How AI-powered conversational commerce will transform shopping in 2023

As the world increasingly relies on technology, the way we shop has also undergone a significant transformation. Gone are the days of physically visiting a store to make a purchase — now, we can shop from the comfort of our homes, thanks to ecommerce. However, even ecommerce-based shopping is set to change with the emergence of AI-powered conversational commerce.

In retail, artificial intelligence is quickly becoming a widely used tool to provide more efficient and personalized customer service. According to a recent study by Juniper Research, AI-powered chatbots are predicted to play a significant role in customer interactions over the next few years, handling 70% of customer conversations in 2023.

This demonstrates the growing reliance on AI-powered tools to improve customer interactions and create a more seamless shopping experience. Imagine conversing with AI-based virtual assistants who can help you find exactly what you’re looking for, offer recommendations based on your past purchases, and then complete the transaction. AI-powered conversational commerce aims to revolutionize shopping by providing personalized, convenient and more efficient service.

The AI-powered conversational commerce advantage

The past decade has seen major advances in conversational AI, deep machine learning, and natural language processing algorithms. Consumers have embraced this technology and are now accustomed to using conversational AI assistants such as Siri and Amazon Alexa, which have enhanced our ability to access information.

AI-powered conversational commerce aims to further personalize the shopping experience. With access to a wealth of data, AI assistants can learn about a customer’s preferences, making it easier to find products that they will love. Such personalization is limited with traditional ecommerce platforms, which rely on generic product recommendations. Advanced natural language processing (NLP)-based chatbots and machine learning models can enhance customer experience (CX) and ultimately drive a higher return on investment (ROI) for businesses.

“Consumers increasingly value experiences over stuff. So unless your store is an enjoyable experience in and of itself, then customers will value the ability to access the experience you provide (owning your product, or enjoying your service) remotely, with low friction,” Kerry Robinson, VP of Conversational AI Strategy at Waterfield Tech, told VentureBeat.

Robinson explained that as consumers become more comfortable with discovering and purchasing products and services through voice and chat interactions on smart devices, brands will need to optimize for discoverability via voice search and virtual assistants like Alexa and Google Assistant.

“This indicates [a move] towards bigger contact centers and ecommerce investments over legacy brick-and-mortar locations — and optimizing those experiences with conversational AI chatbots and voice bots,” he said.

AI-powered conversational commerce will also make shopping more efficient. Customers can ask the chatbot for recommendations or specific product information during the product discovery stage. The chatbot’s deep learning algorithms can learn a customer’s preferences and needs and provide relevant product suggestions based on past purchases and browsing history. This helps customers discover new products they may be interested in and saves them time by presenting appropriate options.

Once the customer has found products they want, they can add them to their shopping cart using the chatbot. The chatbot can also provide information on product availability, pricing, and shipping options and assist the customer in making any necessary selections.

At checkout, the chatbot can securely store the customer’s payment information and process the transaction. It can also handle any issues that may arise, such as an incorrect billing or shipping address, and provide assistance to the customer as needed.

Throughout, the chatbot provides a seamless and convenient experience. The customer can complete all the stages of a purchase without navigating multiple websites or speaking with human customer service representatives. This saves time and reduces frustration, improving the overall shopping experience.

Customers will also have flexibility, able to make purchases through a voice-activated device at home or via a chatbot on their smartphone.

Beerud Sheth, CEO of Gupshup, believes that AI-powered conversational commerce will enhance marketing and advertising in many areas, from public broadcasting to private personalized offers.

“Every conversation leaves a crumb trail of personal preferences that the AI can use to personalize all subsequent interactions. Soon, AI merchants will be like your best friends that know you as well or better than yourself, suggesting just the perfect thing you’ll like,” said Sheth. “It will be like having your personal shopper assisting with the end-to-end shopping experience like they do in premium department stores, but on a mass scale virtually. Each conversation is a one-to-one private chat, with each step in the conversation revealing more details about the customer interest, enabling deep personalization in a way not possible with prior marketing media.”

Enhancing the shopping experience with AI

Traditional ecommerce platforms rely on algorithms that consider a limited number of factors, such as a customer’s past purchases and browsing history. AI assistants have access to a much more comprehensive range of data. Thus they can analyze a customer’s preferences in greater detail,make more accurate recommendations and help customers discover new products.

