How are Chatbots evolving the Retail Industry?

By: Ryan Daws

15, August, 2017


Artificial Intelligence - Chatbot - Chatbots - Consumer - Featured - Virtual Assistant -

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The rise of AI has been well documented over the past few years, and there are countless predictions about how quickly robots will take over the workplace.

Chatbots have become a ubiquitous theme across almost every customer-facing industry, as businesses explore how they can incorporate the technology into their services and platforms, shaking up their customer service function and cutting costs.

As consumers have embraced the convenience of eCommerce, more conversations are taking place online. With an IBM survey revealing that 65% of US millennials prefer going online to get support, rather than speak to staff in-store, it’s clear that there is a role, and appetite, for this technology. So how can chatbots, and other areas of AI, make shopping a better, easier and more enjoyable experience?

Experimenting with personalisation

For retailers, one of the main appeals of AI is its ability to measure and monitor shoppers’ behaviour, and then adapt the customer journey accordingly to offer a personalised experience.

If brands can track the style, or price points, their customers are generally looking at, they can highlight new products and services which can boost spending – as well as proving they know what their consumers are looking for.

the main appeals of AI is its ability to measure and monitor shoppers’ behaviour

Personalisation is important. According to an Accenture report, consumers are 75% more likely to buy from a retailer that recognises them by name or recommends options based on past purchases.

A great example of this is Amazon’s “frequently bought together” and “customers who bought this item also bought” prompts. These help to entice customers to spend more; a report by McKinsey estimates 35% of Amazon’s consumer purchases come from product recommendations based on such algorithms.

Lingerie company Cosabella has also been experimenting with algorithms using the Sentient Ascend platform to test alternative options for its website design based on the conversion rate generated by each variant. According to the brand’s marketing director, Courtney Connel, the testing immediately resulted in a 35% boost in sales.

The power of voice tech

Retailers are motivated to capitalise on the trend of consumers turning to voice-activated technology in their everyday lives. Apple’s Siri has been leading the way in Natural Language Processing (NLP); acting as constant companion to help people search online, set reminders or tell them what song is playing.

It’s estimated that Siri handles over two billion commands a week, and 20% of Google searches on Android-powered handsets in America are inputted by voice.

It’s estimated that Siri handles over two billion commands a week

Amazon is leading the way for evolving how people engage with AI technology in their homes.

Amazon Echo has already impressed the industry; it was voted the number one product for innovation in our Digital Innovations Retail Report 2017. And the company recently announced the launch of Amazon Look, which has all the functionality of its Echo product – and is also able to take photos of the consumer via voice command, and provide style recommendations through a combination of machine learning and advice from experts in the style space.

This personalised service is a clever step forward for Amazon, as it experiments with bringing the in-store experience – style advice and recommendations – to customers’ homes.

How will AI impact jobs in retail?

The potential for AI to improve the shopping experience for customers, whether online or in-store is clearly large. However, the reality is that it’s inevitable some retail jobs will become replaced, or repurposed, as technology advances to the point where it can perform tasks more efficiently than humans.

it’s inevitable some retail jobs will become replaced, or repurposed

Dr. Keng Siau, chair and professor of business and information technology at Missouri University, wrote in a new research paper: “As robots gain more intelligence and have access to vast amounts of customers’ data, they can process the data much faster than humans and will be able to serve every single shopper in a personalised way. Humans may become replaceable.”

There is certainly some truth in this when it comes to some aspects of customer service roles, as chatbots are used to improve efficiency and cut costs; Juniper Research forecasts businesses which use automated customer services technology could save $8bn (£6bn) in costs every year across global business by 2022.

However, this needs to be done in the right way; research by RichRelevance revealed 42% of UK consumers think AI/chatbot-led customer service is ‘creepy’.

It seems difficult to believe that shop floor staff will ever become completely obsolete. Considering it’s taken several thousands of years for humans to develop skills such as empathy, compassion, and the ability to pick up on the nuances of body language, it’s unlikely that robots will reach this level of sophistication overnight.

The future of AI

It’s an exciting time for retail, as brands experiment with using AI to enhance the shopping experience; making it easier for consumers to find and discover products.

The retailers that will reap the most rewards will be the innovators that bring efficiencies to the customer journey; offering targeted personalisation in a non-intrusive way, and delivering chatbot-fuelled customer service which can answer a wide spectrum of questions.

AI may be doing amazing things, but we’re still some way off from walking into a shop filled with robots.

Why not find out more about Bots & Virtual Assistants at our AI Conference in Santa Clara, CA on November the 29th-30th.

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