AI Chatbots for E-Commerce: Benefits & Examples

As an e-commerce retailer, you need to prioritize dealing with customer communication if you want to succeed. In a world of instant gratification and accessible alternatives, a frustrated customer will quickly switch to a competitor if you fail to answer their questions or resolve their issue. 

Related content:

• How Do AI Chatbots Work?
• Getting Started with Chatbots
• 9 Questions to Ask Chatbot Vendors
  
• Conversational AI in E-Commerce: Benefits & Examples
  

For large businesses, the weight of customer demand drains resources and impairs growth. When faced with a high volume of queries ranging from stock availability to complex return requests, turning to technology can help you find a cost-effective solution. 

AI Chatbots (not to be confused with traditional pre-programmed e-commerce chatbots) directly answer the problem of keeping up with customer engagement commitments while scaling an e-commerce business. 

But what makes an AI Chatbot solution for e-commerce different from previous chatbot technology? How do they support customers? What do they do for your business? 

In this guide, we’ll answer those questions and demonstrate why the value of AI Chatbots is too high to ignore…

How Are AI Chatbots Changing the E-Commerce Industry?

The chatbot is dead. Long live the AI-Agent.

Chatbots have been available to e-commerce businesses for years, but the technology powering them has needed to be expanded. Lacking any form of Natural Language Understanding (NLU) and only working via pre-programmed rules, chatbots can only handle very basic requests about defined factors such as product availability or opening hours. 

Artificial intelligence, or AI, completely transforms chatbots from a limited, reactive system into an intelligent, intuitive tool that can engage in live conversations with customers and provide lasting value in every area of the e-commerce journey. An AI-powered chatbot unlocks capabilities for an e-commerce business that were previously reliant on heavy investment and were virtually impossible to scale.

The arrival of Conversational AI and Generative AI has caused a shift in chatbot utility and led to a drastic increase in retail spending. Juniper Research estimated that retail spending via chatbots would reach $12bn by 2023 and will continue to grow to $72bn by 2028. 

To put things in perspective, AI has given chatbots a definitive place in e-commerce. Where pre-AI self-service technology fails to meet the varied needs of modern consumers, AI empowers e-commerce retailers to offer responsive, intuitive automated agents that can lead customers from inquiry to purchase – all while reducing the time and cost burden associated with human-led customer support. 

What Is an E-Commerce AI Chatbot?

The term ‘chatbot’ originally referred to technology embedded in a web chat panel or similar interface that allowed users to perform basic self-service interactions. Pre-AI Chatbots rely on rigid processes developed before they are deployed and can never stray from them or innovate to solve complex queries. They are, therefore, limited to pre-set journeys and responses. 

AI-powered Chat Agents, on the other hand, are a total evolution of chatbots. They are AI Agents for businesses that are built using advanced Conversational AI and are not limited to a single interface. Customers can access the ‘bot’ across systems as diverse as voice calling, WhatsApp, your website, or even social platforms like Instagram. 

With Conversational AI in place, a chatbot is able to hold conversations with customers in their own language. The AI can recognize context and intent and will automatically adapt to meet shifting customer requirements mid-conversation. 

The versatility of AI Chatbots means they support at every stage of the e-commerce journey: 

1. Awareness/consideration: the chatbot can field customer queries around product availability, sizing, etc., and even provide recommendations. 
2. Purchase: customers can buy directly via the chatbot and get any queries answered before they buy, reducing friction and the chance of basket abandonment.
3. Delivery: an AI Chatbot can automatically deal with the majority of ‘where’s my order’ style queries, one of the biggest burdens on any e-commerce brand’s team. 
4. Post-purchase: not only can an AI perform the initial data capture required in returns or refunds before handing over to a human, but it can also reengage customers with proactive messaging to the customer to provide personalized messages or offers. 

Benefits of E-Commerce AI Chatbots

The benefits of an AI-powered chatbot are finally reaching parity with the early promises of pre-AI Chat tech. When deployed correctly, an AI Chatbot provides compelling benefits in areas particular to e-commerce businesses and their requirements. Here are just a few of the most valuable…

Provides 24/7 Omnichannel Support

In the digital age, customers expect your business to answer their questions quickly – with one study finding that nearly half of consumers expect brands to respond to them within 4 hours. Not only that, but the global nature of e-commerce often means your customers are shopping in different time zones. 

An AI Chatbot allows you to field these 24/7 queries in the most efficient way possible. Rather than hiring human teams in multiple locations, your AI Chatbot will be readily available to customers whenever they need it and will respond automatically without human intervention. 

