The lockdown time has caused an ecommerce boom, with the estimates suggesting that the pandemic has accelerated the shift away from physical stores by roughly five years
While physical departmental stores are expected to decline by over 60%, ecommerce is expected to grow by nearly 20% in 2020
Even retail stores have started using ecommerce chatbots to make customer support more effective.
Ecommerce businesses today are on the cusp of something extraordinary. As the pandemic takes hold of the world, more people have made a move towards online shopping. And at the forefront of ecommerce led innovations is ‘conversational commerce,’ known more colloquially as ecommerce chatbots.
Covid-19 has drastically changed the way consumers have approached ecommerce. From isolation to uncertainty, environmental factors combined with increased purchasing power for employed individuals, consumers are changing what they’re buying, when, and how.
Leading this change is the ecommerce industry. Leading this change is conversational commerce.
While retail stores were dwindling in number pre-pandemic, the Covid-19 pandemic seems to have accelerated that trend globally. In the same timeframe, ecommerce itself has seen massive gains.
- The lockdown time has caused an ecommerce boom, with the estimates suggesting that the pandemic has accelerated the shift away from physical stores by roughly five years.
- While physical departmental stores are expected to decline by over 60%, ecommerce is expected to grow by nearly 20% in 2020.
- Even retail stores have started using ecommerce chatbots to make customer support more effective.
What’s Next For R/E-Tail?
The future of shopping is not purely brick-and-mortar or purely ecommerce, but a combination of the two.
And bridging that gap needs technology that addresses the challenges of either approach. Namely, it needs to make ecommerce more personal and retail more effortless.
Enter conversational commerce or ecommerce chatbots.
An ecommerce chatbot takes the website’s dull en masse experience and turns it into a for-your-eyes-only, personalized experience. Similarly, it takes the hassle of post-sales, in-person support out of retail (think having to go to a store and return a product) and makes it more easily accessible.
And this bridging of expectations is vital as more and more large retailers double down on their ecommerce investments.
With the largest retailer globally, Walmart, the pandemic helped drive ecommerce sales up 97% in its last quarter. Target set a sales record as its same-day fulfillment services grew 273% in the quarter.
Market leader Amazon, naturally, has also benefited from the shift to digital with its recent record quarterly profit and 40% sales growth.
Does This Hold True For India Too?
According to a report, on an Indian front, the lockdown’s biggest beneficiaries have been grocery businesses, including Grofers, BigBasket, and grocery arms of Flipkart and Amazon.
The monthly gross merchandise value of the e-tail sector stood at around $30 Bn during January 2020. As the pandemic worsened and the lockdown kicked in, that plunged to a paltry $3.5 Bn in April.
While this seemed dire, it only took till June – just two months – for e-retail to cross pre-Covid GMV levels to $36.5 Bn, according to the data sourced from a RedSeer analysis.
Both Amazon and Flipkart expanded on their product arsenal to tackle the Covid-19 pandemic.
Amazon recently launched its project code-named ‘Local Shops on Amazon’. Aimed at helping customers get products from local shops, the initiative also looks to help shopkeepers supplement their footfalls.
Flipkart has already partnered with around 37,000 Kirana stores, of which close to 25,000 of them are in last-mile delivery activities.
Conversational Commerce – The Best Of Both Worlds
One of the best examples of a brand wholeheartedly embracing conversational commerce is the French cosmetics firm L’Oréal.
The company is one of several influential brands pushing into conversational commerce by making themselves accessible to customers all over Southeast Asia.
For Pierre-Olivier Guy, L’Oréal Vietnam’s Chief Digital Officer, this was a decision driven by stereotype-bucking data. “We see higher penetration of conversational commerce within the more mature population, aged above 30.”
Messaging isn’t just a Gen-Z thing; millennials with disposable income were raised on messaging. From AOL to IM chat, and from WhatsApp to IG, messaging has been a prolific part of their lives.
A survey commissioned by Facebook found that over 58% of respondents felt more confident messaging a business than calling or filling out a contact form online.
“If I sell a fragrance on ecommerce, I may need a promotion or a discount,” Guy said. “But on conversational commerce, it is all about the experience, the quality of the story, and meaningful conversations.”
What Are The Incentive Structures For Both Parties?
Why does conversational commerce work so well for brands and customers alike?
Well, starting from the early 2000s, the increasing popularity of SEO and SERP meant that companies increasingly started to use game language used on websites.
This moved digital conversations from what consumers wanted to hear to what search engines scanned for instead.
Conversational commerce compensates for this by adding personalization and warmth back into the experience. It’s like having a personal concierge at a store, but while on your sofa.
This combined with changing consumer behavior; as users increasingly relied on messaging apps for all communication forms, made business and commerce communication the logical next step.
Real-World Examples Of Conversational Commerce
And for A+ execution, look no further than Burberry.
Using conversational commerce, Burberry employees use technology to contact the company’s most essential clients directly. These customers get access to in-store appointment bookings, personalized online advice, and an unrivaled ecommerce experience.
So does this mean that conversational commerce only works or drives sales for boutique high fashion firms? Not at all.
Much like the ML technology that powers it, conversational commerce only gets better with time.
As customers build relationships with the sellers they trust using the conversational interface, even seasoned buyers begin to spend more as the friction of buying reduces. They also tend to make more impulse purchases and spend more to qualify for discounts or free shipping.
When ordering from a website, you can read reviews to determine whether a product will work for you. But using the chat, you can ask for help comparing your options – more like the advice you would receive in-store.
Not only is conversational commerce more straightforward for consumers who no longer need to toggle back and forth between text conversations and websites to gather information and make purchases. But it’s also a step closer to the attention you might get from a sales associate in the store.
