Conversational AI in E-Commerce: Benefits & Examples

Though the concept of e-commerce is just a few decades old, it is arguably the most dynamic and innovative sector on the planet – growing in size and potential every year. 

Related content:

• AI Chatbots for E-Commerce: Benefits & Examples
• Top 4 Conversational AI Uses for the Retail Industry
• AI Agents: Transforming eCommerce & Retail Customer Service

Take the UK, for example, one of the world’s most promising e-commerce markets. In 2007, UK e-commerce sales accounted for just 3.7% of all retail sales. By 2023, that percentage had risen to 26.7%. 

With more people shopping online, total e-commerce spending is more lucrative than ever before. Experts estimate that in 2024, total e-commerce sales will reach $6.3 trillion, an increase of $500 billion compared to the $5.8 trillion spent in 2023. 

As sales rise, so too do the demands of your customers…

The Era of The Demanding Customer

Technology has shaped the trajectory of online shopping. Payment platforms like PayPal gave people the confidence to buy online. While online marketplaces like eBay have made it easier than ever to access products. Even mobile apps have played their role, making it even more simple to buy from the palm of your hand. 

Tech hasn’t just changed how we shop – but also how we think about shopping. 

With technology providing instant availability, quick delivery, and simple checkouts, customer expectations have been transformed. Modern e-commerce buyers now expect things like: 

1. Personalized experiences: 72% of consumers are more likely to be loyal to a brand that offers a personalized customer experience. 
2. Mobile-first shopping: customers prefer to buy on their mobiles – with as much as 62% of all e-commerce sales coming via mobile by 2027.
3. Flexible payment options: E-Commerce businesses must accommodate for a variety of payment methods. 13% of customers said they’d abandon their carts if they didn’t see enough payment methods available. 
4. Stellar customer experience: You'll win more revenue if you can provide good customer experiences. 86% of customers are willing to pay more for a great customer experience.

How can e-commerce businesses meet these expectations in a cost-efficient manner? The answer again comes via technology…

What Is Conversational AI in E-Commerce?

Conversational AI is a type of artificial intelligence that can help e-commerce businesses better tackle customer needs – whether they are simple inquiries about product availability or more complex support issues such as tracking down orders. 

It is a type of artificial intelligence that uses Natural Language Processing (NLP) and machine learning to understand human language, which means it is perfectly suited to tackling customer communications. 

Not only can Conversational AI comprehend a customer’s query, analyze the intent, and generate a suitable response – but it can also empower self-service functions to create more human-like personal shopping assistants. 

Conversational AI has long served as an independent, powerful tool in customer interactions. When paired with Generative AI, however, it gains even greater capabilities, enabling an advanced, scalable solution that elevates customer experiences with increased personalization and efficiency.

Benefits of Conversational AI in E-Commerce

The benefits of Conversational AI in e-commerce are extensive– it will improve your customer’s experience while also providing long-term value to your human workforce and your overall business performance. 

A happy customer is more likely to return and buy again, so customer experience is critical to every serious e-commerce provider. However, achieving excellent customer experience isn’t easy, thanks to the ever-rising demands of digital consumers who expect your store to offer rapid delivery times, instant access to customer support, and personalized offers – just to name a few. 

Fortunately, Conversational AI can help you meet many of these expectations cost-effectively. That translates to happier customers, greater sales, and better long-term ROI figures. Let’s look closer at the benefits of Conversational AI and AI Agents in e-commerce…

Improves Key Customer Service Processes

Every e-commerce business shares tasks that are necessary but laborious and inefficient. From verifying customer order details to finding tracking information, these problems are usually associated with customer contact and waste valuable minutes (or hours) of your human team’s time. 

Conversational AI helps alleviate this burden in a cost-efficient manner. It can field customer calls and digital communications, and when used as a complete AI Agent platform, it can quickly automate the identification and verification process, track down customer order details, and even create call summaries for future recordkeeping. 