Better yet, AI Chatbots aren’t locked into one panel like traditional pre-AI versions. They work with your backend systems, which means customers can interact with them across multiple platforms. 

Even customers who favor picking up the telephone to call support lines can benefit since you can set your AI Chatbot to answer it even outside of business hours and either solve the problem or flag the case to a human agent who can respond when they start work. 

Makes Your Human Workforce More Productive

AI is not a replacement for human support agents. Instead, it can assist them both in terms of improving successful customer outcomes AND improving their own experience at work. 

According to HubSpot, reps using chatbots to respond to customer service queries saved an average of 2 hours and 20 minutes a day.

How do they save your team so much time? 

Agent Assist AI Chatbots handle the mundane tier-1 tasks that your human agents hate, giving them more time to focus on more complex customer problems. 

The chatbot can also take care of all initial identification/verification requirements before routing to a human agent, summarize the user’s problem, and display it to the employee giving them more context and control over the call. 

Creates Multilingual Capacity

AI Chatbots can translate queries from a variety of languages and engage in a human-like conversation with someone speaking their native tongue. This makes your business more international without any of the commitments of launching new headquarters or contact centers – giving you the ability to offshore incredibly cost-efficiently. 

Enables Better Personalization 

One of the biggest trends in e-commerce is around customer personalization. 77% of consumers have chosen, recommended, or paid more for a brand that offers personalization – so it’s a core consideration for any business that wants to sell more products. 

Historically, ‘personalization’ has been limited to simple things like using a customer’s name in marketing communications. An AI Chatbot grants an entirely new level of personalization, guiding users through personal journeys from their first interaction to post-purchase engagement. 

Speeds Up Satisfactory Resolutions

The ultimate goal for most forms of customer interaction in an e-commerce environment is to have a customer complete a purchase. To do that, you need to quickly address their questions, reduce friction from the buying process, and solve any problems they have as soon as they occur. Any delay can lead to a customer abandoning their basket. 

An AI Chatbot gives customers a sense of priority and speeds up solutions they may have otherwise had to wait for. When they have questions about products, the AI can answer them instantly. If they have a problem with an order, they can use the chatbot to start the process without waiting in a long call queue. 

Ultimately, this leads to faster, more effective resolutions to common customer problems, resulting in a 99.5% faster response time and a 30% increase in CSAT scores. 

Returning to that all-important goal of customer purchase, AI Chatbots can also drive direct improvements to your conversion rate. A Cognigy client saw a 232% increase in conversions after deploying a retail chatbot to guide customers through the buying journey. 

What Are the Pain Points of E-Commerce AI Chatbots?

The main ‘pain points’ associated with e-commerce AI Chatbots are largely down to how you approach and implement them in your business. The most common problems are as follows:

• Negative associations: Before AI, legacy chatbots relied on predefined scripts and decision trees, which led to narrow capabilities and frequent issues. This means some e-commerce businesses have had bad experiences and now distrust any ‘chatbot’ terminology. 
• Scoping user requirements: To make sure your AI Chatbot meets customer needs, you need to scope out your existing buying journey to help identify where your AI needs to operate and what it needs to tackle. Scope out which devices, channels, and tools your customers use and define the most effective sales channels you have. Doing so means you can deploy your AI Agent in the places your customers want to engage – which is a far cry from earlier chatbots fixed to a pop-up window on a retailer’s website. 
• Planning integrations: AI Agents that utilize Conversational AI and Generative AI can access your existing systems to automate tasks like customer verification – but only if they can successfully integrate with them. You need to plan your integrations early to give the AI Chatbot the utility it needs to deliver value. 

Use Cases of E-Commerce AI Chatbots

We’ve discussed how useful AI Chatbots can be, but that’s a general statement. With e-commerce use cases, we can show how AI interacts with defined processes to drive transformational results. 

Order Tracking

Tracking down an order is one of the most common forms of customer interaction within an e-commerce business. Though it is a low-complexity query, it requires an element of verification to find a customer’s order number/details. This quickly adds up and leads to a significant portion of an agent’s workload being spent on such a simple task. 

An AI Chatbot can automate the entire tracking process in a way that improves things for you AND your customers. Not only will it reduce the burden on your human agents, but customers can interact with it via their preferred method and get a response without any waiting times. 

If there’s a problem with the tracking process, the AI Chatbot can alert your human team and help them speed up resolution by providing full context with a contact summary and pre-verified customer details. 

