AI and chatbot in the e-commerce industry

The 100 billion mark is in sight! Over the last 15 years, the French e-commerce market has not stopped growing. It reached 92.6 billion euros in 2018, a 13.4% increase compared to 2017, despite an unfavourable social context at the end of the year. The number of retail websites shot up by 12.6% in a year to reach nearly 200 000 active online stores. Yet despite the sheer number of players, 90% of the market lies in the hands of just 6% of e-merchants, approximately 10 000 websites (source: ZDNet).

To stand out, the ”small” players focus on innovation and the quality of their customer relationships. They are therefore increasingly turning to automation software to improve their business processes, make predictions, or improve their customer service. This article explores how AI and chatbots allow the e-commerce industry to reinvent itself in order to continue to grow and prepare for the years to come.

AI at the service of e-commerce

  • Effective target marketing

AI is capable of analysing huge quantities of data. Used intelligently, they can complement marketing analytics and improve the brand’s target marketing. These solutions collect customer data (age, sex, location) and their behaviour (pages visited, time spent on website, number of clicks) in order to identify their consumer habits and promote the product(s) best adapted to the customer’s needs.

AI solutions can also help identify tomorrow’s trends. L’Oréal for example analyses thousands of images on social media in order to spot the products and details (colour, patterns) in vogue to add to their product ranges.

  • Optimised logistics

AI may not have reached its full potential yet, but its scope of action within the supply chain is already considerable, whether in the optimisation of order preparations, transport, or stock forecasting. Take the giant Alibaba for example, who uses Cainiao, its logistics subsidiary, to pinpoint the most efficient delivery routes by using vast amounts of data. As such, they have reduced their use of vehicles by 10% and the distances travelled by 30%.

As for stock management, algorithms can be applied to identify early on which products are likely to sell faster or slower than expected.

  • Visual searches

Truly revolutionary for customers – in just a few seconds, they can find the product they want with a photo taken on their smartphone. Fashion, home décor or furniture brands have been quick to adopt this new use, such as La Redoute who added visual recognition to its mobile app in 2017.

  • Customer service and automated conversations

More and more e-commerce sites are equipping themselves with conversational assistants, otherwise known as chatbots. Featuring on their website, mobile app or messenger, these chatbots provide users with information before, during and after their purchase.

The rest of this article will focus on the above, and how chatbots can help improve an online store’s customer service.

Conversational AI for better customer service

Conversational Artificial Intelligence can be defined as a machine (a computer programme), with the ability to hold a conversation with a human at different levels of complexity. Chatbots are one of these conversational AI applications.

  • Chatbots, from virtual assistants to personal shoppers

The more you tell, the more you sell.” The rise of chatbots and their multiple uses in the e-commerce sector seems to confirm this adage.

Over the last 10 years, chabots have made their way onto most companies’ websites, mobile apps and messaging platforms. They appear in the form of a pop-up window and usually begin by defining their scope (chatbots are not supposed to answer all questions): product recommendations, after-sales queries, logistics questions (cost, delivery times, refund policy, etc.). And when the chatbot does not know the answer, it hands over to a human operator.

Today, chatbots are far more popular and reliable than you may think. According to a recent Ubisend report, 1 in 5 customers consider buying a product or service via a chatbot.

We will now take a look at how chatbots can improve the customer’s e-commerce purchasing experience.

  • Availability and instantaneity

Availability is a chatbot’s best asset! They provide answers in real time, 24/7, a considerable advantage bearing in mind that consumers tend to make their online purchases in the evening, with 19% of sales between 6 and 8pm (source: IFOP).

A question about delivery, a return or refund? A chatbot’s availability and instantaneity is what appeals most to users. 71% of consumers say they would use messaging apps for customer support (Hubspot, 2017), primarily to ensure the swift resolution of their problem. The quality of customer service is one of the main reasons a customer stays, returns or decides to leave an e-commerce site.

In addition to their availability, every chatbot is endowed with its own personality, designed in advance by the brand implementing it (tone of voice, expressions). Chatbots are therefore also their brand’s spokesperson and can inspire user sympathy. Bots are never in a bad mood and can sometimes even make you smile.

  • Personalisation et product recommendation

Beyond their ability to answer user questions about products, terms of purchase or logistics, chatbots can create a range of content that is adapted to each visitor.

Sephora’s messenger chatbot is a perfect example of this. Simply answer a few quick questions and gain access to personalised beauty advice. Providing appropriate and relevant content both satisfies existing customers and converts those who are on the fence. Visitors to a website feel that they are being assisted, thus building a relationship of trust. Chatbots engage the user and encourage them to buy. They can also promote other products that may interest the customer, otherwise known as cross-selling: “if you like… then you will like…”. They can also upsell by offering personalised promotions for each visitor in order to encourage them to make another purchase.

As such, a well-designed chatbot can improve an e-commerce site’s conversion rate, whilst decreasing their bounce rate, one of the biggest challenges faced by online stores.

By asking the right questions, a chatbot can recommend personalised products based on the user’s answers or saved preferences.

LEGO’s chatbot messenger Ralph is a perfect example of this. Ralph asks a series of questions about the person’s age, budget, or favourite topics in order to find the perfect gift.

  • Smooth customer service and cost reductions

Chatbots are useful for buyers and future buyers, but they also strongly benefit the companies implementing them; increase in productivity, cost reductions, and employees who feel valued.

Customer advisors are no longer required to answer the simplest and most frequently asked questions; the bot does it instead. In many cases, a significant drop in the number of inbound contacts can be observed following the implementation of a bot. Lower contact rates mean lower costs. The cost per customer request for an agent is said to average around 6€ in B2C and over 11€ in B2B (Harvard Business Review, 2017).

Automating answers that were once provided by agents does mean that the company wants to replace them. Covering 20% of the most frequently asked questions avoids 80% of enquiries. Chatbots do not therefore need to answer everything to be efficient. In certain cases, a hundred or so knowledge articles are more than enough. The agent works the chatbot and takes over for the more complex queries.

When a brand implements a chatbot, they ensure both their conversational strategy with customers, and their conversion strategy. A well-treated customer, whose expectations are met, is a loyal customer. Research, data analysis, classification, advice… Humans have endowed bots with their intelligence. And this is only the beginning of what bots will be able to do tomorrow.

communication officer
Lucie Choulet
Communications officer