Deliveree logistics marketplace

Deliveree’s Group CEO Tom Kim and Group Head of New Product Nat Atichartakarn at Deliveree’s Jakarta HQ

The current state of logistics in Southeast Asia is often bemoaned as one of the main challenges holding the region back from its full economic development.

Alibaba founder and chairman Jack Ma remarked that with Indonesia’s geographical state, a comprehensive logistics network is needed to stimulate growth.

His assessment is also applicable to other emerging markets across the region.

But these types of infrastructural projects in the Philippines, Thailand or Vietnam is not an easy, and certainly not, cheap feat. Here are a few examples of current plans in the works:

  • World Bank estimates $500 billion is needed in Indonesia over the next five years to bridge the infrastructure gap
  • President of the Philippines, Rodrigo Duterte, proposed a $161 billion six year plan to improve railways and ports to connect the archipelago’s islands
  • Thailand’s government has also started 20 infrastructure projects worth $50.2 billion to improve the country’s current rail lines

This regional bottleneck has opened opportunities for startups to figure out the cheapest and quickest way to get a package from point A to point B.

Companies solving last-mile headaches for ecommerce companies have attracted a lot of investor money like Lalamove and NinjaVan with $100 million and $30 million funding rounds, respectively.

But a logistics technology company that recently raised $14.5 million is looking to tackle another problem.

“We’re interested in solving bigger, bulkier problems that sit further upstream from your last mile delivery challenges,” explained Tom Kim, Group CEO of Deliveree. “With marketplace technology, we want to fundamentally challenge the way companies approach first and mid-mile bulk logistics.”

Deliveree logistics marketplace

ecommerceIQ speaks with Tom and the Group Head of New Product, Nattapak Atichartakarn, to discover how the logistics company found success in Southeast Asia by helping businesses reduce costs for first and “mid-mile” goods transport and what they plan to do with the recent Series A injection from Gobi Partners.

Logistics but focus is on technology

Through the Deliveree mobile app and web marketplace, customers have access to screened qualified drivers of commercial vehicles to move their merchandise and/or cargo.

The company’s new marketplace model houses 15,000 commercial vehicles consisting of cargo vans, pickups trucks, small-large box trucks, as well as economy vehicles such as MPVs and hatchbacks on its platform — covering three metro cities in Southeast Asia; Bangkok, Jakarta, and Manila (the company operates under “Transportify” due to a trademark issue in the Philippines).

Having started with serving end-customers, the company realized in order to grow its business, it had to focus on serving corporate clients.

“The bread and butter of our business is goods, merchandise, and cargo — bulk movement from outer provinces to warehouses in the cities, factories to distribution centers, and distribution centers to retail stores, or what we call modern trade,” explains Nat.

Now, nearing the end of its third year of operations, the company says it is close to financial break-even in its core markets. Nat credits this success to the quality of technology and drivers that Deliveree provides.

The company’s tech team of 30 developers in Vietnam is responsible for building, managing, expanding, and innovating the company’s marketplace tech capabilities and solutions that focuses on businesses needs:

  • Batch booking toolsets for high volume customers
  • Flexible booking scheduling from immediate to two weeks in advance
  • Drop off package at multiple destinations up 10 locations
  • Real-time tracking of driver and package location
  • In-app chat between customers, drivers, and customer support
  • Cash on Delivery and original document return services
  • Contract logistics option for businesses that need dedicated resources
  • Full commercial insurance

In addition to targeting SMEs, Deliveree also partners with transportation and logistics companies without their own technologies to connect them to new customers on its platform.

“People think these big logistics companies own their whole logistics network, when in fact, many don’t. A lot of them outsource ground transportation elements of the business and they use us as a provider of ground transportation for bulk goods and cargo so we address the gap and needs of the industry,” says Tom.

Capitalizing on quality

Deliveree logistics marketplace

The company takes pride in the high quality of its drivers, achieved by imposing a high standardized screening process, something Tom doesn’t skimp on.

