Rise of the Chatbots

The new world of conversational commerce was born in late 2014 with the launch of Amazon Echo and the Alexa chatbot platform. It began as a trial to Amazon Prime members that extended into 2015 and became available to everyone later that year. In early 2016, the Echo and Alexa appeared in Amazon's first-ever Super Bowl ad and sales have topped 5.5 million units.

Clearly, consumers are excited about the prospect of talking to the internet and retailers are suddenly seeing commercial possibilities. Facebook, Google and Microsoft launched major solutions that demonstrated how machine learning and Natural Language Processing (NLP) have made huge leaps forward.

Artificial intelligence (AI) has simultaneously become cool and chatbots are a perfect way to tap into AI's enormous potential.

In addition, open source communities and vendors have matured to the point where third-party API's (application program interface) for creating and managing chatbots have become readily available. In an incredibly short period, a chatbot ecosystem has emerged that is putting the technology within easy reach of developers.

What all this means is that startups are rapidly emerging that can integrate NLP and AI logic into chatbots and produce solutions that rival those developed by the mega-tech companies.

Who is Doing What?

The big four voice-command platforms are Apple Siri, Amazon Alexa, Google Home and Microsoft Cortana. Each has functions that operate like a personal assistant, one who is always ready to help consumers via voice commands and operate at scale.

The messaging platform Kik, aimed at teenagers, and Facebook Messenger actively encourage and support creation of chatbots. Thousands of chatbots have sprung up on these platforms in less than a year.

Retailers that have made the leap into chatbots, using either voice command or text messaging, include:

• Whole Foods allows users to search for recipes and find store locations. More than 50% of its recipe searches happen in grocery store aisles.
• 1-800-Flowers rolled out one of the first bots on Facebook Messenger, which allows users to send flowers and gifts, make gift suggestions, process orders, and send shipping updates.
• eBay has the ShopBot smart personal shopping assistant that helps visitors find the best deals.
• Macy's On Call answers common customer questions, such as where to find specific products and is available in both English and Spanish.
• Victoria Secret PINK has a Kik chatbot that enables teenage girls to find the perfect bra. Teens answer a few questions about their current bra fit
• Tommy Hilfiger's TMY.GRL on Facebook Messenger promotes Tommy's fashion line for supermodel Gigi Hadid. Fashionistas can learn about Gigi, access behind-the-scenes content, and shop.
• H&M's Kik bot offers teens outfit inspiration and on-demand personal styling. The bot pulls from H&M's product lines to build a whole outfit.
• Burberry's Facebook Messenger bot shares new collections and doubles as a live customer service portal. It also invites users to explore clothing and view sketches of its clothing lines

Sephora is in a chatbot class all by itself. It started with a Kik bot that shares makeup recommendations, videos, tutorials and tips for eyes, lips, face, hair and nails. It then launched a Facebook Messenger chatbot called Sephora Virtual Artist that allows users to upload a selfie and try on different lip colors, which has received more than four million visits. Recently it launched the Sephora Reservation Assistant on Facebook that uses natural language processing to book makeover appointments. Each of these bots can process orders.

The list of retail chatbots is so long now that retailers without one should begin to wonder why not. And retailers aren't the only ones using chatbots. Use cases extend far beyond retail and into banking, travel, entertainment, healthcare, and consumer goods.

For conversational commerce to work it really does not matter if consumers are chatting with a human or a bot if three criteria are met: they get useful information, the experience is convenient, and the interaction is not annoying.

Studies dating back to the 1960s have shown that if these three criteria are met humans show no reluctance to engage with computers. It has taken many decades for the technology to mature into chatbots that retailers can confidently deploy for conversational commerce, but that day has clearly arrived.

Joe Skorupa is editorial director of RIS News, a sister publication of Retail Leader.