Simply put, conversational commerce is the integration of messaging apps, chatbots, and voice assistants into the shopping experience.
It allows businesses to interact with customers in real time, providing a personalized way to browse, purchase, and get support through simple conversations.
Let’s dive deep into the different conversational commerce types, their benefits, and key statistics.
What is Conversational Commerce
Conversation commerce refers to e-commerce platforms using messaging and conversation technology to improve the customer and shopping experience.
This can be done in numerous ways. Here are the most common forms of conversational commerce:
- Messaging Apps: Facebook, Instagram, and WhatsApp messengers are the most common apps use for marketing, chatting with customers for business, and selling products through the channel.
- Live Chat: An install chat software as a widget is mainly use as a customer service tool. Customers engage with the chat with their complaints, and the chat software directs them to a relevant support page. Usually, the chat is monitor by customer service staff in case further help is needed.
- Voice Assistants: Voice shopping is another great example of conversational commerce. People engage with Siri, Alexa, Google Voice, and even virtual assistants like Amazon Echo and Google Home to engage and make purchases.
- Chatbots: Chatbots have gained popularity post the LLM and ChatGPT boom. Chatbots are usually AI-powered designed to understand customer problems and address them accordingly. As long as the pain point is solved, most customers do not care whether it is human-operated or an AI chatbot.
At Cube Asia, we consider:
“Conversational commerce as a “hybrid” archetype of social commerce because it shows up in myriad ways across e-commerce and social media platforms.”
As a result, conversational commerce can be used in all three stages of the customer journey – Awareness, Consideration, and Decision. And they come with distinct benefits.
Awareness is the stage where customers have just begun their journey and are searching for a product or service. Consideration is when they are aware of your product/service and are looking for more information – like reading reviews, checking competitors etc. Decision is when the customer is ready to make a purchase.
Benefits of Conversational Commerce
Here are the major benefits of conversational commerce for a business:
- Personalized Shopping Experience and Increased Conversions: Conversational tools can analyze customer data and previous interactions to offer personalized recommendations. Similar to what a real-life salesperson does. This can increase customer satisfaction and boost sales.
- Streamlined Customer Service: Chatbots and Live Chat assistants can handle common customer complaints and issues quick and fast. They can direct the customer to relevant support pages and documentation and troubleshoot quickly. Resulting in reduced wait times and freeing up human resources for other work.
- 24/7 Availability: Unlike physical stores or even traditional online customer service, conversational commerce tools can operate around the clock. Irrespective of the business hours and timezone, the customers can get constant support.
- Cost Efficiency: Automating customer interaction points reduces the need for a large customer service team. This helps in cutting down on operational costs while maintaining or improving service quality.
Key Statistics
#1. Market Size
The global conversational commerce market is estimated to be $7.6 billion in 2024. The market is expected to grow at a CAGR of 16.3% to hit a market size of $34.4 billion in 2034.
The projected high growth is mainly driven by increased demand for combining AI and natural language processing into chatbots.
#2. Key Players
It is tough to segment key players in the conversational commerce market – since the range is too wide, from big players like Facebook, WhatsApp, and TikTok to small niche b2b players. Having said that, here are some of the major players in the conversational commerce market:
- Octane AI
- Charles
- WorkFusion
- SleekFlow
- Quip
- Recart
- SmartSocial
The list is nowhere exhaustive. There are far too many players and far too many emerging startups in the conversational commerce space to define top market players for now.
#3. Use case for Chatbots
With the LLMs blowing up in the last two years, the use case for Chatbots has been expanding ever since. However, we expect customers to use it primarily for customer service.
Most of the time, customers rely on chatbots to quickly answer inquiries during emergencies or resolve complaints and problems.
Source: Yieldify
Other major use cases include – getting detail answers and explanations about the product/service, making reservations, paying bills, and making low-ticket item purchases.
#4. Alexa is the top voice-assistance for shopping
According to a survey of 1038 frequent online shoppers, Amazon’s Alexa is the most used voice assistant for shopping purchases.
Source: CouponFollow
While Amazon’s Alexa is the most popular virtual assistant when it comes to voice-shopping (72%), Google Assistant (49%) and Apple’s Siri (23%) are not far behind and are reach out quite frequently to make purchases as well.
#5. Chatbots adoption
The increasing adoption rate of Chatbots is something to watch for in the future. Customers have now accustomed to Chatbots and in fact, prefer them for basic queries.
When it comes to answering simple questions, 74% of users prefer chatbots. Chatbots are look forward to further increase their impact on customer service.
Gartner predicts chatbots will become the primary customer service channel for roughly a quarter of organizations by 2027.
In e-commerce, Chabot transactions are expected to reach $112billion by 2024. Despite e-commerce businesses slowly implementing chatbots in, they are already increasing their revenue. Chatbots have started to boost eCommerce revenue by 7-25%.
#6. Cost Efficiency
Businesses that have adopted conversational commerce, especially for customer service, have seen reduced operational costs without affecting their service quality.
Businesses, on average, saw 30% savings on customer costs after adopting conversational commerce in their organizations.
In addition to cutting costs, Chatbots can also decrease handling time by up to 77%. Primarily because of two reasons – (i) Chatbots save customer service staff’s time through intelligent routing freeing up the service staff’s time; (ii) Chatbots are active 24/7 and hence keep the first response times (FRT) down.
#7. Conversational Commerce Landscape in SEA
Within Southeast Asia, the conversational commerce landscape is still growing. The Gross Merchandise Value (GMV) of conversational commerce is expected to hit $23 billion by 2027 in the Southeast Asian market.
Conversational commerce has seen traction in varying degrees across the SEA region, with Thailand and Vietnam engaging the most. A survey of 5,000 shoppers revealed that 40% of shoppers in Thailand have purchased through conversational commerce. And 36% of shoppers in Vietnam. Conversational commerce penetration still has room to grow in Southeast Asia in the coming years.
Source: BoxMe
#8. Meta platform still rules in SEA when it comes to chat-based shopping
Although TikTok has gained immense popularity, the trio of Meta platforms – Facebook, Instagram, and WhatsApp, still lead in the Southeast Asian market when it comes to chat-based buying.
Especially in Indonesia and Malaysia, the dominance of Meta apps (Facebook, Instagram, WhatsApp) is extremely high, closing in 90% of the total chat-based purchases.
Here is the breakdown of the most popular messaging apps in Southeast Asian countries.
Source: Cube Asia
Apart from the trio of Meta apps, other popular messaging apps are Zalo (in Vietnam), LINE (in Thailand), and Telegram.
Wrapping Up
The e-commerce market is ever-changing with changes in the digital landscape. So, it’s no surprise conversational commerce is taking over the shopping experience now.
Especially, with the voice-assistants and virtual-assistants gaining more prominence, and AI-integrated Chatbots being more powerful and useful since LLMs (Large Language Models) rise in the past two years – conversational commerce is set to grow and become a major component of businesses in the coming years.
