Conversational commerce is the process of interacting with a brand or buying a product or service through non-traditional channels, such as voice assistants, SMS text and online and social media chat. Usually powered by artificial intelligence, a combination of technological advances and consumer preferences paved the way for conversational commerce to gain traction, primarily in B2C retail. It works by consumers choosing a non-traditional, one-to-one channel to interact with a business and to complete a purchase at their own speed and on their own time.
Coined by Chris Messina of Uber, this term refers to the combination of messaging applications and e-commerce through voice technology, such as Amazon Alexa and Google Home, or chat apps such as Facebook Messenger, WhatsApp, Talk and We Chat. Adoption of conversational commerce in the B2B space is still behind, as those purchases or subscriptions are often more complicated than B2C commerce.
Examples of conversational commerce
Companies started using conversational commerce in the mid-2010s with rudimentary social media interactions between customers and brands, as well as using direct marketing on social media platforms. It evolved as new channels emerge, some examples of which include smartphone text apps and messaging apps such as Facebook Messenger and WhatsApp. Chatbots that can interact with consumers and execute simple purchases can adapt to these channels, automating purchasing activity, taking on more complex tasks as AI technology improves.
Beyond messaging and chat apps, smart speakers and voice assistants offer another channel through which consumers can buy. Amazon's Echo speaker with Alexa voice assistant can allow users to buy products off Amazon. The Google Home speaker has similar capabilities, as does the Apple Homepod speaker.
How conversational commerce works
Conversational commerce relies on AI, historical data patterns and natural language processing to interact with consumers, either through voice or chat, in a personalized, direct way. Due to its real-time conversational approach, it is often used in customer service to not only help with customer concerns but also allow customer service agents to cross-sell or upsell products.
Conversations typically begin with a customer reaching out via their preferred channel or device; chatbots and chat messaging platforms tend to be more advanced than smart speakers for handling with the processes associated with making a purchase. Consumers can chat with a sales or service rep through chat channels and perform a purchase, or interact with a chatbot that will help with simple purchases, such as renewing a subscription.
Problems with conversational commerce
There are some concerns with conversational commerce through its various channels. At this point, most chat systems and voice-assistant speakers can't conduct complicated purchases. Furthermore, consumers may be uncomfortable completing a purchase through one of these channels or are so comfortable with the current way of purchasing products and services that they need to deal directly with humans to complete the sale.
After considering consumer receptiveness, data security is still a concern within the conversational commerce space. Most chat and voice channels require credit card information, creating vulnerabilities for hacking or accidental purchases. If a smart speaker is set up with a credit card, not much is stopping someone other than the card holder from approving a transaction -- perhaps without the cardholder's consent. Identity verification, through both chat messaging and voice messaging is still needed to help ease the mind of consumers who are putting their personal information out there.