Amazon Alexa was born alongside the first Echo speaker on November 6th 2014. It’s hard to imagine 5 years have passed since. Over 26% of US households now own a smart speaker, with Alexa as the dominant voice with 60%+ market share. She’s not done growing. The number of open postings for Alexa roles reached an all-time high of 1,679 this past October.
R&D is the biggest area of investment: 557 postings exist to improve Alexa’s ability to interpret our voice commands. This is followed by strong investments to improve Alexa’s abilities to help consumers shop, make phone calls, and expand its IoT reach.
Our team also identified four strategic initiatives that could unlock new growth in Alexa. Some with dystopian risks…
Alexa, Get Milk (19 postings)
8 of the 10 largest retail companies by revenue sell groceries and everyday consumables. Amazon included. It therefore makes sense the Alexa Shopping Team is trying to ramp up adoption of grocery shopping. It’s all part of Amazon’s push for hyper convenience. And Alexa has an opportunity to take it to the next level. One software developer job description reads: “Our customers shouldn’t need to think about what groceries they need; Amazon should just know.”
The goal is for Alexa to automatically add bananas to the Prime Now cart, reorder coffee from Amazon.com and check on Whole Foods deals. The idea is to allow clients to forget entirely about groceries, so they can spend their time and memory on something else. Like watching Prime Video.
This convenience has yet to be replicated by Google, the second most popular virtual assistant platform. Part of the challenge lies in the fact that Google does not own a grocery store, and relies on retail partners for product availability and fulfillment. This leads to inconsistent experiences. There are also signs large retail partners are winding down their partnership with Google Shopping, including Walmart and Target. Perhaps they’re not so excited of letting Google become their storefront. They already rely on Google Search Ads for traffic. Imagine if they also relied on Google’s online storefront. They’d effectively become low-margin distributors, not retailers.
The one challenge Alexa Grocery Shopping does face is the decline in household spending of food we take home. In other words, Americans are spending less on groceries. We are instead spending a larger portion of food money away from home. At restaurants. So Alexa Food Delivery may have greater growth potential. Yet it faces a similar challenge as Google does with Grocery Shopping; Amazon does not own any restaurants and relies on partners for cooking and food delivery, leading to yet again inconsistent experiences.
Alexa, Let’s Get Ready for Bed (27 postings)
Now that Alexa “just knows” what groceries customers need, she’ll be able to “perform actions on [their] behalf.” That’s the goal of Alexa’s Routines team.
Alexa Routines has so far been focused on helping users perform multiple tasks using one voice-command. But as it learns more about shopping habits, it wouldn’t be surprising if it not only creates routines, but also does the shopping.
The question becomes whether consumers will trust a virtual assistant, who also owns one of the largest retail stores in the world, with control over their wallets.
“Alexa, What did Hannah do in School Today?” (2 postings)
That is, verbatim, how one job description describes the goals of Alexa Education. With more and more schools and students using technology to manage learning, Alexa aims to tap into all that data and bridge the communication gap between kids and parents.
Many new parents have leveraged Alexa to help put their newborn babies to sleep (the author of this analysis included). It’s much more convenient to tell Alexa to “play bedtime music” than it is to search for songs and playlists while the baby cries. Parenting is such a popular use case for smart speakers that Mattel developed one dedicated to parents and babies.
But what happens when the baby grows up? There’s the option of getting an Echo speaker for their kids, but many parents worry about their children’s privacy and of unconsciously letting a robot influence their lives.
That’s where Alexa Education comes in. It’s trying to offer helicopter parents a convenient way of watching over their kids, while “respecting their privacy”. Are they eating healthy lunches? How did they do with piano lessons? Does coach think their kid is a leader on the team?
As Kickboard, an Alexa Education partner describes: ”Our voice-activated Alexa skill provides instant information for families about how their child is doing throughout the day, including not only in the classroom, but during lunch or recess.”
What’s the challenge? Kids are not stupid. If teenagers discover their lives are being monitored by their parents via Alexa, it won’t be long before they manipulate it to their benefit.
The success of Alexa’s parenting initiatives will depend on whether users trust it. Will kids trust Alexa if it helped their parents spy on them? Will parents trust it if they found out their kids lied to the machine? Or will Alexa erode trust within the family?
Should “What did Hannah do in school today?” really be a question for Alexa? Or for Hannah directly? Alexa runs the risk of causing harm in real human relationships in the name of convenience. That represents a large PR risk.
…This brings us to the next initiative.
Trust, Privacy and Risk Management (10 postings)
With so much of Alexa’s success riding on the trust users place in it, it’s not a surprise Alexa is beginning to staff an entire team to “earn and maintain customer trust.”
The team faces some headwinds. The majority of Americans don’t trust technology companies, and increasingly feel technology giants have a negative impact on their lives. 72% of Americans don’t trust Amazon specifically. But luckily for Amazon, mistrust in tech has so far not translated into less demand for virtual assistant devices. Trust may therefore not be a priority until it impacts Alexa financially.
Of the 1,679 Alexa open job postings, only 10 (0.006%) focus on trust, privacy and risk management. 557 postings (33%) focus on R&D, improving Alexa’s voice and visual capabilities. This means there may be one worker focused on Trust for every 57 workers plowing through what we say, and what we see.
Yet much of Alexa’s growth potential from this point on will depend on the effectiveness of Alexa’s Trust team. Working in the shadow, protecting both user privacy and Amazon from legal liabilities and trust erosion.
As one job description reads: “Done right, trust will be one of the strongest [differentiators] we can create.”
About the Data: The Battle of Giants uncovers companies’ growth intentions by using machine learning to transform recruiting data into strategic insights. It’s the difference between knowing a company is hiring 10% more software developers vs. investing 10% more in last-mile delivery. Data may not be all-emcompassing (we only access public recruiting websites), but complement press releases and news articles for a more comprehensive view of a company’s competitive advantage.