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Amazon has new tools to build shopping into its voice-enabled experiences.
At a Wednesday event to announce new features for the voice tech developer community dubbed Alexa Live 2022, Amazon unveiled the Alexa Shopping Kit.
This creates a way for developers to embed product recommendations within an Alexa skill, which is an application for a smart speaker that allows it to perform tasks, provide information and connect to content.
Customers can also purchase the products that are surfaced. As for what to recommend, developers have a couple of options: For one, they can surface info about their own products. Starting later in 2022, they will also be able to earn a commission on qualifying products through a program known as Amazon Associates on Alexa.
Amazon breaks down the phases in which developers can use Alexa Shopping Kit to add product info and gain insights on the following levels:
- Discovery: Surface new product or gifting recommendations for customers, including alerts about product launches.
- Product research: Customer can ask questions about a product, such as “What are the Amazon reviews?,” “How much does it cost?” or “When can it be delivered?”
- Purchase: Developers can build a path for customers to add a product to their cart or shopping list, and buy the product.
- Post-purchase insights: Amazon is providing developers with metrics so they can compare and contrast the engagement with recommendations that were made. In turn, they can determine which recommendations customers liked most. Metrics will be available for the “Add to cart” and “Buy” shopping action at launch, with more expected to be unlocked in the near future.
Amazon’s announcement about the shopping kit offered a number of examples about how it is being used.
Spanish publishing company Grupo Planeta is providing product recommendations within a mindfulness tool it offers on Alexa. This information about books are offered at the end of a course, so as not to be disruptive to the listening experience within the primary content.
Ryan Jordan, who developed the role-playing game The Dark Citadel, integrated information about books he authored for the game into story-based skills.
wikiHow has integrated product recommendations and purchasing into a skill that offers how-to guides. With Associates on Alexa commission program, it has monetized these recommendations.
It all points the way toward voice-enabled experiences where brands and creators are not just offering advertising in skills, but making them shoppable.
Trending in Shopper Experience
On an earnings call, CEO Andy Jassy outlined the thinking behind the company's cost-cutting in 2022.
After two years of exceeding even its own high bar of bigger and faster, Amazon is in the midst of a slowdown period.
Results from the fourth quarter of 2022 provide plenty of evidence.
- Net sales grew 9%. Overall sales grew 8.6%, marking the slowest holiday quarter growth in 10 years, according to GlobalData Managing Director Neil Saunders.
- Ecommerce, characterized as “online stores” by Amazon, fell 2%.
- Outlook for the first quarter remains 4-8%, which remains in a "light" zone by Amazon standards, CNBC reported.
On an earnings call with analysts, Amazon executives cited a consumer pullback amid rising inflation.
“In our worldwide stores business, with the ongoing economic uncertainty, coupled with the continuation of inflationary pressures, customers remain cautious about their spending behavior,” said CFO Brian Olsavsky. “We saw them spend less on discretionary categories and shift to lower-priced items and value brands in categories like electronics. We also saw them continue to spend on everyday essentials, such as consumables, beauty and softlines.”
Despite the wider pullback, events such as the first Prime Early Access Sale, Black Friday and Cyber Monday outperformed expectations, Olsavsky said.
Third-party sellers were an especially big driver of sales, as they accounted for 59% of overall sales. Sellers aren’t only driving sales, but also Amazon’s business. Amazon’s segment called third-party seller services, which includes Fulfillment by Amazon, grew 20% year-over-year.
Advertising revenue also continued to be a bright spot, rising 23% year-over-year.
Putting on the brakes
Yet it is also a time when Amazon is pulling back. CEO Andy Jassy joined the call, and outlined several of the ways that the company has sought to cut costs.
In Jassy’s first year as CEO, a big priority was scaling back in fulfillment and transportation. In early 2022, Amazon said it overbuilt its logistics and warehouse network during the pandemic as it sought to scale up quickly to meet the massive demand for ecommerce. So one of Jassy’s priorities in his first year as CEO has been to pull back.
Jassy outlined the cycle:
“Over the last few years, we took a fulfillment center footprint that we've built over 25 years and doubled it in just a couple of years,” Jassy said. And then we, at the same time, built out a transportation network for last mile roughly the size of UPS in a couple of years. And so when you do both of those things to meet the huge surge in demand…it took everything we had. And so there's a lot to figure out how to optimize and how to make [it] more efficient and more productive.”
It’s “a different network” now, Jassy said, and the process of bringing it back into balance is still underway. In the early part of 2022, Amazon delayed some builds and mothballed other facilities.
“To figure out how to be really efficient across all those links and have them be highly utilized and to get the flows in those facilities working the right way, it takes time,” Jassy said. “So we're working very hard on it.” The work continues into 2023.
Amazon also made cost-cutting moves in other areas “where we didn't have conviction that they were going to be big needle movers for Amazon,” Jassy said. It pulled back on physical store expansion in areas including grocery, and closed 4-star bookstores. It pulled back development in devices. It ended fabric.com, Amazon Care, Amazon Glo and Amazon Explore. And finally, the company eliminated 18,000 roles in a massive layoff.
“As we got into the early part of the summer, where we start our operating planning process…there was a lot of things happening in the macro economy. We started that process with the high-level tenet of we want to find a way to meaningfully streamline our costs in all of our businesses, not just their existing large businesses, but also in some of the investments we're making,” Jassy said.
The company thought about it this way: “We want to actually do a pretty good, thorough look about what we're investing and how much we think we need to, but doing so without having to give up our ability to invest in the key long-term strategic investments that we think could change broad customer experiences and change Amazon over time.”