Talking shop: chatbots to drive the next ecommerce boom

Chatbots on popular social media platforms are driving a new boom in online spending. In Asia Pacific, spending via conversational commerce could reach $290 billion within four years.

Personalization and emotional engagement allied to total convenience comprise the next frontier of customer experience (CX). Companies that give customers an emotional connection outperform their competitors by 85% , while 80% of customers say they are more likely to do business with a company if it offers personalized experiences. Conversational commerce, or C-commerce, is the fast-growing engagement tool that can deliver what today's consumers want.

Conversational commerce is a process of ongoing, direct communication between a brand or business and its customers. It takes the form of digital or voice interactions sent or shared on platforms such as WhatsApp, Facebook Messenger, iMessage, Viber, or any other digital tool that incorporates the ability to make purchases online. Uber founder Chris Messina first used the term in 2016, and in just a few years, it's become a vital tool for increasing sales and customer loyalty in e-commerce.

Where is it catching on?

Conversational commerce is booming in Asia -Pacific. According to Juniper Research, total spending in conversational commerce channels will reach $290 billion by 2025, up 590% from $41 billion in 2021 . The research also forecasts that three countries, China, Japan and South Korea, will account for over 90% of the $145 billion chatbot spend by 2025. Another report by Facebook and Boston Consulting Group found that Southeast Asian consumers are far more aware of C-commerce than other shoppers and prefer to buy using chat or voice applications.

Why so popular in Asia- Pacific? The apps themselves are central to the explosion of C-commerce in the region, with apps like WeChat, LINE and Kakao Talk all implementing chatbot ecosystems in which retailers play major development roles.

Talking shop: chatbots to drive the next ecommerce boom

Why is it catching on?

C-commerce is highly convenient and gives shoppers everything they need in one place. Consumers can chat with company representatives, contact customer support, ask questions, get personalized recommendations, read reviews and click to purchase something, all from within a messaging app. C-commerce enables the consumer to engage in interactions with a human representative, chatbot or a mix of both via their mobile device, wherever they are.

It gives consumers personalization, omnichannel and payments all in one platform. "It combines the best of both worlds – the personalized advice they would get in a physical store with the sheer convenience and variety available to them on e-commerce retail channels," says Sarita Singh, Director at Global Business Group for Southeast Asia and Emerging Countries at Facebook.

What's in it for suppliers?

From a business perspective, it drives stickiness and loyalty. Brands can employ chatbots to automate their customer service messages and let consumers buy from them without ever needing to leave their messaging app. Three-quarters of customers say they are more likely to spend more with a brand if they can message them rather than call them. It can help reduce cart abandonment, something 70% of consumers regularly do in standard e-commerce engagements: C-commerce lets retailers send shoppers proactive greetings via live chat and offer them support to help complete their order.

Furthermore, C-commerce doesn't only enable brands to serve existing customers better; it also makes them more attractive to potential new ones. Research by Facebook found that 40% of global consumers said conversational commerce was their first introduction to online shopping, while 97% of people said they plan to continue or increase their spending via conversational commerce. That tallies with something predicted by Gartner a few years ago: by the end of 2021, more than 50% of enterprises will spend more per year on bots and chatbot development than on traditional mobile apps.

Use cases emerging

Asia Pacific is the first mover in C-commerce, and a variety of successful deployments can be found there. Fashion brands in the region are leveraging C-commerce. For instance, Esprit has launched an "AI fashion stylist" bot on Facebook Messenger. The chatbot offers one-to-one fashion and styling tips on demand for customers and receives thousands of engagements per week from shoppers. Its consumers can preview clothing collections conveniently and then make a purchase and check out instantly without leaving Facebook Messenger.

French cosmetics company L'Oréal has used C-commerce to gain traction throughout Southeast Asia, particularly in Vietnam. According to L'Oréal Vietnam's Chief Digital Officer Pierre-Olivier Guy, C-commerce and ongoing digital engagement with customers has paid off: "We see higher penetration of conversational commerce within the more mature population, aged above 30, and on C-commerce, it is all about the experience, the quality of the story and meaningful conversations." L'Oréal's C-commerce efforts in Vietnam have seen sales increase by 22% and increased weekly conversations four-fold.

Conversational commerce on an inevitable rise

It makes sense that conversational commerce should come into its own. Consumers want a more tailored, personalized, ongoing experience. C-commerce's conversational style can bring a new element of personalization and warmth to the shopping experience, which isn't there in e-commerce. It lets shoppers shop from their sofas without going out to physical stores and gives brands the ability to drive engagement and loyalty. C-commerce is here to stay.