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Can Conversational Commerce Fulfill Its Potential In Retail? Featured

  • Written by  Glenn Taylor
Can Conversational Commerce Fulfill Its Potential In Retail?

The remarkable growth of voice-assisted devices over the past year has expanded what “conversational commerce” truly means for retailers. While the term had largely been used to describe chatbot activity just a few years ago, voice now gives retailers yet another shiny toy to fulfill consumer needs — and hopefully create a new shopping channel. As such, there are high expectations around the technology: voice shopping is expected to account for $40 billion in U.S. consumer spending by 2022, according to a study from OC&C Strategy Consultants. However, for such a figure to be achieved, retailers must still surmount some high barriers.

It’s true that enthusiasm for the technology itself is high— voice-activated devices are set for 50% U.S. sales growth from the 2016-2017 period to the 2018-2019 span, according to NPD Group. Yet despite this popularity, interest in — or even awareness of — their commerce functionalities remains low.

Thus far, only 16% of consumers use conversational commerce platforms to initiate payments for goods or services, according to a report from Mastercard and Mercator Advisory Group. Another recent study was even less optimistic — approximately 2% of the 50 million people who own and use Alexa-ready devices have used them to make a purchase in 2018 so far, according to The InformationAnd of those who did use Alexa to shop, 90% did not try it more than once, the report said.

Lack Of Comfort, Distrust About Payment Lead Voice Shopping Barriers

With most shoppers showing no desire to shop on voice platforms even after trying them once, it’s clear there are hurdles that prevent consumers from making voice commerce a consistent habit. 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%.

Voice Adoption Won’t Come Easily

Many consumers are still in the learning curve phase with the devices themselves. “First, people need to become more comfortable interacting with voice devices in general, then comfort in purchasing will follow,” said Mark Taylor, EVP and Chief Experience Officer, Capgemini DCX Practice in an interview with Retail TouchPoints. “Our research on conversational commerce from earlier this year confirms this: 24% of shoppers said they would use a voice assistant rather than a web site. However, three years from now, that rises to 40%.”

Exactly how long it will take for retailers to fully leverage conversational technologies is up for debate. But the first steps involve gaining better knowledge of the technology and understanding how customers react to its capabilities.

“As much as retailers have made great strides over the past couple of years in being nimbler and more agile, this is such a unique technology that they will still struggle with,” said Jeffrey Neville, Senior VP and Practice Lead at BRP Consulting in an interview with Retail TouchPoints. “The thought of doing a pilot of a customer service/voice commerce program is going to be difficult because it’s so different. There’s a tendency to overthink the impact of something like this on their customers. As far as the base technology goes, you can get partners or cloud-based third-party applications to do a lot of the groundwork, but from a data integration standpoint and from an understanding of how you build and manage these tools — that’s going to be a struggle.”

Part of understanding this potential change in shopper habits also comes down to differentiating how people type compared to how they speak, according to Ryan MacInnis, Director of Marketing at Voysis.

“We’ve been conditioned over the past 10 years to put certain keywords next to each other in a search bar to make sure we get optimal results,” said MacInnis. “We know that if we type in ‘red shoes’ versus ‘shoes that are red,’ the latter might get you no results. If you say something through voice instead, asking about ‘shoes that are red that are size 12’, the voice should be able to extract what you’re looking for due to the data available now.”

1-800-FLOWERS.COM Ventures Into Voice

Knowing that voice technology will likely cause some bumps in the road, retailers need to conduct more tests to gauge how consumers respond to these technologies. As a company that has always experimented with new ways to get ahead of changing consumer behavior, 1-800-FLOWERS.COM has leveraged voice technology successfully, launching a voice-based floral gifting application on Amazon’s Alexa platform as early as 2016. During the 2018 Retail Innovation Conference, CEO Chris McCann noted that 1-800-FLOWERS.COM is starting a cultural shift to move from a “mobile-first company to an AI-first company.”

