AI, NLG, and Machine Learning

Conversational Commerce on the Rise for Emerging Markets

As humans, we have been looking to communicate in many different ways since the beginning of time. The past 15 years have been no different, with conversational apps (ICQ, Windows Messenger, Yahoo! Messenger, WhatsApp, Telegram, etc.) having to evolve from time to time. Likewise, e-commerce emerged in the trend, where messaging apps saw the opportunity—and […]

By Alberto Peña
June 3, 2021

As humans, we have been looking to communicate in many different ways since the beginning of time. The past 15 years have been no different, with conversational apps (ICQ, Windows Messenger, Yahoo! Messenger, WhatsApp, Telegram, etc.) having to evolve from time to time. Likewise, e-commerce emerged in the trend, where messaging apps saw the opportunity—and need—to adapt to the obvious path of conversational commerce. Through the intersection of messaging apps and the possibility of shopping through online conversations, conversational commerce has fairly reached a level of comfortability and normalcy amongst consumers, ever since initially introduced in 2015.

I have seen more often mass adoption come through the spotlight from already established technologies. Even with virtual reality (VR) headsets, powerful advanced smartphones, and holographic solutions, most of the broadly adopted solutions are tied with “common behavior,” plus a new availability, cheaper technology, or need.

Take, for example, a common QR code. It had some initial push 8 or 10 years ago, but 2020 was its revenge year. If you want to know your restaurant menu, you’ll use it—the same for price options on laundry or the check-in for your favorite place. A combination of widely available technology (QR code)—raising the need for touchless solutions—and the better coverage of smartphones make it more widely adopted.

- Trends to keep in mind for emerging markets:
- Message applications surge
- Cheaper data options and hotspot availability
- Smartphones’ wide adoption
- E-commerce growth, boosted by last year’s work from home (WFH)

The same trend we might observe for conversational commerce in emerging markets, customers feel already comfortable with messaging applications (WhatsApp, Facebook Messenger, Telegram, Twitter, and more). They also have the access to cheaper data options (prepaid or postpaid), and even some market players within different categories (banks, retail, pharma, etc.) pay their data usage within their apps to make it easier for them to use. If you add a wide adoption of smartphones (take, for example, Mexico, which already has 112 million smartphones for a population of 125 million) and seamless connection to m-commerce solutions. All these elements together make it easier to do e-commerce without thinking about the hard choices of a website or even an app.

And we must add to the ecosystem the current penetration of social networks, their usage among emerging markets, commonly over-index, and with that, the usage of social media included messaging platforms that could connect to any conversational commerce designed solution.

In fact, for consumers, it feels easier to have a conversation and evaluate the purchase, somehow exactly as usually happens at a retail fashion store or electronics, for example. Commonly you have some kind of conversation with that “blue shirt guy” or store manager who actually helps you to define your desired outfit. Some specialized companies have been measuring conversational volume increase up to 300 percent.

What is actually news is those interactions each day feel more natural because machine learning and natural language processing (NLP) becoming more accessible for big, medium, and small brands. Ten years ago, this was only available to few big players but at this time is more similar to my initial QR code reference.

Also each time we see more CX applied to conversational solutions, as the closer we get into a more natural language, less transactional, or command-based conversation, the opportunities for e-commerce will be more obvious and extended within messaging apps.

Available technology plus a need covered at scale with reasonable effort from brands will soon be built solutions tied to conversational commerce in emerging markets.

What should you expect around conversational commerce in the next few years?

- Greater adoption from direct-to-consumer (D2C) brand solutions but also business-to-business (B2B) solutions.
- Growth on affordable solutions directed to small and midsized business (SMB) companies.
- A more “natural” artificial intelligence-driven (AI-driven solution). As more users start using the solution, more accurate will be the conversation and also the conversion results.
- Perhaps more Gen Xers and Boomers doing their very first online purchase through these kinds of solutions.

Ultimately it is more common to send a message than think you are making an online purchase.