Conversational Commerce: What it is and Why it's Booming

What is conversational commerce?

Conversational commerce is a newer form of eCommerce in which brands communicate directly with customers via text or voice in real time. By using messaging apps, personalized texts, push notifications, and chatbots — or AI assistants — to interface with customers and answer their questions, brands can deliver a helpful, convenient customer experience.

Conversational commerce is a hot topic for businesses because real-time communication has never been more important to a brand’s ability to satisfy customers. When consumers have questions about a brand’s products or need to resolve issues with their orders, brands need to handle it right away — or risk leaving customers with a less-than-great experience.

“There are a lot of cases for conversational commerce that are emerging, like a scenario where you need to reschedule your appointment or, for retailers, where you’re looking to do a return or a refund,” says David Rusenko, Square’s head of eCommerce. “I think there’s a lot of opportunity for conversational commerce to handle customer service-type inquiries for small businesses, which can help them offload the burden of having to pick up the phone or have a receptionist answer those inquiries.” In a time when staffing has been a challenge, offloading such tasks can be incredibly cost-effective for businesses.

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Not only is conversational commerce a mobile-friendly way to move customers through the sales funnel (or resolve their issues), but it can also provide uniquely customized service to each individual shopper: chatbots, for example, are capable of using customer data, product data, and interaction data to shape their communications with customers, leading to improved service and reduced wait times for customers (due to chatbots’ always-on accessibility). According to Salesforce data, there was a 67% increase in chatbot usage between 2018 and 2020.

Conversational commerce examples

According to Facebook research commissioned by Boston Consulting Group, common reasons customers around the world message brands include: seeking out product or pricing information (45%), getting instant responses at any time (35%), finding it an easy way to shop (33%), getting personalized advice (31%), or using it to negotiate prices or offers (30%).

Examples of conversational commerce in action include:

  • A website-based chatbot that pops up with live greetings, perhaps offering browsing site visitors a promo code to help facilitate their purchases.
  • A messenger app-based chatbot that answers customer service inquiries, or that contacts customers who have ordered from the brand in the past (and reminds them to reorder).
  • A voice assistant that helps customers quickly book or reschedule appointments, or search for desired products.
  • An automated text message that reminds customers about their appointment or shares updates about the appointment. Square Messages allows you to integrate this function easily, offering the ability to put all your customer texts and emails in one place, all connected to your point of sale and scheduling system. And if you’re messaging a customer about an upcoming landscaping job or selling a new product at your salon, you can quickly create a payment link and send it over directly.

Conversational commerce on the rise

Conversational commerce is rising because it sits at the intersection of two booming areas of digital activity among consumers: mobile shopping and messaging (both text and voice).

In 2021, 53.9% of all U.S. retail eCommerce is expected to be generated via mobile channels. Messaging apps like WhatsApp, Facebook Messenger, and WeChat, meanwhile, now have over 5 billion monthly active users, and people use them even more than social networks. Brands recognize that they need to go where their customers are spending time in order to meet their needs. According to HubSpot, 71% of people are willing to use messaging apps to get customer assistance — many of whom want to get their problem solved quickly. Retail sales from chatbot-based interactions are forecast to reach $112 billion by 2023 (per an estimate by Juniper Research.)

Of course, timing is everything. Some brands embraced conversational commerce too soon. Over the 2010s, Facebook had a difficult time getting its chatbot offerings to take off: After making business chatbots a centerpiece of Facebook Messenger in 2016, Facebook hid chatbots from view in the app in 2020 by removing the Discover tab (where users could “discover” brands they wanted to interact with). Wal-mart also discontinued its “Jet black” text message shopping service in 2020 after debuting it in 2018; the service attracted just 1,000 members over its 18 months in operation.

Less than one month later, pandemic-related shutdowns accelerated the change in how consumers order, shop, and eat, making them more comfortable with a range of eCommerce solutions.

The future of conversational commerce

According to most projections, conversational commerce is poised for significant growth. Gartner research estimates that by 2022, 70% of customer interactions will involve emerging technologies, such as machine learning (ML) applications, chatbots, and mobile messaging (up from 15% in 2018). Sales made via conversational commerce channels like chatbots, digital voice assistants, and messaging will grow more than seven-fold from $41 billion in 2021 to $290 billion by 2025, according to Juniper Research.

There are some limitations to certain aspects of conversational commerce, however.

“I can ask a chatbot to show me three blue sweatshirts, for example, but that’s not the same as browsing and finding exactly what I like,” said Rusenko. “And I need to look at an item like that before I purchase it, so I can’t just do it by voice.”

While consumers might need a few more interactions with a brand before buying clothing and jewelry off of chat or voice, conversational commerce does offer the convenience of allowing customers to quickly order items they don’t need to see, such as cleaning products or groceries, or to reorder items they are already familiar with.

In China, conversational commerce is already ubiquitous, thanks largely to the staggeringly popular WeChat app, which enables users to complete day-to-day tasks like booking appointments, hailing cabs, and paying rent and utility bills, as well as message friends and family. (As of 2017, more than one-third of WeChat’s users spent about four hours on the app each day.)

Getting started

If you’re interested in embracing conversational commerce, think about what you’re trying to accomplish. Do you want to improve customer experience? Lessen the service burden on employees? Grow revenue by reducing customer churn? Increase customer engagement and loyalty?

With a broad objective in place, you can then determine how to integrate conversational commerce into your omnichannel offerings.