According to a study by Juniper Research on ‘How AI Can Revive Retail’, chatbot-based interactions are estimated to double retail sales each year from $7.3 billion in 2019 to $112 billion by 2023. At the same time, the number of Chatbots interactions will rise from 2.6 billion this year to 22 billion in 2023 as AI-based chatbots get more advanced. Let’s take a look at how artificial intelligence can support retail.
How can Chatbots increase retail sales?
As natural language processing (NLP) advances, Chatbots are able to understand more and more speech input and provide the right answers to customer queries. But the capability of automation does not end here. By using Artificial Intelligence (AI), Chatbots offer great potential to actively approach customers, study customer behaviour and advise them at the right moments.
A great advantage of Chatbots is that once all relevant customer queries have been learnt via the knowledge base, Chatbots can offer an around-the-clock-service. If online shops don’t have opening hours, why should their customer service? By answering product and shipping requests 24/7, Chatbots can generate additional hidden sales potential at night or on the weekends, as well as managing incoming traffic during peak periods.
Saving costs in retail with AI
Before AI-based Chatbots, customer interactions had to be handled entirely by customer service agents and scaling up service capacity came at a high cost for companies given it is labour intensive. It is also why customer service has historically been one of the first services to be outsourced, despite its importance in building a loyal customer base. With AI, retailers can cut costs by automating more customer interactions through Chatbots. According to Juniper Research, this will save retailers up to $439 billion by 2023. Today, automation through Chatbots saves up to $7 billion in retail.
While scalability is considered one of the biggest problems in the sales process, hybrid Chatbots are able to increase their knowledge base at a fast pace whether inquiries are recurrent or highly complex. Chatbots can welcome new customers on the website with personalised messages and follow-up if they leave their shopping cart before checkout. In this respect, Chatbots can also collect valuable meta-data about the customer and give tailored suggestions about products and services based on consumer behaviour. In addition, the use of chatbots would help to free up the time of customer service agents to add further value and devote more time to specialised cases.
While findings of the study suggest cost savings and revenue growth for retailers integrating AI, Juniper Research predicts challenges for those that don’t adopt chatbots as part of an extended omnichannel retail experience.
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