It’s easier to get into most colleges than to get into our driver pool.

“We only invite a third of the driver applicants to training — it’s less than the acceptance rate at the most universities,” says Tom.

Calling it the “best trained fleet on the market”, every single driver must endure six hours of in-class training, which includes customer etiquette, and pass a 50 question final exam with 80% score or higher.

The company also enforces additional training for drivers with low satisfaction scores and regularly do real-time quality checks with a mystery shopper.

While not the most scalable process, Nat says it’s a price the company’s willing to pay.

Growth without quality is more of a step backward for us.

With such high investment in human resources, is the company worried about “leakage” – the shift of user-driver relations moving off the platform?

“There will always be a case or two of customers trying to work with our partners directly, but most of them end up coming back to our platform. Why? Because one of the reasons they come to us in the first place is they don’t want to, or can’t, manage this specific part of the business,” said Tom.

“And with the added value we provide for them, I don’t see why businesses would want to even bother.”

Ride-hailing apps aren’t built for cargo

With the heated war between ride-hailing companies in the region, parcel delivery is one of the added value services that is being offered by Uber and Grab to capture a wider clientele.

But Deliveree isn’t worried.

“These ride-hailing companies have always been doing logistics but they haven’t been doing it right,” said Tom.

According to Deliveree, the services provided are not comparable as the requirements for logistics is radically different than the passenger business.

“If you’re looking at the value of delivery bookings in Uber and Grab, it’s probably not more than a few dollars. Our average booking value is more than 10 times the amount and at the same time, our resources and costs to support each booking are higher than what a passenger app would expend per booking,” said Tom.

Tom also pointed out the security risks highlighted by a recent ruling in the Philippines by the country’s Land Transportation Franchising and Regulatory Board (LTFRB) that banned any package delivery through ride-hailing apps accompanied without a passenger. The reason? Drug-trafficking concerns.

“Trust me, it won’t only be the Philippines that will apply this rule,” commented Tom.

Small ecommerce pie for Deliveree

With the current state of ecommerce in Southeast Asia where fashion still tops all categories in popularity and ordering large items like bicycles or washing machines is still uncommon, the pie for Deliveree’s business is not that big.

“Ecommerce is primarily a business comprised of small things, and we don’t move small things — we move big things,” says Tom.

But Tom believes the company will eventually grab their share of Southeast Asia’s ecommerce pie.

“Our company is not closely aligned with the ecommerce industry today because the items that people buy are still small parcels and it isn’t our specialty because of the challenging economic units,” said Tom. “Ordering anything and everything online is an evolution that will probably happen in the next over ten years or so.”

“This is when we (Deliveree) will likely play a much bigger role in the ecommerce value chain.”

Growing its current markets

With new funding from its Series A round, Deliveree is exploring some interesting growth plans.

The company hasn’t ruled out M&A to grow the business in key markets and although expansion to new cities and countries are in the cards, Nat said that Deliveree is more interested in growing the cities where it is currently operating at the moment.

Deliveree logistics marketplace

“Imagine if Asus, Lenovo, and Acer compete with each other in the tablet market in Jakarta,” said Tom. “When the sales start, there’s a limit to how far the competitors can go because they have inflated costs the further the consumers. If we can bring down the cost base and give them more margin latitude, the competitive playing field will force some of those savings into discounts, sales, promos, even lower everyday pricing and ultimately the consumer wins.”

Deliveree logistics marketplace

“These are the kind of big problems we love to be involved in solving,” concludes Nat.

The first thing that comes to a consumer’s mind when asked about virtual reality (VR) often involves gaming.

Why? Because virtual reality is used to describe a three-dimensional, computer-generated environment that can be explored by a person. That person is immersed in a space where they are able to manipulate objects or perform a series of actions.

The virtual reality technology buzz, whether in content or hardware, is projected to be worth $80 billion by 2025 globally, while gaming unsurprisingly will make up the largest share of an estimated value of $11.6 billion.

