Brief:
- Retail sales from chatbot-based interactions are forecast to almost double every year to $112 billion by 2023 from $7.3 billion this year, per an estimate by Juniper Research. Chatbot interactions also will surge to 22 billion by that year from an estimated 2.6 billion this year, the researcher said in a report analyzing the effect of artificial intelligence (AI) on the retail industry.
- Retailers also will see major cost savings by automating many of the customer interactions now handled by live customer service representatives (CSRs). Retailers can expect to cut costs by $439 billion a year in 2023, up from $7 million this year, as AI-powered chatbots get more sophisticated at responding to customers, Juniper said.
- Retailers that don't adopt chatbots will face strong challenges from more technologically adept disruptors that use chatbots as an extension of the omnichannel retail experience, Juniper warned.
Insight:
While chatbots have been derided for their inability to handle complex interactions with humans, tech companies are investing billions of dollars in the technology to make bots more conversational. As Juniper's forecast suggests, chatbots are about to embark on a massive growth trajectory that will transform the retailing industry. Most of the transformation will come from costs savings rather than revenue growth, as chatbots likely will draw away sales from other marketing channels, Juniper said.
The firm's forecast suggests that many consumers will overcome their resistance to interacting with chatbots as the technology improves. Only 40% of consumers said they were interested in chatbot experiences from brands, including 20% who said they're very interested in interacting with the AI technology, per a survey by location marketing firm Uberall. More than one-third (36%) of consumers said the technology needs to improve, and another 43% said chatbots need to improve understanding of questions and requests.
Many brands have incorporated chatbots into their customer service mix, including flower delivery service 1-800-Flowers, Ray-Ban, Gap and Renault that work on popular platforms like Facebook Messenger, Bixby, Amazon Alexa and Google Assistant. The growing popularity of smart speakers like Amazon's Echo devices that rely on AI and natural-language processing (NLP) technologies to handle chats is helping to familiarize millions of people with conversational commerce. Meanwhile, Facebook is developing a voice-powered virtual assistant to compete with Alexa, Google Assistant and Apple's Siri.
