Amazon’s Trojan Horses

As you’re reading this story, the first Amazon Echo smart speakers have started shipping to Amazon Prime users in India, each of who managed to snag the device using an invite-only offer.

According to industry estimates, there are over 7 million Amazon Prime users in the country, each of whom pay an introductory annual fee of Rs 499 (set to go up to Rs 999) to access free and fast shipping, access to video content (and soon to be launched Prime Music) and exclusive offers, among other services.

Representation of the pyramid

These 7 million users are arguably one of the most sought-after customer bases in the Indian e-commerce market, together representing the top of the consumption pyramid.

Think of each Echo device as Amazon’s equivalent of a Trojan Horse sent to gradually win over each household.

“Alexa, can you reorder eggs?”

“Alexa, can you book me a cab for 9.30 a.m?”

“Alexa, can you recommend a gift for Arun’s birthday?”

“Alexa, can you order a pepperoni pizza from Domino’s?”

“Alexa, can you play the soundtrack from Guardians of The Galaxy 2?”

“Alexa, can you remind me when those Nike shoes I saved are on sale?”

If focusing on low-value items like digestive candies (for which arch-rival Flipkart made fun of it) and groceries was the first step in Amazon’s plan to become a part of your myriad daily activities, Echo is the next.

The primary focus of Echo devices in India is to gather data on the highest spending consumers, estimated to be close to 60 million by 2020, according to a report by Google and AT Kearney.

Even though Alexa’s primary use cases remain to check on the weather, playing your favorite song and finding ways to engage kids, Amazon’s focus is shifting on driving retail. A report by Forrester Research confirms how it works. The interactions start out as general queries between the user and voice assistant; then these move to connect and control smart home features; and finally, order for services and transactions that come with maturity in adoption.

Echo, which currently recognizes English in American, British and Indian accents, will help Amazon get insight into what the highest paying customers in the country want, their order patterns and how frequently they are willing to transact.

“To begin with, Alexa will be used by Indian consumers for information use cases such as asking about the weather, playing a song or entertainment for kids,” says Satish Meena, senior forecast analyst at Forrester Research. “It will slowly move towards ordering services such as booking a cab, ordering food, and finally, towards retail on the Amazon platform which is what the platform is driving towards.”

Voice-Recognition power

The ingenious (and thus, disruptive) power of Alexa lies in the fact that Amazon has opened up its voice-recognition powers to brands and developers around the world. Like the equivalent of the iOS or Android app store, Alexa has a skill store that lists over 25,000 skills currently, ranging from planning a vacation, ordering an Uber, dictating an SMS text, checking your bank balance or even finding your smartphone. And of course, finding the best shopping deals on Alexa.

Amazon also announced opening up the Alexa Skills Kit to Indian developers, coinciding with the launch announcement of Echo devices in order to create specific use cases for Indian consumers. The available voice skills in India include music streaming from Saavn, booking Ola cab on Echo, sourcing recipes from Tarla Dalal, ordering food from Zomato and booking tickets on Goibibo. Amazon claims there will be over 10,000 skills available for India.

“There is no revenue share agreement with Amazon for orders generated through the Alexa platform as of now, and no support from Amazon’s logistics for the service,” says the founder of one of the hyperlocal service providers in the process of integrating with Alexa’s Skill Store. He requested not to be named. “The payment gateway is not restricted to Amazon Pay either, and the orders are currently based on Cash on Delivery or the linked payment instrument. The focus seems to be on growing adoption.”

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