But the application of virtual reality is not limited to only video games. According to Jirayod Theppipit, CEO and Founder of Infofed, a VR content development startup, virtual reality can be used as a marketing strategy in almost every area.

“Dare we say that virtual reality is the future of content? The experience VR offers can solve the pain points of businesses in almost every industry.”

“People often associate virtual reality with gaming and we can’t blame them. Consumers in the gaming segment have the ability to afford new technology and gadgets,” continues Jirayod. “This is why they’ve adopted virtual reality before others.”

Instead of scrambling to compete in an already crowded gaming market overtaken by virtual reality gaming content creators like VRX, Infofed sees a blue ocean in real estate for virtual reality content in Thailand.

“I know this technology is going to take off because big players like Facebook and Google have already jumped into it.”

Two years ago, Facebook invested $2 billion into VR technology to promote its own VR headset Oculus and only earlier this year, Apple launched ‘ARKit’ to turn its iPhones and iPads into AR/VR (Augmented Reality/Virtual Reality) devices.

IKEA has already jumped on board with its new app, IKEA Place.

IKEA ecommerce

The highly affluential Chinese shoppers have also taken a liking to VR based on a survey by Worldpay, which has been a strong indicator of how content will be consumed in the future.

Phil Pomford, General Manager for Asia Pacific at Worldpay, says,

“China is blazing a trail for VR/AR adoption and showing other Asia Pacific markets what the future could look like…with China leading the way, Asian businesses should start investigating the future of VR/AR technology now, so that they’re ready to meet consumer demands as and when they arise.”

84% of 16,000 consumers surveyed across Asia Pacific believe that AR/VR is the future of shopping, 92% say they’d like to see more retail apps make use of AR/VR – Worldpay.

But for a nascent market like Thailand, can virtual reality successfully take off?

Infofed believes it already has.

ecommerceIQ speaks with Jirayod to understand how the two-year old startup has utilized VR in industries like tourism and education and what it has learned from its latest project, real estate.

Giving a slow-moving industry an upgrade

The current real estate industry in Thailand is experiencing slowing growth but the number of new condominium units are set to rise 15% from 2016.

To sell units, typical marketing tools often include flashy brochures with heavily photoshopped photos and miniature models in an attempt to give homebuyers a glimpse of the expensive home they should buy.

Higher-end real-estate developers will also set up a physical showroom for visitors to experience the ambience of the unit, but this requires travel and more effort than today’s digitalized world is used to.

Virtual Reality Infofed

The Deck, project by Sansiri. Source: Sansiri

“Because my background is in architecture, I can understand the blueprints and engineering language that the marketing material contains but there are many people who are confused by it. The current content in brochures and on websites aren’t extremely helpful for consumers who want to properly ‘experience’ the product.”

Through VR content, Infofed believes that its content can help developers market its products to consumers. What better way for someone to experience their new home than to actually walk through it?

The company has already worked together with Nirvana Property, one of the leading developers in Thailand, to showcase its showroom through virtual reality content.

 

Virtual Reality Infofed

Virtual reality Showroom for Nirvana Rama 2 by Infofed

Consumers are able to view the showroom in 360 degrees, simply through their electronic devices without the need of a virtual reality headset.

According to Jirayod, consumers on average spend up to five minutes viewing a VR showroom whereas they spend no more than two minutes flipping through a brochure.

“The longer consumers spend on our content, the more interest they develop in the product and reflects on a higher rate of purchase.”

The appeal of VR can also save real estate companies money to build and dismantle their showrooms – especially in trade shows and exhibitions. From Jirayod’s past architectural experience, building a showroom has an average cost of $60K for condominiums and $200K for houses.

Creating VR content, on the other hand, can start as low as $1,500 at Infofed according to Jirayod.

New age but in demand

Despite North America being the current leader in VR content market with a share of 73.4% in 2016, Asia Pacific is forecasted to exhibit higher growth.

Transparency Market Research has forecasted that this region will see an exponential CAGR of 116.1% between 2016 and 2024.

