How retail chatbots can personalize shopping experience for customers

Learn how retail chatbots have become increasingly popular and revolutionized how brands interact with their customers.

Ana Rukavina

As online shopping thrives, with estimated global retail sales of $32.8 trillion by 2026, retailers seek innovative ways to engage with customers and enhance their shopping journey. One such solution is a retail chatbot.

In this blog, we will explore how retail chatbots can transform the shopping experience for your customers, making it more enjoyable, convenient, and tailored to their preferences.

What is a chatbot for retail?

Retail chatbots are automated virtual assistants that use artificial intelligence (AI) technology to answer customer’s FAQs, provide recommendations, search for products, upsell, and engage in interactive conversations to enhance customer experience.

They can be integrated into various websites, mobile apps, social media, and chat apps, such as Messenger, Instagram, Viber, WhatsApp, or Kakao, to assist customers throughout their shopping journey and create an omnichannel experience.

Retail chatbots also play a crucial role in conversational commerce as a perfect mix of meeting modern customer expectations on the one side while improving customer satisfaction on the other.

44%

of consumers appreciate the help of chatbots in finding product information before the actual purchase

Source: Statista

40%

of consumers do not have a preference if the chatbot or an actual human helps them as long as they get the help they need

Source: Invesp

Types of chatbots for the retail industry

Shopping chatbots that are available to meet various customer needs and improve the shopping experience usually fall into one of two broad categories:

1. Rule-based chatbots

Rule-based chatbots are powered by pre-defined rules or decision flows and are programmed to assist with a series of options. These rules dictate how the chatbot should respond to a specific user input or scenario.

Even though they do not learn from user interaction or adapt to new information over time, they are well-suited for handling routine and predictable tasks, such as providing standard product information and frequently asked questions.

80%

of routine tasks and customer questions can be handled by chatbots

Source: IBM

Imagine this scenario: your business often gets more questions on open hours or return policies than your agents can handle. Implementing rule-based chatbots helps you provide 24/7 customer support with consistent responses, reduces customer wait times, and frees time for your agents to focus on more complex inquiries.

Other benefits of using rule-based chatbots in retail are:

  • Scalability – They can handle a large volume of routine queries simultaneously. This is particularly valuable during peak periods such as Black Friday, Cyber Monday, or Singles’ Day sales.
  • Customization and control – Your business completely controls your rule-based chatbot’s rules and decision-making process. You can tailor the chatbot’s responses to align with your brand identity, industry requirements, or other standards.
  • Cost-effective – They can reduce the need for live agents and reduce costs.
  • Quick deployment – Rule-based chatbots are relatively easy and quick to deploy since they rely on predefined rules.

2. AI-powered chatbots

AI chatbots leverage AI, machine learning (ML), and natural language processing (NLP) to understand users’ intent and respond to an inquiry in a conversational way. They can learn from data, adapt to user inputs, and improve their responses.

52%

of consumers feel the customer service experience will get better in the future because of AI

Source: Infobip

Let’s take the beauty sector, for example. Your AI chatbot can give them tips on applying products, what skin type the product is best suited for, get information on skin care routines, and suggest other similar products they might like, creating an interactive and customized shopping experience. According to our research, 62% of consumers are willing to spend more with a retailer delivering an ideal customer service experience.

The benefits of conversational AI chatbots in the retail industry are numerous, to name a few:

  • Continuous learning and improvement – AI algorithms allow chatbots to continuously learn from interactions, adapting and improving their responses over time.
  • Data-driven insights – AI-powered chatbots collect and analyze vast amounts of customer data, providing valuable insights into preferences, behaviors, and trends that can help drive sales and increase revenue.
  • Personalized shopping experience – This includes everything from personalized product recommendations and context-aware conversations to awarding loyalty points, and tailored discounts, helping in the decision-making process, and gathering feedback.

Chatbot use cases in retail

Real-world applications are the best way to understand the practical benefits of chatbots in retail. Here are a few examples:

Now, let’s look at some tips and best practices to help you deploy similar effective chatbots for the retail industry.

Tips and best practices for chatbots in retail

Certain vital practices help ensure the successful implementation of retail chatbots. Here are some:

1. Define clear goals and objectives

Prioritize a clear understanding of your business objectives and identify key customer pain points. With this knowledge, tailor your chatbot to address them effectively. Don’t just implement a chatbot because everyone is doing it.

2. Craft the right chatbot persona

Consistency in user experience is one of the key building blocks when building trust and brand loyalty. This means that even your chatbot persona should align with your brand’s tone and values. If your brand’s personality is fun and playful, make your chatbot like that; your customers will love it.

3. Select the right service provider

When choosing the right service provider, you should consider client reviews and portfolios.

With Infobip’s industry-leading expertise, 15 years of experience, highest standards of compliance, and 9700+ global connections, you ensure that your chatbot development is in the right hands.

Create your retail chatbot with Answers.

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Jan 30th, 2024
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Ana Rukavina