None of this is meant to replace your human team – it simply supports them by eliminating the more mundane tasks. When the AI recognizes a need for human intervention, it can route the call to your team and provide full context so the agent knows who the customer is and what their problem looks like before they pick up the phone.

Enables Multichannel, Multilingual Capacity

For an e-commerce business to scale internationally, it needs to be able to support customers who speak different languages and use all manner of devices. An AI Agent allows you to do just that – without all of the resources and investment demanded by human teams. 

AI Agents operate across 30+ voice and digital channels, meaning customers can choose how they interact and even swap methods mid-purchase. They offer multilingual support and can translate in real-time, allowing your business to communicate in natural language with customers speaking their native language, wherever they are in the world. 

Powers up Personalization

71% of customers expect personalization from brands. If they don’t get it, 76% will switch loyalties. As an e-commerce retailer, you must prioritize personalization to secure ongoing customer loyalty.

AI Agents help enhance personalization by providing more individualized approaches to shopping. From supporting customers with product queries and sales journeys to offering personalized suggestions, there is a wealth of untapped potential to explore. 

AI also facilitates user-driven personalization, where a customer might send a photograph of a specific item and ask for recommendations to pair with it. The AI Agent can then make recommendations tailored to the user’s needs. 

Removes Buying Journey Friction

The traditional e-commerce sales funnel includes many steps, from initial awareness and consideration to purchase and advocacy. An AI Agent supports each stage and can help a user progress through them far more effectively than in a traditional journey. 

AI Agents can handle an initial engagement via a product query and then guide a customer through consideration by answering questions and solving problems. In the same interaction, the AI can facilitate the customer purchase – reducing the need for a user to hop from channel to channel and simplifying the purchase journey. 

Once a user purchases, the AI also supports aftercare and additional queries. It can then ask a customer to leave a review, improving the likelihood of successful advocacy. 

Enhances Customer Experience

The fundamental element of ‘success’ for any eComm business is in customer experience. 88% of e-commerce customers said they’d pay more for great customer experiences.

Conversational AI helps improve customer experience across the board in the areas that matter most: speed, convenience, knowledgeable help, and friendly service. 

By giving customers instant access to personalized support whenever they need it, in a language and channel of their choosing, your AI Agent will provide an enhanced customer experience that leads to returning customers and repeat purchases. 

Use Cases of Conversational AI in E-Commerce

Developing defined use cases is the best way to approach any new technology in your business. To be as effective as possible, ensure use cases focus on the most impactful areas first. Take processes that eat up time and money and use them to see how Conversational AI can help. Here are a few examples of typical use cases in an e-commerce environment

Identification & Verification

E-commerce, like many other customer-facing industries, mandates time-consuming identification processes. Outside of a simple product query or general question, almost every other customer query will involve verifying personal details such as a customer’s name, order number, or other form of data. 

Conversational AI can help you optimize this process by gathering all of the necessary information without any human intervention. CAI can either talk to a customer via voice and ask them IDV questions, or send digital communications that allow a user to input the information or even upload additional documents such as an order receipt. 

Considering the high volume and low-value nature of IDV, this is often the best initial use case for new AI integrations as it shows the massive impact of CAI in reducing the time and costs associated with your business’s most mundane processes. 

Stock Inquiries

When discussing use cases, the most impactful implementations tackle the most mundane and time-consuming tasks in a business. In e-commerce, customer inquiries about stock or product availability are another unnecessary time sink your human team shouldn’t have to deal with. 

Even though most e-comm businesses display stock levels on their websites, customers still regularly pick up the phone and ask about a product and whether it’s in stock or when it may be resupplied. 

CAI is practically perfect for this task. It can field customer calls or digital inquiries and reply in real-time, tracking down stock levels and even dealing with more complex queries such as informing a customer when an out-of-stock product may become available. The AI Agent could even offer to remind the customer when the product is back in stock – increasing your chance of successfully converting them.  

