovery.

“Since we are very much still in this exploratory phase, we have yet to see the really killer use cases,” Wind said. “This opens the door for new players to emerge and help them reach customers. I think about some of the solution providers we work with every day to streamline payments and how excited they are to drive change and create new opportunities.”

Building a Better Backend

Everyone likes the consumer-facing stuff — the front-end innovations, Wind explained — because by their nature they are noticeable. For the front end to dazzle, he said, the backend needs to rock — because technologically speaking, the backend is where all the magic happens.

“The front end and the coding is the easy part,” Wind said. “The hard part is making sure retailers have the network and inventory distribution and capacity so that the front end can compete. The work to adjust a retailer’s legacy backend system to a new front-end experience is what’s holding a lot of them back.”

This, he noted, is where Vantiv plays a role for its partners with a goal of reducing the out-of-pocket and the opportunity costs associated with making these upgrades. Otherwise, Wind said that retailers are looking at weeks of work and the attendant costs of integrating with all of the digital wallets and voice protocols that exist.

“We want to reduce those costs and make it easier for retailers to make a smaller bet to find out what will work for them and their customers,” Wind observed, remarking that making sure that retailers are making their big bets on the right tech and the right use cases and building the right products to support the needs of their customers is a top priority.

That means, Wind said, that there are not one-size-fits-all solutions. But there are certain core capabilities that all retailers must have at the jump: A checkout process optimized for mobile and a flexible technology environment to make upgrades easy. The only known, Wind said, is that the path to improving the consumer brand relationship will keep evolving as innovators keep on innovating and connected devices keep on emerging.

“The retailer brand will sit behind the connected device itself, so the question we have to answer is, how they will keep the data and the connections to the consumer that they have if a consumer [has] gone to their app or website,” Wind emphasized.