How chatbots will revolutionize holiday shopping

Bots will change holiday shopping as we know it -- but not likely until 2017.

It seems almost quaint that there was a time when holiday shopping meant harried parents drove to physical stores in search of the season’s must-have toys for their children. And just as e-commerce changed the holiday shopping game, delivering said toys to consumers’ doorsteps not unlike Santa himself, the coming bot revolution will also have a profound impact on how consumers find, purchase, receive and return products all year long.

What’s more, 2016 marks the first holiday season in which many shoppers will interact with bots. That’s because Facebook launched Bots for Messenger only in April. Since then, Facebook said 33,000 bots have been announced, but Jason Goldberg, senior vice president of the commerce and content practice at interactive agency Razorfish, noted they “still kind of stink” and don’t enhance the consumer experience in a meaningful way yet.

For her part, Morgan Petti, director of mobile strategy at mobile-first agency Fetch, noted we won’t likely see a real impact from bots on holiday shopping until 2017 as this season will be more about experimenting and learning.

“This year is more of a ‘let’s learn and step back,’ and next year will really be pushing the envelope,” Petti added.

David Hewitt, global mobility lead at marketing company SapientNitro, agreed.

“Bots won't play a significant contribution to holiday sales this year – not because they don’t have the potential to, but they still represent a very new behavior for domestic consumers and many retailers still don’t offer conversational commerce,” Hewitt added. “When holiday shopping traffic starts jamming up and folks are rushed to find good deals and buy online last minute, they will likely leverage the means they are most familiar with.”

But that’s not to say bots will have no effect on 2016 holiday shopping whatsoever. Here’s a closer look at where they will have the biggest impact.

Shipping and returns

Donna Peeples, chief customer officer at mobile messaging platform Pypestream, pointed to potential for bots in 2016 as a more conversational alternative to a website’s FAQs or to help with common issues like returns.

“It’s huge if you could just do it through a conversation, she said.

And Hewitt noted, retailers like Everlane are already using Facebook Messenger to report on shipping times and arrival status.

Jason Snyder, CTO of brand experience agency Momentum Worldwide, too, cited logistics.

“It will be great when we can get packages where we want to easier…I hope logistics companies like UPS, USPS and DHL will adopt them,” he said.

And actually making purchases via bots may not be much of a leap from there.

“These new touch points will inevitably soak in over time and fuel new ways to purchase. Of course, some retailers may use this coming peak season to differentiate with campaigns that integrate bots,” Hewitt added. “Perhaps the biggest boon in bot commerce will come when a critical mass of shoppers start storing their payment credentials [in] the platforms they are conversing on. Once integrated payment and mobile checkout hits, point purchasing will be a quick chat and tap to buy.”

Petti agreed the ability to purchase goods via bots will be a real boon for consumers, but that’s still an area in development.

Customer service

For now, Goldberg noted the majority of bots available for the 2016 holiday season will be bots that perform customer-service-like functions, such as answering questions about orders, shipping and deliveries.

“In the past, most tools ended up connecting to a human being,” Goldberg said. “This holiday season, a much larger percentage of those tools will connect to a bot that will try to resolve the question and only escalate to a human [as needed].”

These bots will help remove some dreaded friction – and may enhance the customer experience for those who don’t want to call companies and wait on hold.

“There’s all this friction that makes the holidays less pleasant,” Goldberg said. “Bots make answering questions easier, faster and on your own time table. Those are the bot experiences likely to make customers feel better. MasterCard has a bot to check your balance – and make sure [you don’t] get your card declined. In the old days, a person telling you your card was maxed out was unpleasant. [Now you can] send a private text message to Facebook. That’s an arguably better experience that people will like.”

But, he added, with as much optimism as he has for bots in the long term, that’s simply not where they are now.

Brett Leary, senior vice president and commerce innovation lead at marketing and technology agency DigitasLBi, agreed bots will play a limited role in 2016 holiday shopping.

“We see [bots] offloading some of the basic blocking and tackling…[like] store hours, locations [and] more information [and] maybe some product-level information,” Leary said.

But there’s potential for much more in the not-too-distant future.

Gift recommendations

For one thing, Leary said discovery is a big issue and natural language processing and machine learning can go beyond simple conversation paths, enabling questions and responses that provide real value – as well as personalization.

Petti agreed bots could help last-minute holiday shoppers who are in a panic about what and/or how to get what they need, as well as consumers who hate holiday shopping and those who don’t know what to buy.

“You especially look at consumers like…not knowing what teenagers want…and really being able to talk and interact with a bot to get to that solution very quickly,” Petti added, noting these features will be far more prevalent next year.

Indeed, Jaclyn Ling, director of retail at chat platform Kik interactive, said gift guides are particularly well-suited for bots because retailers can only publish so many generic gift guides with broad recommendations, but a bot can narrow down a list of options much more and provide a more targeted recommendation by asking a series of questions about gender, budget and personality type.

Multiple so-called gift concierges already exist from brands like 1-800-Flowers and H&M. Burberry, too, has a bot specifically for holiday shopping. So does American Eagle.

“[The 1-800-Flowers] bot is really designed to solve a common problem that 1-800-Flowers customers would have, which is they tend to buy something for someone they may or may not know well and it helps with discovery,” Goldberg said.

In a similar vein, North Face has an IBM Watson-powered bot that helps shoppers choose winter jackets.

