Conversational AI continues to grow in popularity
While it’s true that AI has been redefining retail for the past ten years, that’s nothing compared with what’s coming next!
Now, I almost ran this story with a headline of “Conversational AI will redefine retail and CX”. This would have been a great headline in 2014 after the launch of Alexa, Amazon‘s smart speaker and AI assistant – and conversational AI remains the key for the future of retail. However, although conversational AI will provide the interface that redefines retail and customer experience, it will be intelligent and autonomous AI agents that bring the magic!
Two year’s after Amazon launched Alexa, only about 1 percent of consumers had actually completed a payment transaction via a smart voice device. That figure had grown to 3 percent by 2017, but it kept growing. According to a new report from Research and Markets, the global market for voice commerce was estimated $49.6 billion for 2024 and could reach $147.9 billion by 2030, while annual growth is estimated at a CAGR of 20% from 2024 to 2030.
32% of online consumers have made at least one purchase via AI voice
About 32% of online consumers have made at least one purchase via AI voice and, according to most research, consumers are most likely to use voice commerce for buying grocery and household items, electronics and beauty supplies. There are many reasons why consumers use voice commerce, but a key reason is its ease of use, and voice commerce continues to get easier and more intelligent, we can expect the category to keep growing.
Building a voice commerce market has been expensive
The progress in voice commerce has only been made at huge cost to smart assistant vendors, in particular Amazon. The Wall Street Journal reported last year, that Amazon lost more than $25 billion on Alexa devices between 2017 and 2021. The reason is that Amazon set prices very low for its Alexa devices in the hope that acquiring market share among smart home device users, would result in higher sales from voice commerce. Since Amazon originally ran for more than six years without turning a profit, it’s hard to dismiss that argument (Amazon registered $59.2 billion in net income last year). Nonetheless, despite having more than 600 million Alexa devices out there, Amazon’s voice commerce sales have apparently not been in line with expectations.
To-date, transactions via voice commerce have been very – well – transactional. Users give voice assistants commands and provide verbal confirmation when required to, to make choices on products, delivery and payment. They often do this after researching product alternatives, or after having specified preferred products for shopping lists.
These days, many consumers are used to searching for information, locations and products via AI voice. The majority of connected users use AI voice to find locations or local businesses, more and more now use AI voice to research purchases and then we have those that actually purchase via smart home assistants.
Despite widespread adoption of voice apps, the customer journey for voice commerce is far from seamless. The process of making a new purchase (versus a repeat purchase, of milk, butter and eggs, for example) via AI voice is often compartmentalised into different voice and keyboard tasks, and not part of a continuous customer conversation with an AI assistant.
Getting chatty
Amazon has done very well in getting Alexa smart speakers into consumers homes and building up the trust in the platform needed to support voice commerce sales. It is also true that Alexa (and I’m talking about the Alexa commonly available today) will find products for you and even recommend products on request. However, Alexa conversations have always been quite transactional and – despite plenty of little twists added by Amazon to make the assistant more interesting and personable – Alexa is just not very chatty.
Meanwhile, the arrival of Generative AI and powerful LLMs (large language models), has produced voice assistants that are so much better at chat – and they’re getting more chatty all the time!
Alexa connects with hundreds of APIs in order to interact with other Amazon systems and the broader Amazon ecosystem
More online consumers are using GenAI to search for new products and services (including via AI voice), and the underlying technology allows the assistants to offer comment, advice and recommendations on purchases. The thing that GenAI assistants haven’t been able to do is take your order and process your payment. There are good reasons for this.
Amazon Alexa connects with hundreds of APIs (Application Programming Interfaces) in order to interact with other Amazon systems and the broader Amazon ecosystem, and seamlessly provide a frictionless purchase, with all the safeguards in place necessary to protect the buyer, the seller, payment platforms and other members of the Amazon ecosystem. That’s just not what large language models were built for.
AI agents: the next frontier for virtual assistants
On the other hand, fulfilling specific tasks with intelligence and precision, is exactly what AI agents were built for. So, as GenAI chatbots and voice-bots now start to become the interface to access AI agents, the world of voice commerce is about to integrate with the world of GenAI assistants. The ideal result? A seamless customer journey from product discovery, empowering the buyer’s decision-making process, through to final purchase transaction and even post-sale customer support.
