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Chatbots: Latest Technology in Retail

Updated on July 13, 2016

The basic principles of human-to-computer communication were outlined nearly 70 years ago by Alan Turing – the famous British mathematician, code breaker and the father of artificial intelligence. Then there was Eliza, a primitive chatbot that processed user responses to scripts creating an illusion of understanding. And don’t forget about Alice: the smart program actually won several awards including the Loebner Price and still failed to pass the Turing test.

Now we’ve got Miss Piggy – a computer program that runs inside the Facebook messaging app and chats away with fans promoting her latest Up Late with Miss Piggy fictional TV show. Although the bot fails to recognize some trivial questions (like “How’s the weather”) focusing on promotion instead, it’s definitely a huge step forward.

AI chatbot: taking customer experience to the next level

We humans love to spend time on social media. According to TechCrunch, smartphone owners now spend 85% of their total mobile time in apps, but only 5 applications actually see heavy usage – and one of them is Facebook, of course.

With 27% of online payment transactions made on mobile devices, 58% of e-retailers consider mobile as their top priority – and invest in app development. However, no one really waits for their apps (we love Facebook, remember?). And that’s why chatbots may be the biggest thing since the beginning of mobile web.

By 2019, messaging apps like WhatsApp, WeChat and Facebook Messenger will be installed on 68% of smartphones out there; why not use the channel to reach target audience?

That’s exactly what Mark Zuckerberg thought – and built a chatbot platform within the FB messaging application, thus enabling third-party companies (including e-retailers and content creators) to develop smart voice assistants and directly communicate with their potential customers.

An AI chatbot is a light-weight application that runs inside Messenger and doesn’t differ much from other contacts on a user’s list. Bots’ conversational abilities are limited to one topic, but most retailers don’t want to build a second Tay anyway. Quite a few e-commerce companies have already jumped on the trend – and so far have no regrets about it.

Examples of using chatbot technology in retail

Spring

Spring became one of the first companies to build a Facebook chatbot. It has a very simple, stripped-down interface – and uses pretty simple logic, too. The bot interprets a series of multiple choice questions.

Here’s how it works.

You access the bot and receive a personal greeting message (like “Hi, John, what can I help you with?”). The bot then provides several buttons to direct your responses, offers to choose a product category and asks how much you’re going to spend. Then you can look through several catalog items that match your choice, pay by credit card and go back to the messenger where a receipt is already waiting for you. Although the bot lacks some useful features (choosing clothes by color, for example), Spring proved that any retailer can build an app with a natural language interface and revolutionize customer experience.

H & M

Facebook is not the only messaging app that welcomes AI chatbots. In fact, Kik (a messenger with 275 million active users) announced its chatbot platform earlier than Facebook, and the chances users might prefer Kik over its rival look pretty good. If you want to communicate with a Kik bot, you simply enter @ followed by the bot’s name, and the smart program automatically joins your conversation. Once you get what you want, the bot quietly leaves the chat (just like a well-trained assistant or waiter would do).

Anyway, let’s go back to H & M.

The world’s second largest clothing retailer took a delicate approach to chatbot marketing. Instead of bombarding you with promotional messages and digital coupons the smart assistant offers you to choose a clothing item and…builds a trendy outfit around it, so you can’t help but check the suggested items on the company’s website and eventually buy them.

Sephora

The French cosmetics retail chain launched a friendly chatbot to provide makeup tips to US teenagers – and convert them into paying customers, of course. The artificial intelligence program asks a user what type of content he (or she – we’re talking about makeup after all) is interested in and uses the information to select relevant how-to videos and product reviews. Each message incorporates links to Sephora’s mobile website, so you can make online purchases directly from the app.

The bot’s performance is sort of lackluster at the moment: it fails to recognize semantic patterns of human speech and generates replies based on the choices users make. However, bots will get smarter over time - at least those that rely on the machine learning technology.

Why should you care?

In case you consider building an e-commerce website in the near future, we've got an interesting case for you.

Adrian Zumbrunnen, an experienced UX designer from Switzerland, integrated a simple chatbot into his personal website to guide users through his portfolio and make their online journey a little more entertaining.

Within 48 hours the website traffic grew by 1000%!

The experiment made Adrian re-consider the whole bot concept; he doesn’t fear the Artificial Intelligence takeover anymore. Bots have personality – and that’s why they might one day replace orthodox hamburger menus and navigation bars.

Another reason to build an e-commerce chatbot is cost reduction. You can hire an experienced developer, put up a Magento website and integrate it with a Facebook chatbot. If you’re not impressed with the straight-forward “yes-no” Spring and Sephora bots, you can create a more sophisticated voice assistant using the Facebook Wit.ai engine.

The rise of chatbots marks a totally new era for e-retailers; now companies that employ SMS marketing can transfer their existing phone number databases to Facebook and reach their audience through an extremely popular and effective customer acquisition channel.

You surely don’t want to lag behind your competitors, right?

Mark Zuckerberg on chatbots

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