Virtual Reality Infofed

But in order to capture the opportunity VR presents, Infofed is committed to educating Thai consumers about new technology and training the people necessary to create VR content. One way it has done so is by creating content for influential industry players like the Tourism Authority of Thailand and leading real estate companies.

“It’s important that we help create build an ecosystem for virtual reality content. I have never viewed other virtual reality players as competitors but instead as partners to together push this technology out.”

Infofed has also brought in experts from the US through partnerships to equip its local staff with sufficient virtual reality knowledge to produce content. It’s also sharing its own experiences at top universities to educate the incoming digital-savvy workforce.

Virtual Reality Infofed

Infofed Team

All of the company’s efforts come down to one goal – to make Thailand a virtual reality society, even if it’s not fully ready now.

In the last 12 months, 144 million people went online for the first time in Southeast Asia — 45 million from Indonesia alone — to shop, to chat, to share news and to connect.

This brings the total internet population in the region to over 1.9 billion people.

While the internet penetration rate for the region (47%) is still below the world’s average (51%), the growth of internet users in the region (8%) outpaces the global rate by 1%.

social media apac

And the catalyst for the rapid growth in the sector can be credited to…social media?

More than a platform to share selfies

Excluding Indonesia, the latest findings from Kepios show that social media penetration in Southeast Asia’s biggest markets (Thailand, Singapore, Malaysia, Philippines, and Vietnam) is above 49% of the region’s population.

social media apac

What has fuelled this social media frenzy?

In these markets, being connected has transformed the standard way of life. Anyone can become an “entrepreneur” with a Facebook/Instagram shop, customers order from a marketplace at any time of the day, businesses can sell direct to consumer and the world becomes an entirely accessible market.

In some markets, Facebook is synonymous with the internet.

And these platforms continue to improve their user experience with fresh content, new algorithms, and media formats to hook users into browsing for longer.

Instagram is one example of a social platform that continues to innovate. The Facebook-owned company recently launched a “shoppable post” that aims to let 2 million of its advertisers sell directly to the photo-sharing’s 800 million users.

Although the function is only available to businesses in the US at the moment, Southeast Asian companies should be active on social channels and take advantage of features that push the digital trend agenda forward.

It won’t be surprising to see more of this in the region.

THE BACKGROUND

IKEA. There is no other furniture brand as iconic as the blue and yellow giant famous for its ready-to-assemble flat-pack furniture, dizzying warehouse stores,  and difficult to pronounce product names (GRÖNKULLAFYRKANTIG).

The Swedish giant claims its beginning started in 1926 when founder Ingvar Kamprad was born but it was only at the tender age of 17 when he started a mail order business selling pens, watches, jewelry, and picture frames after receiving seed money from his father.

Furniture would be introduced into the company’s product offering five years later and become a success.

IKEA ecommerce

Ingvar Kamprad, the founder and senior adviser of IKEA, is the world’s 10th richest man. Source: Aftonbladet

Six decades later, IKEA’s 300+ stores around the world require over 1%of the global supply of wood to make over 100 million pieces of furniture. No business can come close to the Swedish conglomerate’s size…right?

THE CHALLENGE

While no furniture business has been able to even remotely achieve the same brand identity and global scale that IKEA has in the last 60+ years, the world’s shift to ecommerce has forced the company to re-think its retail strategy.

The biggest threat comes from low-cost manufacturers going direct to consumer by following a “Warby Parker business model”, popular examples include Interior Define and Bryght in the US.

“By cutting out high-rent showrooms and warehouses, big-budget ad campaigns and big-name designer, these companies can offer great prices and bring in greater profits.” – NYT

“This year has been quite challenging in terms of sales. After many years of good sales, this year we have seen weaker launches, stiffer low-price competition and changing consumer behavior. We are revising sales targets downward for the year, but remain very optimistic and ambitious,” Jesper Brodin, IKEA CEO, then MD, told a global suppliers’ conference in Almhult earlier this year.

