Why Your Home Assistant Costs More Than You Think
The Amazon Echo and Google Home are great at making you spend money.
Chances are, you or someone you know got an Amazon Echo for Christmas. It was the best-selling product from any manufacturer in any category across all of Amazon, with tens of millions of Alexa-enabled devices sold worldwide. The Google Home assistant was no slouch either—about six million were sold this holiday season.
The Echo and the Google Home are the two most prominent examples of virtual assistants—voice-activated gadgets intended to make your life easier by providing everything from sports scores to traffic reports to recipes.
But if you’ve recently added one of these gadgets to your home, it could be costing you money.
In January, the Consumer Intelligence Research Partners released a report analyzing the shopping habits of Amazon customers. Overall, it found the average Amazon customer is spending around $1,000 a year; while those with Amazon Prime spend $1,300 a year. But if you’ve got an Echo, you’re spend even more still: About $1,700 a year. It’s no wonder Amazon was offering such big discounts over the holidays; based on those findings, the report says, Amazon can afford to subsidize sales of Echos to get them in more homes.
(The Google Home mini was likewise sold at a steep discount to spur online shopping: Walmart cut the price of the gadget from $49 to $29, then offered a $25 rebate if you linked to your Walmart account.)
So if you’ve got one of these gadgets in your home, then Amazon or Google is betting that it’s going to make you spend more money… And they might be right. Here’s what you know to navigate this new world both easily—and frugally.
It makes spending a little too easy…
About 51 percent of consumers are already using voice assistants (a number that includes smartphone assistants like Apple's Siri), and 35 percent are using them for purchasing items like groceries and clothes, according to a study by Capgemini. The process of shopping by voice is almost too easy: You just set up your device through the Alexa smartphone app, which includes your Amazon account and payment information, and then voice shopping is enabled by default. So if you run out of paper towels you can just say, "Hey Alexa, order me paper towels." And two days later (assuming you have Prime, and the towels are Prime-eligible) they will be delivered right to your door, all without you having to lift a finger.
Google Home isn’t much different: You simply need to add a payment method in the Google Home app and then can place orders by asking Google assistant. But instead of buying through Amazon, you purchase your coffee, diapers and dog food through Google Express, which partners with stores like Whole Foods, Walmart and Target.
All this ease can lead to some unconscious overspending. “The more convenient we make paying and buying goods, the more people tend to spend," says Charles Lindsey, associate professor of Marketing at the University at Buffalo. Another thing that encourages us to put our feet on the spending accelerator is that shopping via a virtual assistant doesn’t feel like shopping. “Research shows that we are much less likely to overspend when we use cash than when we use credit or debit cards,” says Stacey Tisdale, president and CEO of Mind Money Media Inc.
“There’s something about actually touching the money, and watching those levels decrease, that makes it real for our brains.” And when you ask a virtual assistant to purchase something, you don’t even feel the swipe or enter your card information, removing you even further from the transaction. “Each layer we put between ourselves and the actual money transfer makes it easier to ignore the realities of our spending,” says Tisdale.
…And a little too friendly.
There’s a reason salespeople in retail stores are so eager to please. Befriending you makes their numbers (and their commissions, if they receive one) rise. Research has shown we will spend in order to make those salespeople like us more. The fact that these virtual assistants were designed with a human touch can have a similar effect. (If you’ve ever asked Siri to tell you a joke, by the way, you’ve fallen for it.) “Alexa can almost be humanized in a way that makes us feel like we are not solely responsible for our purchasing choices,” Tisdale notes.
Assistants aren’t necessarily the savviest shoppers.
Let’s go back to those paper towels. If you ask Alexa to buy paper towels, she will choose Amazon’s best-rated or best-selling option, which isn't always the cheapest option. Right now, if you were to ask for paper towels, Alexa would pick a 12-pack of Bounty rolls for almost $30, instead of a 24-pack of Plenty rolls for around $22. “If you want Alexa to get something specific, you need to manually go into your virtual shopping cart and pick it yourself, or ask for a specific brand so she knows what you want,” says Nir Eyal, author of Hooked: How to Build Habit Forming Products.
“If you are a price-conscious consumer, and that’s more important to you over convenience, then before you buy you need to check the prices online to make sure you are getting a good deal.” Voice-purchasing on Google Home also requires you to be ultra-specific on what brand you want for any product, especially if you want the best price. But with limited store partnerships, you may not be able to purchase the most affordable option.
Stop the madness (if you want to).
Fortunately, there are ways you can help yourself from falling into these spending traps. If you have a Google Home, you can simply delete your credit card information on your app. If you have an Echo, you can go into your Amazon account and select to turn-off voice purchasing. That way, you will manually have to go into your app on your phone or website on your computer to purchase an item. And while that may be less convenient, you will be able to have all of the options for paper towels laid out in front of you to choose from.
Not only will you be able to choose your favorite brand and get the best possible deal, your purchases will be harder to ignore.
With Hattie Burgher