Did you know —  in 1969 Two electrical engineering students from Columbus, Ohio, launched CompuServe, which became the country's first-ever commercial online service.

Yes, that’s how online retail started.

In 2023, online retail has evolved into a seamless, personalized shopping experience, integrating advanced technologies like AI, AR, and conversational AI, transforming the way consumers browse, purchase, and interact with brands.

The e-commerce landscape is undergoing a profound transformation. Gone are the days when you only had to worry about getting a domain and opening your online store.

Now we have to worry about privacy, SSL certificates, customer engagement, and much more. We are in an era that requires the fusion of technology and customer engagement. 

Welcome to the era of 'Conversational Commerce,' where online retailers are reshaping how we shop and interact. 

In this blog post, we’ll delve into the exciting realm where artificial intelligence, conversational e-commerce trends, and brand examples converge to redefine the customer journey. 

What is Conversational commerce and how does it work?

The modern digital consumer wants the same level of personalized and timely customer service that brick-and-mortar shops used to give them. Conversational commerce can help you give your customers what they want while online shopping.

It refers to the intersection of messaging apps, chatbots, and artificial intelligence (AI) to facilitate online interactions between businesses and customers. With the help of conversational interfaces such as chatbots or virtual assistants, you can engage with customers in real-time with conversational AI and provide them with personalized assistance throughout the buying journey. 

For example, Burberry, a luxury fashion brand, integrated a chatbot on its website to assist customers with product inquiries, styling advice, and locating nearby stores. The chatbot contributed to a 60% increase in online sales and improved customer engagement.

‍

Stats suggest that 44% of consumers have used chatbots. Almost 50% of them are open to purchasing items during their interaction with the chatbot.

This means Conversational commerce is the gateway to getting more engaged consumers. Now, it’s time to understand how conversational commerce works:

1.  Customer Initiation: The process typically begins when a customer initiates a conversation with a business through a messaging app or chat interface. This can be done by visiting a business's website and clicking on a chat widget or by sending a message to the business's official messaging account.

2. Chatbot Engagement: Upon initiation, a chatbot or virtual assistant takes over the conversation. These AI-powered bots are designed to understand customer inquiries, provide information, answer questions, and guide customers through various tasks. 

3. Product Discovery: Customers can inquire about products or services, check prices, view product details, and even receive personalized product recommendations based on their preferences and past interactions. 

4. Ordering and Purchasing: Customers can place orders and make purchases directly within the chat conversation. Payment processing and order confirmation can also be handled seamlessly through integrated payment gateways.

5. Customer Support: Businesses can offer customer support through chatbots, addressing common issues, troubleshooting problems, and providing assistance with order tracking, returns, and exchanges. In more complex cases, the chatbot can escalate the conversation to a human customer support agent.

6. Integration with Other Systems: Conversational commerce platforms often integrate with the business's backend systems, such as inventory management, customer relationship management (CRM), and e-commerce platforms, to ensure accurate and up-to-date information.

How Retail Companies are using AI

Retail companies are harnessing the power of artificial intelligence (AI) to improve various aspects of their operations and customer experiences. According to PwC, customers are willing to pay up to 16% more for products if they receive exceptional customer service.

Who doesn’t love money? It’s useful to understand how online retailers are using conversational commerce trends in their business.

1. Personalized Shopping Experiences: This is a no-brainer. AI is used to analyze customer data and shopping behavior to create highly personalized shopping experiences. This includes personalized product recommendations, tailored marketing messages, and customized website or app interfaces.

For instance, eBay employs conversational commerce through their eBay ShopBot, accessible on Facebook Messenger. Users initiate a conversation with the bot, describing what they're looking for, such as "women's running shoes." 

The bot responds with personalized product suggestions, considering factors like brand, size, and price range. This seamless transition from conversation to purchase creates a highly personalized and convenient shopping experience.

2. Inventory Management: AI helps retailers optimize their inventory levels by predicting demand, monitoring stock levels in real-time, and automating restocking processes. This reduces overstock and understock issues, leading to cost savings and improved customer satisfaction.