“People are making choices in different ways. Retail is getting tougher, and there is a bigger fight for the marketplace than ever before. We need to be much more aggressive and the price-volume equation, which is part of IKEA’s DNA will help us.”

With the success of ecommerce companies like Amazon making headlines everyday, IKEA, along with every other retailer in the world is being reminded that retail is evolving and the traditional company finds itself having to learn new tricks.

THE STRATEGY

While late to the online shopping scene, up until 2016, the company was officially present in 28 countries and offered ecommerce in 14 of them. Even with no new ecommerce ventures in 2016,

IKEA recorded at 30% jump in online sales to $1.6 billion, a small fraction of total sales but nonetheless impressive.

“We weren’t one of the early adopters but we’ve matured in our thinking about it,” Peter Agnefjall, former IKEA CEO told the New York Times. “We realised this is not a trend, it’s a megashift.”

The company has never been one to shy away from innovation. Its successes include its in-store cafeteria and very own startup incubatorfocused on food innovation, disruptive technologies, customer experience, disruptive design, sustainability, manufacturing, supply chain, and analytics.

It’s not then surprising to learn that IKEA has become one of the first to actually incorporate VR into its brand new mobile app launched only yesterday.

IKEA Place is part of the first wave of augmented reality apps that work with Apple’s new ARKit technology and iOS 11 to allow customers to “place” furniture in their apartments. While late to the show, the company has managed to outpace other pure players.

IKEA ecommerce

IKEA Place uses VR to allow users to easily visual what a piece of furniture will look like in their homes. Source: IKEA

Its push into applications could be attributed to world’s growing affinity for the mobile phone and by analyzing its own customer behavior. In Australia, the company’s website pulls in 40 million visits per year – 50% of which comes from mobile.

At this point in time, IKEA sells its products only on its own websites but has dabbled in the idea of establishing an official presence on Amazon but no confirmation has been made by the company yet.

There has however, been a partnership between IKEA’s “smart light bulbs” and Amazon’s virtual assistant device Echo to promote the latter’s line of smart home products. Owners of IKEA’s voice controlled light bulbs will be able to adjust the brightness of the bulbs through voice command by not only Alexa but Google and Apple’s Siri as well.

IKEA ecommerce

IKEA Smart Light Bulbs controlled by voice command.

“Unlike other companies, IKEA doesn’t fear the cannibalization of offline channels by online channels.

This is not without precedent, IKEA’s UK online store becoming the region’s largest outlet, without absorbing sales from existing stores.

“It’s just one among our many initiatives to make our products available for as many people as possible. And we are seeing big opportunities by leveraging upcoming digital technologies to their fullest,” said Inter IKEA Group Chief Executive Torbjörn Lööf.

THE FUTURE

IKEA Group is aiming for 50 billion euros in sales for 2020 and to open 18 new stores by end of year. It also has been eyeing growth opportunities in India and Southeast Asia but execution has taken much longer in these emerging markets.

As a fully independently owned company, IKEA must ensure that an average of 30% of the production value of sold goods should be sourced from within India, and within five years of the initial investment. As ecommerce is new to the Scandinavian company, it must test various fulfillment models including pickup points, third-party depots and the use of small-format stores for click and collect.

But the company hasn’t stopped making strides towards its aggressive target and continues to invest heavily in ecommerce. IKEA recently announced that a shoppable IKEA webstore would go live in Singaporein two weeks and in Malaysia in 2018.

IKEA ecommerce

Jesper Brodin, IKEA CEO. Source: dagensps.se

New IKEA CEO Jesper Brodin, who recently succeeded Agnefjall in May this year, will focus on building multi-channel retailing in almost all of its markets before 2017 finishes. He definitely has a tough job ahead moving the giant forward.

But according to Agnefjall, the CEO job involves “working 365 days a year, 15 to 16 hours per day”, which explains the admirable dedication founder Ingvar Kamprad still has for the company.

“Oh, I have so much work to do and no time to die,” he said.

Amen to that.

