PFSweb : Chatbots and Conversational Commerce

In the '50s, it was a far-out technology confined in a humming laboratory room filled wall-to-wall with a first-generation computer. In the 80s, it was Skynet, a self-aware technology grid that took over the fictive, dystopian world of the Terminator series. Now, it's a 2017 retail buzzword defining technology capable of listening, intuiting, conversing and acting: Chatbots.

Chatbots have been around for a while, first publicly popular during the ELIZA to AOL SmarterChild reign. But times have been a changin' in recent years, beginning with the introduction of Siri (2011). As uses for chatbots and personal assistants have grown, retailers have scratched their temples, wondering how to harness the power and convenience of these digital capabilities. Enter conversational commerce.

Defined by social technology expert, Chris Messina, conversational commerce 'largely pertains to utilizing chat, messaging, or other natural language interfaces (i.e. voice) to interact with people, brands, or services and bots that heretofore have had no real place in the bidirectional, asynchronous messaging context. The net result is that you and I will be talking to brands and companies over Facebook Messenger, WhatsApp, Telegram, Slack, and elsewhere before year's end, and will find it normal.'

So what does this mean for us as consumers? For us as retailers?

Let's step back about four years, and walk through this recent timeline of our cultural acceptance of machine-based intelligence, and its growing use. In 2013, Her, a movie about a man falling in love with his virtual assistant, earned $47 million in box-office sales. In 2014, Microsoft introduced Cortana and Amazon launched Alexa-enabled Echos. In 2015, Facebook unveiled M, a mix of human and virtual assistants accessible through Facebook Messenger.

In 2016, over 30,000 bots were used in Facebook Messenger. Kik's 200 million users exchanged 350 million messages with bots within 7 months of utilizing the technology (Forrester Research). Google Home was also launched to compete in the growing market - and their Magenta bot created a 90-second piano melody through a trained neural network. By the end of 2016, Alexa was accepted in 5% of Amazon customers' homes and is now set to be featured in hotel rooms as a guest experience perk.

It's no secret that people are starting to prefer silent communication over verbal. Texting and messaging can be more instant than waiting in line to be the next caller answered. With chatbots, conversational commerce promises a more convenient interface for customers - especially since upwards of 3 billion consumers in the world are heavy users of instant messaging platforms (Forrester Research).

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Consumers spend approximately 78% of their smartphone time using an app, and loyalty runs deep - nearly 88% of this time is spent within only 5 apps. Instant messaging platforms are king, with frequent interactions between phone and user (Forrester Research). For example, metro Chinese consumers of WeChat spend 10.4 hours per week on the app, with 55% of users opening WeChat more than 10 times a day. In the U.S., Kik has users accessing the app 10 times a day, and eight times a day in the U.K. (Forrester Research).

Human-like Features

Conversational commerce via chatbots brings commerce into this part of consumers lives, deepening brand relationships with their audience with made-for-mobile content and video integration, and with facilitated product exploration. With increasingly human-like features - such as personalities and language adjustment - messaging apps will be viewed more and more as a fun, friendly way to connect the day-to-day activities of life to commerce, bringing huge opportunities to retailers.

Several big retailers in the U.S. have already seen impressive results, pioneering conversational commerce practices through Kik, Twitter, and Facebook Messenger. Uber will pick you up based on your conversation with friends over Facebook, easily integrating addresses sent via Messenger. Or, perhaps a more dangerous convenience, start a conversation with Pizza Hut via Twitter or Facebook and order a pizza within seconds. And don't get me started on Sephora's too-easy conversational commerce on Kik.

To learn more about how retailers can engage with and convert shoppers into buyers, tune in to our March interview with subject matter expert, Doug Hollinger, here on the blog.

Need more conversational commerce and bot action before then? Other notable research articles (that I just couldn't just click out of) can be found here:

https://www.inverse.com/article/13387-microsoft-chinese-chatbot

http://venturebeat.com/2016/08/12/why-is-now-the-time-for-artificial-intelligence/

http://www.themarysue.com/siri-chats-with-eliza/

http://www.pymnts.com/chatbots-and-commerce/2016/apple-siri-chatbot-competition/

https://chatbotsmagazine.com/2017-will-be-the-year-of-the-killer-bots-c6c3dee2ec38#.st0dsfrzd

https://techcrunch.com/2017/02/01/how-facebook-plans-to-evaluate-its-quest-for-generalized-artificial-intelligence/