McCann referred to conversational commerce as “The Fifth Wave” of its changing culture, noting that the retailer expanded voice capabilities to Google Assistant in 2017. While the company is very aware that it can’t force changes in consumer behaviors, the implementation of new technologies puts them in front of a new audience, particularly young, early technology adopters.

“Voice is the ‘back to the beginning’ for us,” McCann said during the conference. “It’s the true new user interface, and we’re seeing that to start to become more prevalent, certainly as the home gets smarter. As we’re starting to see voice become more prevalent in automobiles, I think that will start to tip the scale.”

For Chatbots To Work, Transparency Is Crucial

Although much of the talk regarding conversational commerce references voice shopping, chatbots are presently the more feasible applications in retail. But even chatbots still have their limitations, making it important for retailers to get a grip on where the AI-powered platforms work, and where they don’t.

For example, only 9% of consumers find chatbots useful in their attempt to purchase an expensive item, according to Salesforce. The likeliest explanation for this low figure is that 30% of consumers say their top worry about a chatbot is that it would make a mistake.

Chatbots’ ambiguity may be part of the issue: consumers can be confused as to whether they are talking to a real person or a bot until they’ve already entered the interaction. That lack of clarity can be a turnoff for consumers, and make them not want to use the technology even when it can help them. Retailers seeking to deploy chatbots must be transparent about the fact that the messaging apps are not real human beings.

“A big discussion in this space is: ‘Do we want the customer to think they’re speaking with a real human being or do we want the customer to realize that this is convenience with Watson or some other AI technology?’” said BRP’s Neville. “That’s a decision retailers have to make right now. Any AI using voice is probably going to mess up the conversation at some point, and the customer is going to realize that they’re talking to a computer.”

Voice Has A Long Way To Go For Product Discovery

Retailers selling commodities or easily replenished items currently have the inside track with conversational technology, since shoppers can simply say “Alexa, buy batteries” or type “buy batteries” into a chat. But for retailers offering design or luxury items that require a more sophisticated search, conversational commerce may require the integration of other technologies to really take off.

“Conversations are happening very frequently — when they are happening — but they are only happening within category leaders,” said Mukund Ramachandran, CMO of Dynamic Yield in an interview with Retail TouchPoints. “People realize that the way conversational commerce is going to work today is that it’s going to work for categories that have repeat purchases and kind of a loyalty-esque behavior, versus behavior around discovery.”

Retailers that rely on product discovery as part of the shopper journey will need to integrate conversational elements into more compelling features that can draw the consumer in. That is an understandably difficult expectation with a more nuanced direction, but it appears to be the only way to nail down the specificity of a discovery experience.

“If you look at apparel or luxury, you’re seeing companies like Burberry and Tommy Hilfiger use chatbots to be able to play the role of a stylist and provide fashion advice,” said Neville. “That’s where you may start seeing that relationship building through a chatbot, versus the stylist you’re used to going to at Polo Ralph Lauren. Not to bring this back to Amazon, but the Echo Look can take a picture of you in an outfit, and the long-term theory is to be able to combine this conversational commerce and voice shopping with image recognition. As you start to mix the concepts of being able to have a conversation with a computer-based stylist, and then having that computer-based stylist also be able to recognize patterns and colors, and making recommendations out of the existing retailer’s catalog, there’s some cool opportunities that retailers can tap into.”

Consumers Are Using Voice To Navigate Online Journeys

There are indications that the barriers to voice commerce are already 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%.

“Commerce is not limited to the transaction — the role of voice in accompanying consumers on their journey to the transaction (and beyond) is starting to take shape,” said Taylor of Capgemini. “Voice will be an extraordinary vector of brand differentiation, and this differentiation will drive preference.”

So while there is certainly room for concern for retailers investing in conversational commerce technology, as shoppers have better experiences with these baby steps, the chances are higher that they will move into making transactions down the line.

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