Smart lockers were a big topic at Last Mile Fulfillment Asia this year.

What are they you ask? They are the tech-world’s equivalent of high school cubbies but out on the street, in your condominium lobby or shopping mall accessible only to users with the right digital passcode.

smart lockers Southeast Asia

POPStation lockers in Singapore. Source: SingPost

Many e-locker providers such as PopBox in Indonesia, Box24 in Thailand and POPStation in Singapore talk about the future of their businesses as the best solution to the region’s ‘last mile’ problem. But is it that simple?

Let’s disassemble the smart locker.

How it works

As online retail grows in the region, it’s understandable that more packages need to be delivered to end consumers. Nomura International (Hong Kong) projects that the package delivery market for the six major Southeast Asian countries will more than double from 2015 levels to over $7.5 billion in 2020.

The last mile becomes costly for companies because of how geographically vast countries such as Indonesia and the Philippines are and the broken address system across Southeast Asia.

While the last mile of the supply chain may be the shortest physical stage in a package’s journey, it represents about 30% of total delivery costs.

“Delivery cost per package a few years ago used to be 60 THB and now, logistics companies in this red ocean are subsidizing costs to charge only 30 and even 20 THB to grab market share,” said Paul Srivorakul, aCommerce Group CEO, at LEAP by ecommerceIQ and Sasin SEC.

Enter the smart locker, a new delivery option that promises less failed deliveries, flexibility for customers, and cheaper last mile costs.

smart lockers Southeast Asia

Benefits of a locker-bank i.e. smart locker.

For couriers to deliver the package:

  1. Login with company’s credentials
  2. Access data and address customer’s information
  3. Choose an available compartment
  4. Scan the package
  5. Put the package in the compartment, lock it and confirm delivery

For recipients to pick up the package:

  1. Internet shopper selects the “parcel locker” while checking out online
  2. Shopper receives an email confirmation and SMS (or in app) with details and code on package pickup
  3. Customer can track shipment to know when package has been dropped off
  4. At the smart locker, customer provides the code and other details using the touch screen
  5. If a package is not picked up, it will be transported to the nearest branch of the logistics partner

 

In Indonesia, PopBox Asia allows customers not only to pick up packages but as well make payments and return packages. In Thailand, WashBox24 (now Box24), lets shoppers pick up groceries and washed laundry ordered in app through partnerships with supermarket Tesco Lotus.

In North America, 7-Eleven has opened its doors to partners like Amazon interested in renting lockers to stay relevant as commerce moves online.

smart lockers Southeast Asia

Source: WSJ

But lockers are risky for 7-Eleven as each locker takes up about the same amount of space as one large shelf, holding dozens of lockers, which by some estimates could represent thousands of dollars in lost sales each year.

Do they actually solve any problems?

In many ways, smart lockers sound like a perfect last-mile solution. Available 24-hours, simple to use, convenient for the consumer and cheap fee for ecommerce businesses as packages are consolidated at one drop-off point.

smart lockers Southeast Asia

SWOT analysis of e-lockers.

But do they work?

Based on recent app reviews for POPStation and Box24, the service and ‘seamless’ pick up experience have faced some problems.

smart lockers Southeast Asia

Source: Google PlayStore, POPStation (left), Box24 (right)

While understandable to have hiccups with the introduction of new technology, the hardware heavy system has proven to work well in markets like Europe. But in a unique market like Southeast Asia, there are a few factors unaddressed by most reports.

Apart from the fact that the lockers require prime real estate and are costly to build and maintain – $5,000 to $35,000 per piece – these machines don’t accept cash.

smart lockers Southeast Asia

Source: WashBox24

Given that majority of Southeast Asians, with the exception of Singaporeans, still prefer cash-on-delivery, this last mile option is not viable for many ecommerce companies whose customers want to see the item before committing to purchase.

smart lockers Southeast Asia

Source: aCommerce

In China, 15,000 lockers were put in place in 2014 but handled only roughly 1% of all deliveries.