Exchanges & Refunds

Another common problem is in processing exchanges and refund requests. Using a Conversational AI customer service approach helps reduce customer frustration and gives them a sense of instant support.

A customer can contact an AI Chatbot to begin a return/exchange request. The AI Agent will ask for all relevant details and even prompt the user to submit photographs if required. Once all of the information is gathered, the AI can then either facilitate the rest of the process or pass it to a human agent who can quickly complete it. 

Personalized Shopping Assistant

Personalization is critical to e-commerce shoppers and AI Chatbots allow you to give them a shopping assistant in the palm of their hand. By interacting with the AI Chatbot, users can ask questions about your products or services. The chatbot can either reply or (using Generative AI) create suitable content such as size guides or style advice.

With these capabilities, your AI Chatbot becomes a full personal shopping assistant for your customers – which again minimizes friction in the buying process and helps accelerate the chance of successful checkout. 

Abandoned Cart Re-Engagement

60% of customers who abandon their carts do so because they’re either “just browsing” or they’re “not ready to buy”. Reengaging customers who have abandoned carts is a core part of the e-commerce marketing cycle and is usually dependent on email marketing. 

AI Chatbots provide a whole new approach to abandoned baskets since they can proactively engage customers in a real conversation. With an understanding of context and intent, the AI can ask questions that turn a user who is ‘not ready to buy’ into an eager customer. 

Examples of AI Chatbots in E-Commerce

As with most forms of digital technology, the numbers don’t lie. AI Chatbots have the potential to drive incredible results to your e-commerce business – just take a look at some real-world examples of them in action and see for yourself. 

Personalized Shopping Drives Conversion Rates Skyward

Cognigy developed a personalized virtual shopping bot with a prominent retail client to help reduce support times and improve basket spend. With automated image analysis, the bot could extract data from digital images – which was used to speed up resolution times from 10 days down to 15 seconds! 

The AI Agent also helped improve basket value, with chatbot users spending an average of 10$ more than those not using the bot. As more users discovered and began using the bot, there were fewer issues and more satisfactory outcomes. This ultimately led to a 200% year-on-year increase in conversion rates. 

If you’d like to know more, click these links to discover other examples of our work in the e-commerce and retail sector. 

Best Practices for AI Chatbots in E-Commerce

Getting optimal results from an AI Chatbot relies on setting the right fundamentals in place before you start. Here are some best practices to be aware of. 

Start With a Low-Complexity Use Case

Start with a low-complexity task with high potential value to your business. In e-commerce, that may be basic product availability questions or the ever-present “Where’s my order” request. Choosing this type of use case allows you to develop and deploy the AI Chatbot quickly, which means you can gather live data and use that to refine the chatbot and scale out to other services. 

Design Around User Journeys

As mentioned in the pain point part of this guide, you need to map out your customer’s interactions throughout a buying journey before deploying an AI Chatbot. You need to know where your customers are, what devices they use, how they prefer to buy, and their problems. From there, you can ensure your chatbot supports this journey and is available on the platforms customers need. 

Educate Human Employees

To some workers, AI can be a scary concept, as they fear it may replace their role. You must demonstrate potential AI integration to your team and explain how it will support them rather than replace them. Explain how the AI Chatbot will work, what tasks it will help with, and how agents can utilize it. 

Monitor and Optimize 

Your chatbot will become a source of valuable data and information about customer requirements. The chatbot can summarize interactions and even develop detailed reports. As customer usage grows, you need to assign someone to be responsible for reviewing interactions and identifying potential new intents or use cases that crop up during interactions. 

Cognigy Can Implement an AI Chatbot Solution for E-Commerce

Empowering a whole new generation of self-service, AI Chatbots represent the future of e-commerce interactions. 

Work with Cognigy to develop an AI Agent for your business. You’ll decrease the weight of service requests on your team, improve customer buying experiences, and ultimately drive better conversion rates. 

Book a demo to see how it works. 

Frequently Asked Questions

What Is the Difference Between a Chatbot vs Conversational AI?

Traditionally, the term ‘chatbot’ was used for a non-AI tool that relied on pre-defined responses and journeys to support customers with basic queries. Conversational AI offers a transformation of that technology, providing brands with a way to offer fully automated two-way conversations to customers.  

How Does AI Chatbot Improve Customer Experience in E-Commerce?

AI Chatbots improve customer experiences by cutting down on call waiting times, speeding up satisfactory resolutions, and providing personalized shopping support throughout the e-commerce buying journey.