AI-powered conversational commerce will also benefit retailers. By automating routine tasks such as answering customer queries and processing orders, retailers can free their human staff to focus on more complex tasks. This helps reduce customer service teams’ workload and enables them to provide better service. With the valuable customer data and insights gathered by the chatbot, the customer service team can improve their marketing and sales strategies while increasing efficiency.

Toward conversational advertising

Explaining how AI-powered conversational commerce will impact the way products are marketed and advertised to consumers, Matt Ramerman, president of cloud communications company Sinch, told VentureBeat that AI conversational commerce will further enable consumers to “talk to” ads, so retailers can push an offer to a customer over messaging.

“Marketers can design the ads to invite customers to ask questions or [to] select an alternative or adjacent product they may be more interested in,” said Ramerman. “In turn, the customer can immediately ask questions about that offer, explore options and conclude that transaction without leaving the messaging channel. Conversational advertising invites the customer to participate in a conversation to help shape and customize the offer on the backend. No longer do brands need to make educated guesses about what a customer might want.”

Ramerman elaborated that conversational commerce enables shoppers to proactively engage with brands for shopping, transacting and delivery. He says that streamlining this process through interactivity gives the consumer more control, reducing purchase time and allowing for a more seamless and pleasant shopping experience. At the same time, it creates trust between the consumer and the brand.

“I believe collectively, we are accommodating consumers’ preferences to engage on their favorite mobile channels with a shift to messaging. In fact, consumers are spending nearly 70% of their time on mobile messaging instead of spending time browsing web pages. These interactions at scale have to be powered in an automated way [and] AI is the enabler,” he said.

Current challenges facing AI-powered conversational commerce

Christina Kosmowski, CEO of LogicMonitor, notes that it can be hard to feed conversational tools all the context they need to provide real value and solutions. She also says these tools work great, but only as long as the problem space is confined and known.

“For AI-powered chatbots to run efficiently, context is key. Unfortunately, complete open support is very hard to get right, as this tech runs into the traditional precision/recall problem. The more you try to cover, the less precise you will be — and this will impact customer confidence and trust in the tool,” said Kosmowski. “The more questions you ask as primers, the greater the friction in the conversation. Although the architecture can learn behind the scenes — pulling demographic/psychographic detail and, frankly, deeper personal info to provide a valuable customer experience, gleaning this data in a frictionless way is hard.”

Likewise, Bern Elliot, research VP at Gartner, says that many legacy underlying systems lack the agility needed to respond to evolving markets. As a result the only things you can change are your customer-visible elements, and not the operations.

“APIs to back-office systems are often lacking, and back-office systems are often not integrated with each other. Another significant issue is the data. AI systems need good data to perform their differentiating services, like personalization, and many organizations are still unable to capture and retain the needed information,” Elliot said. “Changing and adapting internal processes, policies, compensations, pricing etc. to properly leverage the new methods currently presents a huge barrier to developing the type of organization capable of delivering these new approaches.”

What to expect from AI conversational commerce in 2023

Ramerman predicts that AI-powered conversational commerce will soon become the primary way to interact with brands in 2023 and beyond.

“Customers crave convenience when shopping, and it’s more important than ever for retailers to keep customers engaged within one channel. Inviting them to a conversation through AI-powered chatbots and voice assistants is the next step in digitizing commerce. Natural language understanding (NLU) enables cutting-edge chatbots to understand and mimic a customer’s tone and/or speaking pattern. More brands will leverage NLU in 2023 to equip their chatbots with brand personalities,” said Ramerman.

Similarly, Sheth believes conversational AI can be combined with AR/VR or voice technologies to make the experience more immersive.

“Together, these technologies can trick your eyes, ears and brains into believing that you’re standing right next to that shopping assistant, or even your favorite celebrity, talking about things to buy or not. Going shopping with friends will have a whole new meaning when those ‘friends’ are virtual shopping agents,” he said. “As 2022 marked the rise of general conversational AI models, 2023 will mark the rise of business-specific conversational agents. It’s coming soon to a mobile device near you.”