I fly regularly with KLM from Minneapolis to New Delhi, and I always stop in Amsterdam. I’m often in Minneapolis for research and it’s my way home to take a break from work. I’ve made the trip so many times that I know almost every store at Schiphol like the back of my hand. However, once in the summer of 2019, the predictability was broken when I missed my connecting flight to New Delhi.
I was tired, hungry, sleepy and the customer service counter was closed. I had a choice of taking the long walk to customer service at the next door or using my iPhone, so I tried my phone.
I texted the KLM WhatsApp number and went back and forth with an assistant on my picks. Within minutes I was on the next flight, with the boarding pass on my phone. It wasn’t until later that I discovered I was dealing with next-gen artificial intelligence – in an example of the new realm of conversational commerce.
If you haven’t met him yet, you will soon. Some supermarkets, for example, offer customers voice-activated shopping services. In the United States, Walmart shoppers can ask Google Assistant to add certain things to their virtual shopping carts and learn from their shopping habits.
Google has similar deals with two other supermarket giants – Target in the US and Carrefour in France – while Amazon is offering voice-controlled shopping in the UK to Ocado’s online customers. Not to be outdone, Walmart recently acquired conversational commerce specialist Botmock to expand its services in this area.
There are already over a billion people interacting with businesses through text or voice chat tools. In 2021, conversational commerce is expected to represent a total turnover of US$41 billion (£30 billion) worldwide and is expected to grow fivefold to nearly US$300 billion by 2025, half of which thanks to chatbots. So how is this market changing and what does this mean for our shopping habits?
Coffee diehards and hyper-personal shopping
If conversational commerce still seems under the radar, one reason is that most of the growth has occurred in China, Japan, and South Korea. However, it grows everywhere. If you’re talking to your girlfriend or boyfriend on Facebook and suddenly want to send them flowers, you don’t even have to interrupt the conversation. You click on 1-800-Flowers.com, a conversational AI tool built into Messenger, and explain what you want. You don’t even need to enter card details if you use Apple, Samsung or Google Pay.
Or maybe like me, you’re a coffee fanatic. I used to stand in line for my morning latte, but not anymore. I just ordered from my couch from the chatbot in the My Starbucks Barista app, and my coffee is waiting for me when I reach my local store.
The AI that underpins these advances encompasses deep learning, sophisticated natural language processing, speech recognition, and cognitive computing – which is an automatic thought system that emulates human thought. But the biggest selling point – besides ease, comfort and shopping anywhere and anytime – is probably the potential to make a customer’s retail experience much more personal.
If this meets expectations, customers may soon be able to interact with an AI that understands what they want in great detail. We are already seeing big retailers offering bespoke products to entice customers – for example Nike and Adidas allowing people to design their own trainers.
But by using sophisticated AI, customization can be taken to a whole new level. Customers will receive personalized recommendations in their own language, easing the burden of choice and making the experience as pleasant as possible. As a result, they might spend more money – not because they’re being manipulated, but because they almost feel like they’re buying from a friend.
During this time, businesses will gain new insights into people’s buying behavior. Yes, this raises privacy issues, but it will also help companies refine their offering. This should reduce returns and increase sales.
where it’s headed
Conversational commerce reminds me of the 2013 movie Her, which takes place in the near future where Theodore (Joaquin Phoenix) falls in love with Samantha (Scarlet Johannson), an AI-powered virtual assistant. The relationship eventually becomes unworkable when it appears that Samantha is simultaneously maintaining intimate friendships with thousands of men. She then combines with other AIs to perform an upgrade that causes them to withdraw from human interaction.
We may be far from falling in love with chatbots, but there are clearly ethical issues here. Technology should not harm human beings or threaten their dignity. For example, Microsoft recently restricted its voice mimicry technology because it makes it easier to create deep fake videos.
Another problem is that of employment. Automation is clearly a threat to the workforce, and conversational commerce might just be one of them. But unfortunately, companies won’t pay support staff as much if AI can do the job at least as well. One consolation is that AI in its entirety could create more jobs than it destroys. For example, the World Economic Forum predicted in 2018 that the net new jobs created by AI would be 58 million by 2022.
In the longer term, conversational commerce could become all the more prevalent in the metaverse, the virtual reality representation of the internet, with voice-enabled purchases potentially accounting for 30% of all e-commerce revenue by 2030. It seems predictable that we’ll be interacting with AI Avatars in virtual reality stores, or talking to bots in real-life supermarket aisles via augmented reality glasses.
What may seem alien to our generation is likely to be second nature to tomorrow’s buyers. There are pros and cons to this technology, but I suspect my little chat with the KLM chatbot at Schipol Airport will soon seem quaint compared to what’s to come.