“The holidays for us…a lot of it revolves around the US teen and what’s interesting and fun,” Ling said. “We’ve seen the bot experiences most engaged with are fun and shareable experiences with friends, so what we like to focus on is what we can build around brands that is shareable with friends.”

She also noted that because bots live within chat, which is a highly social environment where friends talk and share, it’s not too much of a stretch to think about consumers eventually asking bots what to buy their friends.

Deals and wish lists

Snyder concurred marketers haven’t figured out how to integrate bots in a meaningful way, which he said could include offers that pop up for products mentioned within a conversation or suggestions for products that are added to a list of desired items to look at later.

Leary, too, was intrigued by the potential for a bot to scour the Internet and serve up the best price for a product.

“That isn’t happening this year,” Snyder added. “I think it’s still very, very nascent.”

But as bots become more widespread, when consumers chat about gifts, lists could theoretically be created in real time and devices could become holiday wish lists, Snyder added.

“That’s a significant shift in the way we shop and think of gifting -- ‘Hey, so what do you want for the holidays?’ or when you’re sharing your device for your holiday wish list, it may actually be populating the shopping cart in real time,” Snyder said. “The big difference is it can accelerate the entire experience. It’s no longer about the need to put a list together and keep track against my budgets. All those things need to happen with bots.”

Additional benefits

And, in the end, bots – and conversational commerce -- may strengthen the relationships between brands and consumers overall.

Snyder noted advertisers have long focused on persuading people, but they will eventually have to persuade bots as well as consumers hand over more proxy for purchasing decisions.

“Then marketers and brands need to start paying attention to those machines as well and figure out the best way to persuade them because whoever is closest to the consumer controls the conversation,” Snyder said. “As bots control conversations and there is ambient intelligence all around us, marketers need to figure out how to participate in that dialog on behalf of the bots that consumers use.”

Snyder pointed to interactive ad capability Watson Ads, which allows consumers to interact with technology platform IBM Watson through advertising. Pharmaceutical company GlaxoSmithKline was one of Watson Ads’ beta partners and used Watson Ads for its allergy medication Flonase.

“You can go in and with natural language, say, ‘Can my kid take this?’ or, “What is the pollen count?’ or ‘Will this make me sleepy?’ which is very, very different,” Snyder said. “Imagine how that might work [for other products] – you could say, ‘Is this sweater itchy?’, ‘Are these pants tight in the crotch?’ When you attach a network to anything, it changes its meaning. When you attach it to pair of pants, you can ask, ‘Can I wear you to work?’ and you can start asking your pants questions.”

And that, in turn, helps brands meet customers on their terms, which means deeper engagement and creating relationships where there might have only been transactions before, Peeples said.

“All buying decisions are made with emotion on some level and this is a way to more deeply connect with the consumer on behalf of a brand,” she added. “This is an opportunity to not only increase efficiency in the business while improving satisfaction, but we have the ability to improve top-line growth, but also to manage the middle line to keep the cost of operations down. Those are the big wins for brands and marketers.”

Henderson noted a further opportunity for brands to collect wide range of data about consumer preferences and things that will help further improve the experience thanks to both analytics and consumer feedback.

Ling agreed bots enable brands to learn about users and store that information, which they can use later to retarget.

“Imagine if I’m shopping pre-sales for Black Friday and express interest in coats,” Ling said. “On Black Friday, I can be sent targeted notifications for the product or category I was searching for…[and receiving] highly targeting promotions when the brand has one.”

What’s more, Goldberg cited the 2016 Internet Trends report from VC firm Kleiner, Perkins, Caufield and Byers, which said millennials prefer to interact with brands via mediums like chat and instant message.

“Older shoppers…want to dial up the phone,” Goldberg said. “Younger shoppers don’t. [Bots] meet their needs better.”

It’s all part of a shift in power from brands to consumers in which the latter have communicated they want to use chat platforms and natural language interfaces for discovery and shopping.

“So that’s what the consumer wants. We have to offer those natural language experiences and to do so at scale means we need to use bots,” Goldberg said. “First and foremost, it’s about meeting the needs consumers are showing they have and there is a very silver lining for brands: Brands [want to have one-on-one] relationships with every customer, but they can’t afford [to hire a] person to talk to [all 6 billion people] on the planet, but bots scale much better.”

In other words, bots enable one-to-one conversations with consumers on a mass scale, Goldberg said.

Peeples, too, pointed to consumer preference to using messaging to talk to businesses.

“We’re moving into this world about taking transactions and turning them into real relationships to solve problems – everything from FAQs to accessing gift registries and…personalizing orders, tracking shipments and making returns,” Peeples said. “I think there’s a huge opportunity for chatbots both on the consumer side to increase satisfaction and loyalty. Think about the consistency that can be created and efficiencies that can be gained when bots are doing the heavy lifting and take humans out of the equation and use them for more complex issues.”

This, in turn, helps cut down on call center needs and brands can then funnel those resources to helping in-store customers and building out e-commerce capabilities, Petti said.

“From a marketer’s perspective, we need to take a step back. We experienced a rush to get from Point A to Point B in the app space and there were a tremendous number of apps that were useless and brands were spending lots of money to promote them when consumers downloaded and used them once and forgot about them,” Petti said. “So think about what utility you can bring to the consumer. What purpose can I help them with? We can continue to have them interact with us and build a bot experience, but I’m seeing a lot of press these days about scrambling to figure out a strategy…I think we will see a lot of failures, but brands that succeed will take their time and focus on user experience and machine learning and how to get it integrated properly.”

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