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Conversational Commerce: A Competitive Advantage for Smart Retailers

Move over chatbots. Conversational commerce fueled by AI is real and growing by leaps and bounds. Driven by consumers’ increasing appetite for voice devices, Amazon, Google, Apple and others in the voice assistant business have expanded their portfolios dramatically over the past year. For example, Amazon is funneling huge sums of cash towards Alexa through the Alexa Fund that provides up to $200 million in venture capital funding to fuel voice technology innovation. The Fund envisions an Alexa-filled future where voice assistants are available anywhere you turn, ready and eager to help you solve your problems or make your next purchase.

How much is consumer demand for voice interfaces increasing? In a recent study by the Capgemini Digital Transformation Institute, 40% of consumers surveyed said that by 2020 they will be using a voice assistant instead of a mobile app to make online purchases.

Where do the potential opportunities lie? According to Capgemini’s research, more than half (52%) of voice assistant users would be interested in buying electronics via voice assistants, with significant interest also shown in areas such as clothing, groceries, and home furnishings.

Users interest in suing voice assistants for purhcase

Is Voice Shopping for every ecommerce Company?

The short answer is yes. However, the key lies in understanding what the possibilities and constraints of voice purchasing are.

There is already a known formula for great voice shopping – small, repetitive products that are sent to the same location. Customers typically have their favourite selection, they usually order to the same location and pay with the same credit card. This makes conversational commerce a natural step for companies like Dominos which created the virtual ordering assistant Dom, that lets consumers dictate orders via mobile devices while on-the-go. Or Starbucks and My Starbucks Barista which allows customers to order and pay for their food and drinks just by speaking, including the ability to modify their drink order, as if they were speaking with a barista in real life.
Other great examples of using voice in ecommerce include reordering – when customers need to ask Alexa to reorder their usual items like dog food. It’s also helpful for things like order tracking when it’s easier to ask Alexa where the package is rather than looking for an email with the tracking link.

Voice also works extremely well when combined with lists. One of the biggest use cases of Alexa is quickly adding items to shopping lists. Once the item is on the list, it is possible for merchants to make recommendations for products that complement what’s on the list via other marketing channels. This is exactly what Ocado in the UK did. By enabling “adding items” to a shopping list by voice, giving customers a chance to review the order on a different device before they make the final purchase, Ocado saw an measurable increase sales.

What’s also great about voice is that it opens up new a marketing channel for ecommerce businesses. For example, Procter and Gamble, the makers of Tide, created an Alexa app that helps to guide users through the stain removal process with their products. Customers simply ask Alexa how to remove a grass stain and the application can guide them through the recommended steps.

Unfortunately, getting started with voice apps can be challenging for many companies, particularly those who do not have the technical teams to build new interfaces. There’s a whole new ecosystem of tools around it, not to mention critical business decisions and a clear understanding of the landscape that’s required before ecommerce retailers make the leap into conversational commerce. That’s where working with a solutions partner like TWG can be helpful.

The Adoption Challenges for Ecommerce Merchants

According to a report from Voysis and Voicebot, some of the major barriers for consumers are:

  • They are not comfortable shopping by voice: 31.7%;
  • They don’t trust smart speakers with payment information: 23.4%;
  • No screen to order from: 21.2%;
  • There are no barriers at all: 18.1%; and
  • Shoppers can type faster to get what they want: 16.7%.

But there are indications that the barriers to voice commerce are starting to fall. When it comes to interacting with voice assistants throughout the shopper journey, consumers have a wide variety of tasks they want to complete both before and after making a purchase. Top touch points of interaction include:

  • Checking delivery status: 49%;
  • Making a shopping list: 45%;
  • Searching for products and services: 42%;
  • Adding items to a shopping cart from a shortlist: 42%;
  • Providing feedback for any product or service: 40%;
  • Using customer support for any product/service: 40%;
  • Making a purchase: 35%; and
  • Recommending the purchased product/service to others: 34%.

Another key challenge for online merchants is SEO. That’s because written search optimization and voice based optimization techniques differ fundamentally. Algorithms based on written text determine the relevance of a site or product based on a short phrase that one searches for based on relevance, for example “New York hotels.” Algorithms based on voice recognition will cater to natural language queries which will likely be longer than written searches and will be in full rather than partial sentences. A good example would be “I am looking for reasonably-prices hotels in Soho.”

Additionally, another potential challenge for merchants to overcome will be marketing products purely using verbal descriptions and not images. Sellers will need to come up with short, catchy, precise product descriptions in order to capture sales.
So while there is certainly room for concern for retailers investing in conversational commerce technology, as shoppers’ experiences improve, chances are they will move into making voice-enabled transactions down the line.

What’s Ahead

Despite the hurdles, leveraging this new technology to your benefit is smart risk. According to analysts at Gartner Group, early adopters stand to gain as much as a 30% upturn in ecommerce revenue by 2021. If the upturn in revenue isn’t enticing enough to get you on board, here’s a reality check:

Enterprises like Proctor & Gamble, Dominos, Walmart and 1-800-Flowers are rapidly rolling out this technology, which means that SMB retailers must keep pace or risk losing customers due to subpar experiences.

Consumers don’t care what size of business you are. They want to browse and transact in a way that suits their needs. If you can’t offer multiple gateways that meet those needs, consumers will go elsewhere.

So, between the potential of conversational commerce and the importance of meeting customer expectations, you should immediately identify conversational commerce as something, at least, to be looking at. If you’re not, then it might be time to rethink your approach. Why? Because research on retail customer experience by Salesforce found that:

  • 77 percent of consumers say they avoid going to stores
  • 64 percent want personalized offers from retail brands
  • 56 percent are willing to share data to receive faster, more convenient experiences

Conversational commerce hits all these points. It may be the next great frontier for retail experiences. It’s here now and growing rapidly — a paradigm shift that’s not going away. If you’re a manager of an ecommerce business, now is the time for you to be adding this to the tech trends you’re paying attention to while preparing your business’s infrastructure to support voice assistants. That means it’s time to get friendly with Alexa, Siri, Google and the gang.