Consider Walmart, which utilizes an internal chatbot system that connects store associates with real-time inventory data. If a store manager needs to check the availability of a specific product, they can simply message the chatbot with the item's details. The chatbot retrieves the inventory status across multiple store locations and the distribution center, enabling quick decisions on restocking, inventory transfers, or order fulfillment.

3. Pricing Optimization: AI algorithms analyze market conditions, competitor pricing, and customer demand to dynamically adjust pricing in real-time. This pricing strategy maximizes profits and ensures competitiveness.

For instance, if a customer inquires about a high-demand item, the chatbot may offer a slightly higher price. Conversely, if a customer shows hesitance or shops around, the chatbot might present a discounted rate to incentivize the purchase. 

This real-time pricing strategy helps Amazon maximize revenue while ensuring competitive prices, ultimately delivering a tailored pricing experience to each customer and enhancing overall profitability.

4. Visual Search: Visual search technology allows customers to search for products using images rather than text. AI analyzes images to identify and recommend similar products, making it easier for customers to find what they're looking for.

Pinterest allows chatbot users to upload or describe a product image, and the bot then provides visually similar items from various retailers. 

For instance, a user might send a picture of a stylish outfit they found online. The chatbot identifies the clothing items and accessories in the image, displaying links to similar items available for purchase on various e-commerce websites.  

5.  Predictive Analytics: Retailers use AI to analyze historical sales data, market trends, and other factors to make predictions about future sales, demand, and customer behavior. This helps with inventory planning, marketing strategies, and overall business decision-making.

Imagine a scenario where a cybersecurity-focused online retailer employs chatbots to assist customers in selecting the right security software. The chatbot could engage with customers, asking questions about their specific needs and concerns, such as the size of their business, the type of data they handle, and their budget.

Conversational commerce evaluates AI-driven messaging platforms to create highly personalized and responsive customer interactions. These tools can understand customer preferences, provide tailored product recommendations, answer inquiries instantly, and even assist with purchase decisions. 

For example, Sephora uses chatbots to assist customers in finding the right beauty products and providing makeup tips. They also offer a virtual try-on feature for makeup products. They use live one-to-one video shopping that helps them stay close to their customers.

Secondly, conversational commerce offers unparalleled convenience. Shoppers can make purchases, track orders, and resolve issues without leaving their preferred messaging apps or websites, eliminating the need to navigate through complex e-commerce product descriptions or make phone calls. 

The Role of Social Media in Conversational Commerce

‍
We all know that social media platforms offer a direct and convenient channel for businesses to interact with their customers. With the integration of chatbots and messaging applications, brands can engage in real-time conversations with users, providing immediate responses to inquiries, assisting with purchases, and offering personalized product recommendations. This instant and convenient communication fosters a sense of connection and trust between the brand and the consumer, ultimately enhancing the overall customer experience.

For instance, the online fashion retailer ASOS utilizes social media platforms like Instagram and Facebook to engage with its customers. Through direct messaging and chatbots, customers can inquire about product availability, sizing, and even place orders. ASOS also leverages user-generated content by encouraging customers to share photos and reviews, creating a sense of community and trust.

Last but not least, we can't forget the role of influencer marketing.

According to a survey by Influencive, 69% of consumers are more likely to make a purchase if it's recommended by someone they follow on social media.

Influencer marketing leverages the trust and authority of influencers to promote products and services through authentic conversations. This approach fosters genuine engagement, boosts brand credibility, and encourages seamless customer interactions and transactions.

Conversational commerce enhances influencer marketing by allowing influencers to engage directly with their followers, answer questions, and provide recommendations about products or services in real time. 

Conclusion

In the dynamic landscape of e-commerce, online retailers are at the forefront of reshaping the customer experience through conversational commerce. 

This revolution, driven by AI-powered chatbots, one-click purchases, and real-time engagement, empowers brands to create deeper connections and drive unprecedented growth in the digital marketplace. 

Ready to take your e-commerce strategy to the next level? Contact us to learn more!