Conversational Commerce: Redefining Ecommerce

By Anush Clive Fernandes / In Ecommerce / October 8, 2020 / 11 min read

Ecommerce businesses today are the cusp of something extraordinary. As the pandemic takes a hold of the world, more people have made the move towards online shopping. And at the forefront of ecommerce led innovations is Conversational Commerce, known more colloquially as ecommerce chatbots.

COVID-19 has drastically changed the way consumers have approached ecommerce. From isolation to uncertainty, environmental factors combined with increased purchasing power for employed individuals, consumers are changed what they’re buying, when and how.

Leading this change is the ecommerce industry. Leading this change is conversational commerce.

While retail stores were dwindling in number pre-pandemic, the COVID-19 pandemic seems to have accelerated that trend globally. In the same timeframe, ecommerce itself has seen massive gains.

  • The time in lockdown has caused an ecommerce boom, with the estimates suggesting that the pandemic has accelerated the shift away from physical stores by roughly five years.
  • While department stores are expected to decline by over 60%, e-ommerce is expected to grow by nearly 20% in 2020.
  • Even retail stores have started using ecommerce chatbots to make customer support more effective.

What’s next for R/E-tail?

The future of shopping is not purely brick-and-mortar or purely ecommerce, but a combination of the two.

And bridging that gap needs technology that addresses the challenges of either approach. Namely, it needs to make ecommerce more personal, and retail more effortless.

Enter, conversational commerce, or ecommerce chatbots.

An ecommerce chatbot takes the dull, en masse experience of the website and turns it into a for-your-eyes only, personalized experience.

Similarly, it takes the hassle of post-sales, in-person support out of retail (think having to go to a store and return a product), and makes it more easily accessible.

And this bridging of expectations is important, as more and more large retailers double down on their investments in ecommerce.

In the case of the largest retailer in the world, Walmart, the pandemic helped drive ecommerce sales up 97% in its last quarter. Target set a sales record as its same-day fulfilment services grew 273% in the quarter.

Market leader Amazon, naturally, has also benefited from the shift to digital with its recent record quarterly profit and 40% sales growth.

Does this hold true for India too?

On an Indian front, the biggest beneficiaries of the lockdown have been grocery businesses including Grofers, BigBasket and grocery arms of Flipkart and Amazon, according to a report by Financial Express.

The monthly gross merchandise value of the e-tail sector stood at around $30 billion during January 2020. As the pandemic worsened and the lockdown kicked in, that plunged to a paltry $3.5 billion in April.

While this seemed dire, it only took till June – just two months – for e-retail to cross pre-COVID GMV levels to $36.5 billion, according to the data sourced from a RedSeer analysis.

Customers who earlier only used Flipkart or Amazon are now also ordering food online, getting medicines delivered, buying grocery, etc. So use cases for online commerce have increased

Abhishek Gupta, Senior Consultant, RedSeer Consulting

Both Amazon and Flipkart expanded on their product arsenal to tackle the COVID-19 pandemic.

Amazon recently launched its project code-named ‘Local Shops on Amazon’. Aimed at helping customers get products from local shops, the initiative also looks to help shopkeepers supplement their footfalls.

Flipkart has already partnered with around 37,000 kirana stores, of which close to 25,000 of them are in last-mile delivery activities.

Conversational Commerce – The best of both worlds

One of the best examples of a brand wholeheartedly embracing conversational commerce is the French cosmetics firm L’Oréal.

The company is one of several major brands pushing into conversational commerce by making themselves accessible to customers all over Southeast Asia.

For Pierre-Olivier Guy, L’Oréal Vietnam’s Chief Digital Officer, this was a decision driven by stereotype-bucking data. “We see higher penetration of conversational commerce within the more mature population, aged above 30.”

Messaging isn’t just a Gen-Z thing, millennials with disposable income were raised on messaging. From AOL to IM chat, and from WhatsApp to IG, messaging is and has been a prolific part of their lives.

A survey commissioned by Facebook found that over 58% of respondents felt more confident messaging a business, rather than calling or filling out a contact form online.

“If I sell a fragrance on ecommerce, I may need a promotion or a discount,” Guy said. “But on conversational commerce, it is all about the experience, the quality of the story, and meaningful conversations.”

What are the incentive structures for both parties?

Why does conversational commerce work so well for brands and customers alike?

Well, starting from the early 2000s, the increasing popularity of SEO and SERP meant that companies increasingly started to game language used on websites.

This moved digital conversations from what consumers wanted to hear to what search engines scanned for instead.

Conversational commerce compensates for this by adding personalization and warmth back into the experience. It’s like having a personal concierge at a store, but while on your sofa.

This combined with changing consumer behaviour; as users began increasingly relying on messaging apps for all forms of communication, made business and commerce communication the logical next step.

Real-World Examples of Conversational Commerce

And for A+ execution, look no further than Burberry.

Using conversational commerce, Burberry employees use the technology to directly contact the company’s most important clients. These customers get access to in-store appointment bookings, personalized online advice, and an unrivalled ecommerce experience.

Since starting conversational commerce, buyers report spending 60% more. Trust and reassurance are key factors to the buyer’s experience on c-commerce.

Karen Teo, Facebook’s Global Business Group VP for APAC, speaking at an IAB SEA+India webinar

So does this mean that conversational commerce only works or drives sales for boutique high fashion firms?

Not at all.

Much like the ML technology that powers it, conversational commerce only gets better with time.

As customers build relationships with the sellers they trust using the conversational interface, even seasoned buyers begin to spend more as the friction of buying reduces. They also tend to make more impulse purchases and spend more to qualify for discounts or free shipping.

So not only is conversational commerce simpler for consumers who no longer need to toggle back and forth between text conversations and websites to gather information and make purchases. But it’s also a step closer to the attention you might get from a sales associate in the store.

When ordering from a website, you can read reviews to get a sense of whether a product will work for you. But using chat you can ask for help comparing your options – more like the advice you would receive in-store.

So what are you waiting for?

Want to build a Chatbot for your own ecommerce or retail store? Look no further than Verloop.io!

Get started now!

Schedule a Demo!

Leave a Reply

Your email address will not be published. Required fields are marked *

Anush Clive Fernandes

Content and Marketing, Verloop.io

Love Canines, Conversational Automation and Curry - Steph and otherwise.