Conversational Commerce: unveiling the Power of Conversational AI

Conversational Commerce: unveiling the Power of Conversational AI

Conversational AI is reshaping ecommerce landscape, learn the basics of Natural Language Processing and shopping assistants.
Conversational Commerce: unveiling the Power of Conversational AI
Pietro Di Chio | Full Stack Developer
Pietro Di Chio | Full Stack Developer
November 28, 2023

In the ever-evolving landscape of e-commerce, one trend is taking center stage and transforming the industry as we know it – conversational commerce. 

We have discussed it in detail here. But nowadays, this innovative approach is being fueled by the prowess of Artificial Intelligence (AI).

These technology evolutions are reshaping the user experience and driving unprecedented conversion rates. In fact, according to recent statistics, 64% of consumers expect to receive a quality service from AI bots, comparable to that of human agents.

In particular, Conversational AI is reshaping the ecommerce landscape by offering incredible tools and functionalities to digital businesses. 

Not surprisingly, the global conversational AI market size is projected to reach $32.62 billion by 2030. From virtual shopping assistants, that guide you through a customized shopping experience, to chatbots that provide instant support, we're seeing stunning implementations of AI in conversational commerce.

Let's dive into the world of conversational commerce and explore the key insights from leading articles in the field.

The Rise of Conversational AI in E-Commerce

What is conversational AI?

Conversational AI is a subset of artificial intelligence (AI) that focuses on enabling natural language human-like interactions between computers and humans. 

It involves the development of software systems that can understand, interpret, and generate human language, allowing them to engage in complex and meaningful conversations with users. Conversational AI is frequently used in virtual assistants, chatbots, voice assistants, and other applications that require human-like interactions. it leverages advanced technologies such as natural language processing (NLP), machine learning, and deep learning to improve the user experience.

For example, if a customer messages you on social media, asking for information on when an order will be shipped, the conversational AI chatbot will provide the desired information in a couple of seconds.
It will do this based on prior experience answering similar questions (that is machine learning) and because it understands which phrases tend to work best in response to shipping questions (that is NLP).

How Conversational AI Works: A Deep Dive

So if you want to understand better how Conversational AI works, you need to understand (even just a little bit) how AI applications work.

First of all, Natural Language Processing (NLP) is a fundamental process that underpins Conversational AI, enabling programs to comprehend, interpret, and generate human language contextually.

NLP and Machine Learning (ML) are related concepts, though they are not synonymous. NLP algorithms could be considered a specialized subset of ML.

The main difference between NLP and the more generalized ML is the type of data being analyzed.
NLP algorithms analyze, process, and interpret text-based data, while generalized ML algorithms focus more on other types of data, such as numeric data or image data.

Here a basic representation of how to distinguish them:

How AI, ML and NLP work together
How AI, ML and NLP work together

How AI can be applied in eCommerce:

Let’s dive into potential AI applications in ecommerce.

  1. Powering Chatbots and Virtual Assistants.
    NLP (Natural Language Processing) and NLU (Natural Language Understanding) empower conversational AIs to understand customer inquiries, respond accurately, and make tailored product recommendations.

  2. Increase customer engagement.
    By analyzing reviews and social media, conversational AIs can increase customer engagement and identify customer sentiment, enabling businesses to quickly address issues and understand preferences.

  3. Chatbot improvements.
    Finally, AI applications guarantee constant Learning and Improvement. In fact, NLP tools using AI, continually learn from user data and developer input, progressively improving their performance over time.

Ok now, it’s time to focus on all the benefits that conversational AI can provide to your business.

3 benefits of using conversational  AI in ecommerce

There are several positive aspects in adopting conversational AI, here are the main three according to us.

1.  Revolutionizing Customer Interactions:

Conversational AI is revolutionizing customer interactions by providing a personalized and interactive experience, never seen before. 

This means that a conversational AI platform can make product or add-on recommendations to customers that they might not have seen or considered.

Of course, personalized interactions and product recommendations contribute to a more tailored shopping experience, ultimately driving conversions.

In order to give you an overview of recent changes, here are some interesting data.

  • According to Gartner, the volume of interactions handled by conversational commerce tools increased by as much as 250% in multiple industries since the pandemic.
  • Almost all adult voice assistant users are using conversational AI tech on a smartphone (91.0% in 2022).
  • According to eMarketer, browsing and searching for products were the top shopping activities they conducted using AI technology.

Moreover, customers love personalization:

  • 80% of consumers are more likely to buy from a company that provides a tailored experience

2. Enhancing User Experience and better Customer service

Before diving into how AI can help you increase your customer experience, let’s start by listing some significant data.

  • As of February 2022, 53% of US adults had communicated with an AI chatbot for customer service in the past year.
  • In 2 years, online chat, video chat, chatbots, or social will be the most used customer service channel in three years, according to 73% of customer service decision-makers in North America surveyed by eMarketer.
  • According to Pwc, 73% of customers consider experience an important part of their buying decision. But, only 49% of customers say companies provide good customer service.

You should consider that Conversational AI facilitates the overall growth of your eCommerce not only by increasing sales and by offering new interactions with your customers, but also by reducing (by a lot!) operational and employee costs, thereby increasing profit margins!

A way to surely frustrate your customers is having them repeat themselves. If they provided you with the information once, they don’t want to have to explain their issue again. The resentment toward repetition is so strong that 92% of customers will spend more with companies that don’t make them repeat themselves.

