Two top global car manufacturers Ford and Volkswagen have announced during CES 2017 that they will be integrating Amazon Alexa in their cars in future. While Ford even put a date to this launch (starting summer 2017), Volkswagen has not confirmed on the timelines. So what does the integration of Amazon Alexa to on-board system mean for its customers, competitors and for the whole ecosystem in automotive industry?
Amazon Alexa will create an interface for communicating with the car, wherein drivers can talk to Alexa, sync audio systems, check weather, control connected home services, get traffic updates, add stuff to their cart in amazon, and use features such as lock-unlock their cars.
Laying Foundation for Connected 360 Degree Automotive Platform
In the long run, this clearly looks like an attempt by Amazon to be a wholesome solution in the automotive industry. The company wants to be engaged with its customers at every possible point, from researching and buying a new car/used car, ordering replacement parts, and booking vehicle service. In a way, it wants to a partner for drivers in the end-to-end journey and is looking good with its latest launch of offerings with Amazon Alexa. Additionally, this does not only stop at automotive services, but also includes others industry segments such as music, connected home services, and a whole lot more.
What this Means for the Automotive Aftermarket
- Development of In-vehicle Sales Channel
Integration of Alexa will be revolutionary for the development of an In-vehicle sales channel. Drivers can now simply ask Alexa to look-up for stuff and add to their carts. In fact, Volkswagen also mentioned that Alexa could potentially search compatible replacement parts for the particular vehicle being driven, simply when prompted to search for that part. This definitely makes life whole lot easier for customers. Of course, the successful implementation will depend a lot on precision in cataloguing, and ironing out details around conflict of interest if both Amazon and Volkswagen were to independently sell parts online. (Ford already does it with its online portal through its fordparts.com in the United States.)
- Ease of Ordering
Getting Alexa’s help for ordering compatible replacement parts, and for looking up for best available service options could go a long way in easing the aftermarket ordering process. Even looking at the distinct demographics in the market, this will be very helpful for female drivers who have their own reservations of buying parts and services from traditional aftermarket channels, especially when it comes to negotiating and understanding various parts options in aftermarket. At the same time, it will be an exciting solution for millennial and young drivers and is therefore expected to emerge as a popular enough solution.
- Do-it-For-Me (DIFM) Support at Various Levels of Customer Journey
Amazon already has a program ‘Amazon Home Services,’ which sells service as a product. This service is not limited to automotive alone and includes variety of other services such as home services, home improvement, computer and electronics, yard and outdoors and automotive. Access to Alexa will assist extremely well in selecting the best available option and therefore ease the whole service selection and booking process for drivers. Amazon launched this service in 2015, and has been expanding its portfolio over a period of time. Using this, one can buy tire replacement service, change brake, and avail other numerous services as a product on amazon.com.
What this Means for Amazon
Amazon is one of the biggest online marketplaces for automotive parts in North America and Europe and now even in Asian countries such as India. It has already showcased its wide logistics and fulfilment capabilities, and along with an even wider portfolio of aftermarket parts, the online seller is making great strides in this space. The company has also shown tremendous interest in new vehicles sale as well and is working on a strategic plan to be an end-to-end solution provider in the automotive industry. Currently, with placing itself right inside the car, Amazon is consistently paving its path toward the consumer, taking the customer engagement to the next level. Working on multiple areas, Amazon is at present preparing itself to attain a dictating position in the digital channel development.
What this Means for the Competition
In the United States alone, as per Frost & Sullivan estimates, online sales of automotive parts and services was valued at around $7-$9 billion in 2016. While the traditional channel participants such as Autozone, AAP, and O’reilly have been doing their bit so far, the popularity of Amazon could leap frog thanks to its latest interfacing and will gain a large share of the competition. Competition definitely stands a danger of losing out here and needs to swiftly come up with solutions which are powerful enough to counter Amazon’s existing pole position advantage.