As Lazada Vietnam Gerald Glauerdt commented LMFAsia 2017 to ecommerceIQ’s question if he believed lockers were a good solution for last mile, “these lockers are more expensive than couriers that can take the package directly to the door.”

Operating in low-labor markets such as Southeast Asia gives companies the luxury of re-thinking their last mile strategies. As logistics networks expand their networks in the region, such as hubs on Indonesia’s scattered islands, costs will decrease to reach customers in remote locations.

New startups such as Park N Parcel are also leveraging existing infrastructure such as mom and pop shops and convenience stores to offer another last mile solution.

With packages expected to increase in the region thanks to the rise of ecommerce percent of total retail sales, there is plenty to go around for logistics players, given they can handle today’s customer expectations.

“If you do last mile only, there’s zero loyalty. You don’t remember who delivered your order, but you remember who screwed it up,” – Vaibhav Dabhade, CEO and founder of Anchanto.

Voice has always been a compelling way to activate certain human behaviors. It can stir women to distrust men based on voice pitch, it can soothe a crying baby, and now it’s being utilized to making shopping easier.

Well, that’s the hope.

Voice commerce is the new trend in online shopping that is piquing the interest of major players such as Google and Walmart. The two giants recently announced a one-month partnership to take on Amazon’s current dominance in the voice-shopping market.

Consumers in the US will be able to purchase any Walmart product through Google’s voice-activated assistant platform.

“For example, if you order Tide Pods or Gatorade, your Google Assistant will let you know which size and type you previously ordered from Walmart, making it easy for you to buy the right product again,” says Sridhar Ramaswamy, senior vice-president of ads & commerce at Google.

Walmart’s Head of Ecommerce Marc Lore shared that the retailer plans to expand the use of voice-activated shopping across its 4,700 stores to “create customer experiences that don’t currently exist within voice shopping anywhere else”.

To understand what currently exists and whether investing in voice-commerce makes sense, one must look to ecommerce giant Amazon and its strategy surrounding AI assistant Alexa.

Leading voice commerce, Amazon, of course

This year’s Prime Day, Amazon’s largest shopping event for its Prime members, happened on July 10 and theEcho Dotwas the best-selling product across any category globally, with customers purchasing seven times more of these devices this year than in 2016.

What are owners using Alexa to do?

Alexa Amazon Commerce

Alexa is typically being used to play music and set alarms/timers. Source: LivePerson

Amazon used Prime Day as a vehicle to increase its foothold in voice and offered premiums to influence a wave of shoppers to purchase these cylinder-shaped units. They included:

  • Voice shoppers had early access to select Prime Day deals a full two hours before the general public beginning
  • More than 100 Alexa exclusive deals were already available
  • First-time voice-shopping customers who purchased with Alexa before Prime Day received a $10 promo code
  • Amazon device owners could sign up for Prime via voice command. New members who signed up for Prime by voice got their first year of membership for $79, a $20 saving

LivePerson, a cloud-based software platform, surveyed over 500 Alexa owners in the US and discovered the following:

  • A significant majority (70.6%) of respondents have made a purchase on Amazon through an Alexa voice command at least once
Alexa Amazon Commerce

Electronics are the most popular category purchased through Alexa. Source: LivePerson

  • 45.8% of Alexa owners are repeat shoppers (meaning that, of consumers who give Alexa shopping a try once, almost two thirds turn into repeat users)
  • 70.6% of Alexa owners have an Amazon Prime account

By 2020, it’s projected that Amazon will sell 41.3 million of Echo units (each one retails for about $44.99). Having a physical presence in the household of many Americans gives Amazon a new channel of power.

Professor Scott Galloway of L2 placed an order for batteries on Alexa and discovered that the assistant would only recommend Amazon label products. Without the visual cue of product discovery, Alexa can strongly influence consumer buying decisions.

The voice trend has become so irresistible that even General Electric plans to soon sell a LED lamp with Alexa built in so consumers without an Echo can ask questions for information. Some food for thought.