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Conversational commerce via Facebook Messenger: the future of ecommerce?

Those who have no time shop online. An Amazon Prime membership, or Prime Now, is now part of the standard system where a purchase should arrive at the doorstep in the next 60 minutes to 24 hours.

To date, the online purchase has been a non-communicative business. You order something from a shop online and receive an order confirmation sent via e-mail. In this process it doesn’t matter whether the purchase was made at an online store on a computer, or transacted on a mobile phone app developed by Amazon, ASOS or Zalando & Co.

740x400-conversationalCommerce-02 Facebook Messenger Conversational Commerce

Call Centers should offer support if any problems occur. Some of them are simultaneously active with staff on Facebook sites and Twitter accounts.

But let’s face it: even if you were to accept their help, people tend to try and avoid them as much as possible. Oftentimes, long waiting times and incompetence shape customers’ opinion of the support at hand.

Conversational commerce

With the emergence of messaging apps such as WhatsApp, Facebook Messenger, WeChat, and LINE, a part of ecommerce has been extended from shopping apps to messenger apps. In this process, the purchase is carried out in dialog (conversational commerce). From the corporate side, this is based mostly on (chat) bot software, which uses preset dialog patterns to analyze customer requests using text and speech recognition.

With the help of artificial intelligence, chat bots in the future will be better than they currently are at answering many questions, and at reacting to individual requests.

Conversation during online shopping: why?

Conversational commerce was established in public debate as a term at the beginning of 2015 by tech mastermind Chris Messina (formerly at Google, currently at Uber).

He wrote then in his article on medium:

"Conversational commerce is about delivering convenience, personalization, and decision support while people are on the go, with only partial attention to spare. I expect more service providers will shift in this direction, becoming more subtle in how they integrate into our lives."

At the beginning of 2016, a year later, he stated:

"2016 will be the year of conversational commerce."

First of all, we come to the framework. In April 2016, Mark Zuckerberg announced at the in-house F8 development conference that there would be a send/receive API for Messenger, which would enable bot establishment. This is a result of Facebook reacting to pressure from Asia. There, the two leading messengers, WeChat and LINE, already have more than 1 billion users, and are much more marketing-oriented than the messengers are here.

Of course, this drove up the number of bots. While there were 11,000 bots in July, as of mid-September 2016, Dave Marcus, from the Messenger department at Facebook, reported over 30,000 bots in use to The Verge.

In the same article, he was also quoted with the following:

"Bots are overhyped and underpowered, says the man who runs Facebook Messenger."

The boss of Messenger seems to be surprisingly frank and self-critical.

"Most chat bots can’t fulfill the expectations of users," said Malte Goesche, head of new platforms at BILD, a few weeks ago in his lecture at the All Facebook Marketing Conference in Berlin.

He referred to the following tweet in particular:

tweet_david_j_bland Facebook Messenger Conversational Commerce

Therefore, there is only a slight overlap so far between customer problems and the ability of bots to solve these. Goesche finally quoted Fred Wilson, a leading risk capital investor (VC) from Silicon Valley:

"New user behaviors take time to develop and sometimes require a breakthrough app to get things started. That’s where we are with chat bots. The hype phase is over and we are now into the figuring it out phase. That’s usually when interesting stuff starts to happen."

So far, so good. And in Germany?

In Germany, investor Fabian Westerheide of internetworld.de, a positive visionary of software-based dialogue in online shopping, expressed the following:

"In 10 years it will be totally natural for us to talk, write, or think with machines. Chat bots will be many things for us: lawyers, secretaries, accountants, investment advisors, travel agents. They will order food for us, shop for us, or even drive the car."

But this assumes that chat bots of the present generation, which are based on text and speech recognition, customer feedback, and are aided by artificial intelligence, will further develop themselves. Finally, it is also known that eBay has installed its personal shopping assistant "ShopBot" on Facebook Messenger.

From the background of conversational commerce, the goal of chat bot developers must be to develop simple, yet efficient and personal digital consultants; consultants who support brand sales and, if necessary, relieve customer support. This could lead to significant saving potential.

The whole thing is future oriented, since is located at one place, where there are more people than in the social networks!

Advantages of conversational commerce for markets

It should be noted, that up until this point, discussions on chat bots have been characterized by more advantages than disadvantages. Facebook and an increasing number of experts are looking for a realistic method of approach for this topic:

1. Mobile commerce

Mobile commerce (also called mcommerce) is a subdomain of ecommerce. According to the latest Internet retail study, the share of mobile commerce in the total turnover of ecommerce is about one third (27.7%) in Germany.

So it’s clear that the remaining two thirds, or 72.3%, are generated from PCs and laptops. The share of mcommerce is definitely developable!

Since the focus of conversational commerce is mobile, an approximate assumption is that mobile commerce will strengthen if there are successively more chat bots with ecommerce character in Facebook Messenger.

shopbot Facebook Messenger Conversational Commerce

Figure 1: Screenshot of eBay’s ShopBot

Conversational commerce is (and will be) the shopping and consulting experience for on the go. And the more mature and adaptive the chat bots become, the more accepting users will become of conversational commerce.