In fact, mandatory sign-up is considered (most of the times) a major obstacle in modern ecommerce and leads to cart abandonment 31% of the time.
As a matter of fact, according to PwC, 63% of customers are more willing to offer more personal information if they have a great experience.

TextYess can help you with that, by offering a great customer experience interacting with customers in real time, - 24/7 also during the weekends and the evenings - offering product recommendations, shipping information and upselling or cross-selling deals.
Additionally, TextYess AI Shopping Assistant does not require any sign-up from the end customer, he or she only needs to access their WhatsApp!

3. Eliminating Abandoned Carts

E-commerce businesses all across the globe massively struggle with abandoned carts, in fact, they lose $18 billion a year overall.

Consider that the average rate for abandoning carts is over 70%.

This is where conversational AI comes in handy. The latter allows brands to re-target prospects and remind them about their abandoned carts.
It encourages them to complete a purchase by offering a pleasant discount for the viewed goods. 

As people are usually viewing products from several brands at the same time, it is small details that make a difference. If your brand is the first one to remind people about left items in the cart and do it in the right way, you will be the one they stick to when deciding where to buy.

With conversion rates that range from 20-40% depending on the vertical, in-store retailers appear to have a massive advantage over their online counterparts. In fact, most ecommerce websites have a lower CR, converting around 2-3% of site visitors into buyers - the lucky ones.

So AI chatbots can definitely help you with that, by directing your customer flow to a chatbot automation.

For example, with TextYess Generative AI Shopping Assistant, your ecommerce can increase sales with an  in-chat CR of 15%.

Conversational AI Use Cases 

In the pursuit of elevating customer experiences, diverse industries are turning to Conversational AI, increasing performances and unlocking new ways to boost both efficiency and personalization. 

In fact, more and more customers are expecting to have a sort of “personalized assistant” that helps them throughout their buying journey.

In particular, 17% of them expect to receive product recommendations and 16% of them will appreciate having a personal customer support assistant.  
Let's explore how different businesses, in 3 distinct industries, are leveraging this conversational technology to redefine their customer interactions.

Automated Home-expert

AI-driven chatbots handle FAQs, routine queries and can suggest products (or explain main product features) to customers, increasing user experience and making customers fall in love with your brand.

Dafilo and Olimpia Home are both digital businesses in the household products industry. 

They both used TextYess on selling aims to streamline customer interactions, significantly reducing response times and increasing ROAS.

As a matter of fact, Olimpia Home was able to reach an in-chat CR 17%, reaching a ROAS of 72, by using TextYess AI Assistant,  generating 132 orders from 797 conversations.

Similarly, Dafilo was able to reach an in-chat CR of 11%, receiving 52 orders from 492 conversations and reaching a ROAS of 48.

Personal Stylist or Makeup artist

As we said, AI assistants guide potential customers through the buying process, offering tailored product suggestions or advisory roles.
Generally, AI Assistants will ensure quick responses to customers' requests, enhancing customer satisfaction.

But did you know that they can be your customers' personal stylist or makeup artist?
No, I’m not kidding.
TextYess has already implemented these types of shopping assistants in several ecommerce websites like Laylacosmetics and Balato. 

For online customers it’s often difficult to find the right product, especially if it’s a product related to beauty or apparel or if there are a lot of different types of products, because they cannot try it on themselves (like in physical retail stores) and maybe they can’t understand easily the difference between them.

For example, TBD Eyewear implemented a personal stylist to help their customers select the perfect eyewear for them online. Similarly, Laylacosmetics, a makeup and cosmetics online brand, is using TextYess AI Assistant to help its customers find the right product in a massive vari

ety, by offering tailored product suggestions.

Personalized interactions lead to a more engaged customer base, driving higher average order values and fostering brand loyalty.

Italian food expert

As we mentioned, personalized interactions lead to a more engaged customer base, driving higher average order values and fostering brand loyalty.

AI can also help you enhance product discovery: in fact, conversational AI can increase the likelihood of users discovering new and exciting products. This is a huge functionality, especially if your brand is selling online high-quality products or is operating in an industry that requires some kind of “customer education” before users buy (like wine, for example).

This means your brand can offer better customer satisfaction and reduce the issues related to returning the product (which is a huge “pain point” for online sellers), increasing the CLTV.

Moreover, thanks to these AI assistants you will manage better warehouse inventories because you’ll know what type of products your AI assistant will suggest when the customers search for specific features or queries. 

For example, Dolceterra has used TextYess AI assistant as a personalized “Italian food expert” for all its customers.

In particular, the AI assistant not only caters to customer preferences but also introduces them to a broader range of offerings, enriching their overall shopping experience.

Conversational AI is shaping the ecommerce industry

Conversational Commerce, driven by AI, is not merely a trend but a transformative force in the e-commerce landscape. 

As a matter of fact, sales made via conversational commerce channels like chatbots, digital voice assistants, and messaging will grow from $41 billion in 2021 to $290 billion by 2025, according to Juniper Research.

From personalized customer interactions to optimized user experiences, the impact is profound and it’s widespread all over the customer journey. 

As businesses embrace the power of Conversational AI, they unlock new possibilities for growth, customer satisfaction, and higher conversion rates

The journey has just begun, and the era of AI Conversational Commerce is here to stay.