Bots for Business

Why Conversational Commerce is the Future of E-Commerce

As more online shoppers engage with chatbots, conversational commerce is on the rise. Learn how it’s helping retailers boost user engagement and drive sales.

April 9, 2019

If you bought anything online this year, there’s a good chance that a chatbot guided you to the Submit Order button. Among consumers who use voice AI, like Amazon Alexa or Google Assistant, 51 percent use them for product research and nearly a quarter use them to make a purchase. Now consider that more than half of all US residents will actively use mobile messaging apps by 2022, and you can start to see where e-commerce is headed.

More conversations, fewer forms; more chatbots, fewer human agents. That’s the essence of conversational commerce. And it’s rapidly transforming the retail industry.

Instead of visiting a retail establishment or using a retailer’s e-commerce web interface, more consumers are using chatbots to inform their purchasing decisions and to complete transactions. That matters because it affects how they shop, what they shop for, and how they view the shopping experience.

Let’s have a look at the basics of conversational commerce, including its ability to boost customer engagement and to yield positive business results.

What is conversational commerce?

At its core, conversational commerce involves communicating online via a messaging or chat interface to replicate the in-store shopping experience—or at least to offer a comparable alternative.

Consider Tommy Hilfiger’s messenger chatbot, which can help you browse clothing collections and select an outfit. When you see something you like, an Add to Cart button beckons. Sephora, too, provides a conversational commerce experience involving chatbot-to-human shopping banter. Tell the bot you want some pink lipstick, and it guides you through the different shades. Sephora’s bot can also administer a makeup quiz and can use your responses to suggest products you might like.

Of course, fashion isn’t the only retail category exploiting conversational commerce. The Staples chatbot uses the IBM Watson platform to help businesses order office supplies. All you have to do is press a red Easy button and tell the voice chatbot to order 40 packs of staples, 7 printer cartridges, and just the right bobblehead for the boss’s desk.

Why is conversational commerce so convenient?

Have you ever been in a situation where you have an idea of what you want to buy but aren’t 100 percent sure? For example, you know you want white sneakers but you don’t know whether a certain brand runs large or small. Or you need a new microwave, but you want one that won’t take up a lot of counter space.

In the past, you’d clear these things up by visiting a store and browsing the inventory. But that’s a big commitment. After all, you have to spend the time and energy to get there and back. And what if they don’t have what you need? You’d have to go through the whole process again.

Online shopping, of course, solves many of these problems. Size charts help you choose shoes. Spec sheets show you how big the microwave is. And chatbots take that convenience even further. Instead of going through the lengthy process of self-guided product research—a time-consuming exercise on its own—you simply ask a bot some questions and get the quick, to-the-point answers you need. When the bot is well designed, it’s a seamless experience.

Just ask Sephora Senior Vice President of Digital Mary Beth Laughton. Remember the Sephora shopping chatbot we discussed earlier? According to Laughton, that bot’s primary purpose is to “[solve] the client’s needs, no matter where [that client is located].” She adds:

By nature, Sephora chatbot users will have a logged cadence of questions, because of how the platform services their inquiries...whereas speaking with our in-store experts (which can also be question driven) tends to be more conversational because of the educational services and environment we offer.

So conversational commerce is similar to the in-store retail experience, but it’s not exactly the same. It’s a quick interaction (a logged cadence of product-related questions) rather than an extended conversation that’s subject to human-to-human talkativeness. It’s fast.

You might think of conversational commerce as chat without chattiness or as online shopping without information overload. Either way, it helps users get what they want without a lot of extra time.

How can an e-commerce chatbot deliver business results?

When 1-800-Flowers.com, the floral retailer, decided to launch a chatbot to help customers shop for flowers, it didn’t build just one. Instead, the company diversified by launching three—a Facebook Messenger chatbot, a voice-assisted bot on Amazon Alexa, and an “artificial intelligence concierge” (aka Gwyn) on the IBM Watson platform.

According to the 1-800-Flowers.com CEO Chris McCann, the bots haven’t just made shopping more engaging—they’ve helped move product. Here are the results:

  • Eighty percent of customers indicate that they would use Gwyn again.
  • Chatbot users have lower checkout abandon rates.
  • Successful cross-selling via chatbot keeps customers engaged for more extended time periods.

The lesson from 1-800-Flowers.com? An engaging chatbot has the potential to get better results than a form-based online sales experience. Also, cross-selling via chatbot works.

Non-florists need not despair. Chatbots are helping retailers increase sales for all sorts of products. Case in point: cars. Kia’s Facebook Messenger chatbot, dubbed Kian, responds to questions, such as, “What kind of Kia gets 30 miles per gallon?” The goal, of course, is to increase sales through meaningful customer engagement.

So far, it’s working. With over 600,000 messages exchanged with customers, Kian has converted three times as many users into sales leads, when compared to Kia.com. If there’s anything Kia’s experience proves, it’s that e-commerce chatbots aren’t just experimental tools to help drive inexpensive, low-commitment purchases. Many consumers will turn to a bot to help with the more significant purchases they make.

Switching gears a bit (pun intended), consider eBay’s ShopBot, which was recently discontinued. Although the company hasn’t commented publicly on the reason for ShopBot’s departure, early reviews noted that using ShopBot required several more steps compared to just entering search terms on the eBay website. In other words, ShopBot didn’t offer users a better experience than they could get elsewhere.

As ShopBot shows, your bot needs to do something unique and valuable. Otherwise, people might not use it! It needs to make the shopping experience easier, faster, or—at the very least—more engaging.

What is the future of conversational commerce?

For the 2018 holiday season, mixed-reality company VNTANA partnered with Mall of America on a chatbot project, Ellie the Elf, a hologram concierge. Ellie chats directly with shoppers who encounter her in the mall.

You tell Ellie the kind of gift you’re shopping for, and she lets you know which retailers carry it and where their stores are located within the mall. If you thought that chatbots only presented as chat windows or voice concierge, Ellie is here to dispel you of that notion.

Starbucks is also working on innovative chatbots. For South Korean customers, Starbucks recently integrated its loyalty program, My Starbucks Rewards, with Bixby, a voice-powered chatbot available on some Samsung phones. If you’re sitting in your office in Seoul and feel like having a coffee, you can order one without getting up from your chair. Then just head over to Starbucks to pick up your beverage—skip waiting in line.

Starbucks isn’t the only retailer doing this sort of thing. Dominoes takes orders through Amazon Alexa, and Dunkin’ Donuts takes orders through Google Assistant. What’s clear is that seamless, on-the-fly product ordering—orders as straightforward as the Staples experience described earlier—is becoming increasingly common.

As more consumers demand an efficient retail experience, e-commerce will only become more conversational. And chatbots, of course, will be leading the charge.