Will conversational commerce be the next big thing in online shopping? – The Economist

MESSAGING IS AN intimate medium for sharing private views and sentiments. It is a cocktail-party whisper in digital form, as one user of WhatsApp, a service owned by Facebook, put it. Now some of the world’s biggest brands are venturing into this personal realm. Aware of the limitations of conventional communication channels like call centres and email, a few years ago firms started using WhatsApp and its sister app, Facebook’s Messenger, as well as Apple’s iMessage and independent apps such as Line.
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The pandemic gave all such apps a fillip. Messaging on Instagram, Facebook’s photo-sharing app, and on Messenger rose by 40%. Four-fifths of mobile-device time is now spent on chat apps. Companies can usually be relied upon to go where customers are, so messaging has become vital for business, not just experimental, says Javier Mata, founder of Yalo, a startup whose technology connects firms to messaging platforms. Firms once used them chiefly for customer service. Now they want to get people to buy stuff via chat, as hundreds of millions of Chinese do on WeChat, owned by Tencent, China’s mightiest tech giant.
Because many popular messaging platforms are encrypted, data on transactions are hard to come by. But growth is undoubtedly happening. Over 1bn people now interact with businesses via chat, not counting China. Each day 175m people send a message to WhatsApp business accounts (WhatsApp channels designed for companies). Yalo’s customers include consumer-goods giants such as Coca-Cola, Nestlé, PepsiCo and Unilever, as well as Walmart, the world’s biggest retailer. Apple Business Chat, which started in 2017, is used by Home Depot DIY stores, Hilton hotels and Burberry, a fashion brand. Facebook’s roster includes Sephora, a cosmetics retailer, and IKEA, a furniture giant. LVMH, a French luxury-goods conglomerate, is testing out messaging, according to Jeroen van Glabbeek, chief executive of CM.com, a Dutch conversational-commerce platform.
“C-commerce” is already entrenched in Asia and Latin America, where spotty access to broadband and high-quality devices puts e-commerce and company-specific apps out of reach for many. Now Western consumers are beginning to embrace the ease, speed, personalisation and convenience of messaging. For firms, the return on investment seems higher for messaging than for call-centre exchanges or email chains, says Emile Litvak, head of business messaging at Facebook.
Boosters of business messaging claim that c-commerce will displace e-commerce within a decade or two. But messaging is best understood as a refinement of e-commerce, and a sibling of “social commerce” (shopping on social media). Most messaging conversations between large firms and consumers start from corporate e-commerce websites equipped with a “click to message” button. Plenty begin on social networks.
In some ways c-commerce is a throwback to the past. Apart from mail order and its modern guise, online shopping, trade has relied on conversation for millennia. Yet business messaging does have new elements. It is more personalised than SMS marketing, which has itself had success in recent years in America and Europe. Automatic messaging is moving beyond rudimentary chatbots, which have been around since the mid-2010s. Artificial intelligence (AI) is getting better at unstructured exchanges that shoppers used to have with expert retail assistants.
For now, says Marc Lore, who led Walmart’s digital efforts, a lot of business messaging has humans in the loop. In future, he reckons, AI will be able to answer customer requests as fuzzy as “get me a birthday toy for a five-year-old around science education for roughly $40”, suggesting choices and completing the transaction in seconds. And when AI gets better at natural dialogue, as it will after learning from human interactions, consumer-to-business messaging may sound if not exactly like J.A.R.V.I.S, Tony Stark’s digital butler in the Marvel comics, then close enough.
Until that time, firms must tread delicately. Full of family and friends, chat apps are emotional spaces, says Robert Bennett, CEO of Rehab, an agency that helps brands reach consumers digitally. Try to sell someone yoga leggings after an exchange with their mother, he says, and your firm might find itself deleted faster than an ex. But get it right—think gentle reminder of evening meditation from a purveyor of herbal teas—and the rewards look tasty.
This article appeared in the Business section of the print edition under the headline “Chat-up lines”
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