Impact of chatbots in the eCommerce industry

Published on 20/01/2022 by Ojasvini

As per a report published by CMO, Australian customers are among the highest chatbot users globally. The report also says that brands are progressively using chatbots as a significant platform for customer interaction. One of the reasons why chatbots might be popular could be because of its use of technologies such as artificial intelligence (AI) and machine learning (ML). 

According to a study by the International Trade Administration, Australia has been ranked as the 11th largest eCommerce market worldwide, and the total revenue is projected to reach US$32.3 billion by 2024. The study indicates that the eCommerce industry may be rapidly growing. With the use of chatbots, eCommerce brands can ideally enhance their customer interaction, eventually leading to business growth.

A chatbot for eCommerce can help businesses enhance engagement levels with customers

In this article, we will first discuss what a chatbot is. We will also talk about the impact of chatbots in the eCommerce industry, their types and benefits, and lastly, how to create a chatbot for your business. 

What is a chatbot?

A chatbot is generally computer software that replicates or mimics human conversations (whether written or verbal) to conduct some service. As they are automated, their speed of performing actions is faster than humans. A daily life example of a chatbot is Google Assistant or Siri. A chatbot specifically made for eCommerce would likely focus on helping customers in the buying process, such as providing product recommendations. 

Impact of chatbots in eCommerce

As per an article by Freshdesk, chatbots and AI are making a significant impact in the eCommerce sector and by 2025, they will take control of more than 95% of customer interactions. The study also claims that this might be why chatbots are gaining popularity over time, specifically in the eCommerce business. 

AI technology  —along with ML— might help eCommerce businesses understand their customers’ purchasing behaviour by assisting them to gain insights into their needs. With the help of chatbots —which utilise such technology— companies can create a customised online experience, keeping in mind buyers’ shopping history. This knowledge could also help brands plan a more efficient marketing strategy and execute it.  

What are the different types of chatbots?

There are many different types of chatbots used by businesses. According to an article by Finwin Technologies, some of the more commonly used types could be support chatbots, transactional chatbots, and skills chatbots, among others. We examine some of these types below.

Most common types of chatbots used by businesses

How can an eCommerce business benefit from chatbots?

The impact of chatbots in the eCommerce market can be seen in many ways. According to an article by IT Brief, there has been an approximate six times increase in the use of chatbots by Australians since 2019. In addition, the report states that interactions with chatbots might have become more natural over time. Below, we have given some of the potential benefits of chatbots for your eCommerce business. 

Help decrease the cost of customer support staff

Chatbots can help reduce company expenditure in various ways including resolving customer complaints without requiring human staff, providing round the clock assistance, and offering customer service with limited resources. For instance, if an eCommerce customer would like to change the shipping address of a particular order, a chatbot could help resolve the problem without letting the customer wait for a human representative. 

Enhance engagement level with customers

As most chatbots work on an automated system, they might have the ability to adapt according to changing circumstances. For instance, an AI-powered chatbot might have the ability to change its style and tone based on learnings from human conversations. They can help increase customer engagement by solving queries in real-time. Moreover, they can potentially handle numerous questions simultaneously, leading to better average response time. 

Collect a record of real-time conversations with customers

Another benefit of having a chatbot for your eCommerce business would be its ability to record real-time interactions with customers. This data might prove helpful for understanding the challenges faced by your customers, understanding their specific needs, and customising interactions based on this record. You could even re-initiate contact with customers and notify them of marketing offers on their preferred products.

Offer quick responses and 24/7 availability

One of the significant advantages of chatbots could be swift response time. An instant response along with ideally a smooth solution might help in customer retention. For instance, a customer wanting to get a pair of shoes exchanged for a bigger size would not prefer waiting for 2-3 days to get in touch with a customer care executive. A chatbot here might be able to solve the problem with greater efficiency.  

How can you create a chatbot for your business?

There are many software out there that can help you create a chatbot for your business. While creating your chatbot, the goal should ideally be to focus on the needs of your customers. Given below are some of the significant steps of chatbot creation.

Select the appropriate type of chatbot

The first step involved would be to choose the right type of chatbot for your business. For instance, a support chatbot could help schedule appointments for a healthcare website. Similarly, a transactional chatbot that could help book tickets would be more suitable for a flight booking website.

Choose the preferred channel to launch your chatbot in

The second step would be to choose the appropriate communication channel. Your chatbot should ideally be visible on a platform that is conveniently accessible to users. Be it on your website, social media channels or your mobile application, it should serve your target audience.

Determine the technology to be used for your chatbot

The next step would be to choose the suitable technology for your chatbot. Some common technologies involved in chatbot creation include artificial intelligence (AI), machine learning (ML), and natural language processing (NLP). Your chatbot could be based on any one technology or a combination of two or more. 

Create a conversation script 

You should aim to maintain a smooth conversation flow with the customers. The questions should be set up keeping in mind the predicted responses from the customer. Giving a proper name and personalised conversation tone to your chatbot might help keep the flow of conversation going. 

Train your chatbot to meet your objectives

The next step would be to train your chatbot. For your chatbot to function effectively, you should train it using the data your business might have collected from external sources (such as social media messages, emails, and other media channels). This data could help a chatbot understand the customers’ needs and respond appropriately. 

Test your chatbot to detect any potential problems

You can test your chatbot manually —by launching it on a platform of your choice and asking all sorts of possible questions. Alternatively, you can opt for usability testing, which involves testing a product in the presence of a real user. 

Install the chatbot and record the results

The last step would be to install the chatbot. You should have a record of how your chatbot is performing and whether there is any scope for improvement. You can always include an option for customer feedback, which may help you gain actionable insights. 

What’s the key takeaway?

The chatbot industry can potentially grow to a value of US$1.11 billion, and will not be extraordinarily affected by the COVID-19 pandemic —as per a report published by Chatbots Journal. The study also indicates that the impact of chatbots might continue to grow in the coming years. An appropriate chatbot —tailored specifically for your audience— might help you stay ahead of the competition.

Looking for chatbot software? Take a look at our catalogue!

This article may refer to products, programs or services that are not available in your country, or that may be restricted under the laws or regulations of your country. We suggest that you consult the software provider directly for information regarding product availability and compliance with local laws.

About the author

Content Analyst for Australia. Focusing on insights about software technolgies critical to SMEs. Insipred by growing tech trends and how these help SMEs to grow.

Content Analyst for Australia. Focusing on insights about software technolgies critical to SMEs. Insipred by growing tech trends and how these help SMEs to grow.


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