AI agents are built to perform specific tasks and take actions. So the next frontier for virtual assistants is to combine the conversational and reasoning abilities of LLMs with the promised executional precision and reliability of AI agents. There are many such assistants in development at the moment, but it may take a while before we can see how AI assistants and their ecosystems will develop.
Alexa+ — Amazon’s integrates GenAI with Alexa
Amazon’s clear advantage in voice commerce is Alexa’s tight integration with the company’s vast commercial ecosystem, but GenAI capabilities have been conspicuously absent. This is about to change.
In February, Amazon announced Alexa+, a next-generation assistant powered by Generative AI. This more conversational, smarter, more personalised version of Alexa, combines the strengths of GenAI and Amazon’s voice commerce platform. This means the assistant can both handle more expansive and natural conversations, and still reliably perform all the transactional tasks, including voice commerce orders and payments, playing music, managing home devices etc.
Alexa+ is currently being trialed with a limited number of users, and so it could be sometime before everyone gets to talk to the new AI assistant. However, the product promise that Alexa+ will feel more like engaging with an insightful friend, than a computer that only recognises precise commands.
Fundamental changes to voice commerce
GenAI and agentic AI can be expected to bring some fundamental changes to the voice commerce customer experience. Here are three new things that I find interesting:
The voice commerce journey could start well before intent to buy
First, the integration of GenAI and AI agents means that the voice commerce customer journey could start well before the consumer’s intent to buy! AI assistants are increasing being used to discover new ideas, plan, iterate and solve challenges.
So, for example, in a GenAI world the customer journey for a supermarket purchase of groceries could begin before those grocery items have been identified: perhaps when the consumer searches for a recipe. In fact, the journey could start even before that. Perhaps the consumer is planning a special day for the family and GenAI suggests a family dinner and a menu to suit.
GenAI and agentic AI will put ‘personalisation’ on steroids
Second, GenAI and agentic AI will put ‘personalisation’ on steroids! GenAI will not only make personal recommendations for your purchases, but will deliver those in a personal, conversational way that previous AI language models could not. GenAI assistants can be much more interactive, driving a much deeper level of involvement between the consumer and AI voice than past AI voice assistants.
For example, rather than simply asking the consumer if they would like to order the t-shirt in red or blue, the assistant could facilitate a discussion on the consumer’s preferences, wardrobe and clothes matching. This has obvious potential for an AI assistant to both upsell (selling the consumer more of the same product) and cross sell (by introducing the consumer to matching clothing items that they might like to consider). Then, there are promotional offers, loyalty schemes, and mining consumers for more personalised data. Which brings us to a whole new level of complexity for ethics, data rights and data protection!
GenAI and AI agents will shape voice commerce ecosystems
Third, the combination of GenAI and AI agents will play a key role in shaping voice commerce ecosystems. As we saw with the first generation of consumer AI assistants, such as Apple’s Siri, Amazon Alexa and Google Home, different assistants have different strengths and different ecosystems. Today, we have GenAI assistant services ChatGPT, Google Gemini, Microsoft CoPilot and more specialised players such as Perplexity.
The question is how will the increasing variety of AI voice assistants relate to ecommerce?
Amazon’s vast ecommerce ecosystem makes it the best positioned to deliver product options, pricing and to handle purchases. Amazon Alexa currently has little competition from other voice assistants, because it’s seamless access to Amazon’s marketplace. However, pre-purchase product discovery is now driven by Internet search, increasingly via AI assistants, which is not Alexa’s strong suit. So, will we see leading GenAI assistant services built their own ecommerce ecosystems, or will vendor-specific voice ecommerce be more of a focus?
In the short term, it seems that, although AI voice is going to play a much greater role in consumer buying, the customer journey is going to continue to be somewhat compartmentalised. The processes of pre-sale discovery and comparison research, product selection and purchase, and post-sale customer support, will all be transformed further by GenAI, but creating a seamless end-to-end customer experience may remain elusive for the time being.
This article first appeared in my April 2025 AI First newsletter.