2. Customer support

When speaking with experts on this topic, the call center example is always mentioned. Many large brands have cells centers, which significantly contribute to customer support in order to solve customer problems. Finally, customer support is now becoming implemented in social media.

Creating a conversational commerce that relieves customer support will be a matter of cost saving, since chat bots not only have automatic capabilities, but are also much more cost effective than employees. The framework in which cost savings move must be looked at as individual cases. But ultimately, this would be a concrete argument for conversational commerce.

3. Mobile

Conversational commerce is purely mobile. It follows the method used by most users, and they use mobile internet.

Messengers, which clearly represent "one-to-one communication", stand in contrast with social networks.

The resulting traffic and the increasing and quick willingness to click on and forward links (offline/online) are highly valuable for conversational commerce, since they benefit the brand and its shops.

4. Convenience

Conversational commerce must be advantageous. The quick "on the go purchase" must not be costly for the customer. The "Shop Bot" from eBay is heading in this direction, even though it is not fail proof. In its defense, one must concede that it is still brand new on the market.

The shopping process is carried out with subject areas, which can be made increasingly specific. The sequence could go something like: Art Design -> Designer Collabs -> 9 selected products with their prices -> shop

It’s an interesting concept, which certainly has a disadvantage: the user is directed to eBay’s mobile website instead of the app, assuming the app is installed on the corresponding phone. This would make the purchasing process easier and more efficient for the customer.

5. Data

What is customer X interested in? Which products does he regularly purchase? What brands does he prefer? What is the average number of purchases?

These and other questions will be answered with the chat bot user. Both the brand and Facebook have data of individuals and their purchasing behaviors. This can be interesting for Facebook, for example with respect to advertisers and their target groups. Such data is interesting to chat bot operators because it enables the right advertisement when retargeting.

Brands want to know the needs of their customers in order to provide the optimal service. With help from chat bots this possibility is greater than ever before.

Decision support

Recall: chat bots are purely mobile! And mobile typically means that users have little time because they are on the go. Their attention span is almost shorter than normal.

In such situations, chat bots can be extremely valuable because they provide potential time and cost savings.

Disadvantages of conversational commerce for brands

The largest disadvantage so far may be the deficient solution competency of existing chat bots, which leads to a low acceptance rate. In the next 12 months, this status will change dramatically, but currently it is still complicated.

Current complaints are that people do not want to talk with a "machine". Where customer support is concerned, these days it is pretty common for a large portion of the call to be automated in order to channel and handle the request as best as possible.

But of course such automatization does not replace a personal exchange. The success of the chat bot in conversational commerce stands and falls with its precision and individuality.

1. Discoverability

This is a point that is currently quite pesky. How does one find a (chat) bot? An example is a bot list like this one: http://botlist.co/. Interestingly, the (chat) bot list contains various messaging platforms, but not WeChat or LINE.

Otherwise, chat bots can be found from articles or in social networks and, of course, if it is already known by name.

2. Understanding

"Beyond the tech scene, most people don’t even know what a chatbot is and what it is good for." (Source)

It is difficult to evaluate if this is really true. But there is definitely something there. A look at reality shows that there is already an artificial !human vs. machine! discussion.

KLM example: The airline from the Netherlands was one of the first brands to experiment with Facebook Messenger.

After buying the ticket, the bot provides the customer with important trip information, including departure times, gate number, flight times, etc., in real-time via Facebook Messenger.

Ultimately, this is another way to strengthen customer loyalty to certain brands.

To the future of conversational commerce

What we are currently experiencing is a consolidation in the area of chat bots on Facebook within the Messenger. The infrastructure will be progressively expanded by Facebook so that in the final step you can see a window for payment.

"What people really want are integrated tools that make it easier to do regular tasks in a comfortable and familiar place: Within a conversation."

Conversational commerce will only succeed to the extent that it meets the needs and requirements of its customers.

These people want quick, problem-free (without logins, passwords, and e-mail addresses), individual, and secure (https, certified) shopping. They also want a receipt. For example, the personalization should include non-standardized questions in the selection and purchasing process, so that the purchase can be executed as personally as possible.

That will happen. Overall we are still in the discovery phase. Now it’s a matter of processing the first months’ findings and implementing them in future projects.

What we can’t forget from this whole discussion are smart systems like Amazon’s Alexa Echo, Microsoft’s Cortana, or Apple’s Siri. These systems develop parallel with chat bots, and will become increasingly personalized with the help of artificial intelligence.

In conclusion: 3 take aways

1. Chat bots will be a large part of digital communication in the future, which is why it is important for them to be efficient, secure, and personalized for user communication.

2. Conversational commerce will increase; it is still at an early stage.

3. In the next 12 months, users in Germany will become more and more accustomed to shopping via (Facebook) Messenger, as more and more brands use the synergistic effects of this technology.

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Published on Nov 15, 2016 by Johannes Lenz