Order Tracking

They say patience is a virtue, but customers are frequently impatient when it comes to orders, which explains why the most common queries in e-commerce are related to order tracking/shipping. 

Whether customers are simply looking for shipping information or they’re concerned their order hasn’t arrived on time, they want access to rapid customer support that helps ease their concerns and solve their problems.

CAI helps mitigate customer frustration by providing instant support without waiting on hold. Customers can upload order details either digitally or tell the AI Agent directly. The power of Conversational AI, in this instance, is that it can deal with the nuance and complexity of a user’s query – not only providing the tracking info they need but also picking up on complaints, negativity, or frustration. 

If the CAI can’t resolve the query, it will then alert a human employee and give them all of the pre-qualified information about the customer’s case, so your team can reach an effective resolution far faster than having to start from scratch. 

Customer Exchanges & Refunds

How you handle exchanges and refunds is critical in protecting your business’ reputation. 

A poorly handled refund request can quickly lead to further disputes and negative reviews, so prioritizing frustrated customers is always important. 

CAI helps you pre-qualify callers, identify their intent, and ensure any human intervention happens when the agent is fully equipped with the background information and can make better decisions about potential exchanges/returns. 

An AI Agent using both Conversational AI and Generative AI can also automate the refund process where possible, prompting a customer to submit details about the return, the nature of the problem, and any other issues. The AI Agent can then send a customer a return label, ask for a photograph of the shipping confirmation, and issue the refund. 

Turning Chatbots Into Digital Shopping Assistants

Does your e-commerce brand use a chatbot? It’s time to upgrade. 

Traditional ‘chatbot’ technology helped transform many e-commerce businesses by deploying self-service systems that allow customers to perform simple actions such as tracking an order or making a query. Pre-programmed responses and a rigid process tree have always limited this technology.

Conversational AI can help revolutionize chatbots as a concept and create a more engaging, personalized, one-to-one conversational interface that a customer can use to fulfill more complex self-service tasks.

Examples of Conversational AI in E-Commerce

Though use cases give you some examples of what roles Conversational AI can fulfill in an e-commerce environment, there’s nothing better than looking at real-world examples of Conversational AI. Here’s one from an exciting European retailer that demonstrates the impact it can have.

Let’s look at Mister Spex, an eyewear e-commerce business, to see how they utilized AI to transform their business and improve that all-important ROI…

Mister Spex

Europe’s leading online eyewear retailer, Mr Spex, caters to 7 million customers across ten countries. With such a high number of customers, their agents were bogged down by mundane queries about order status and having to spend valuable time performing simple processes like ID&V. 

Starting with this essential process as a use case, the brand deployed a Conversational AI Agent that could tackle simple ID&V and handle ‘where’s my order’ queries by either providing a self-service option or routing to an agent if the AI recognized friction or complexity. 

The results were staggering – automating 70% of IDV queries and 52% of ‘where’s my order’ issues. This saved human agents at least 30 seconds per call – which adds up to a huge time saving across the business. Read the full case study to learn more.

Want to see more examples of Conversational AI in retail? Click the link and discover four exciting use cases for sellers.  

Best Practices for Conversational AI in E-Commerce

In e-commerce, best practices such as utilizing attractive product images, attracting detailed product reviews, and sending customer basket abandonment reminders all help direct you toward success. 

Similarly, when adopting AI, you need to know some clear best practices to ensure you get the most from your new AI Agent…

Plan Your Integrations

From payment gateways like PayPal and Stripe to CRM systems, inventory management tools, and even customer support platforms, e-commerce businesses rely on many different integrations to operate successfully. 

For your Conversational AI solution to provide the most value, you must scope all your integrations first. Bring them to your AI provider so they can ensure your AI Agent is built around your systems and utilizes them in the best way. 

Choose a Narrow Use Case

E-commerce can leverage AI in many ways, and use cases are vast. To get started with Conversational AI, or any other type of AI, you need to start with a use case that represents low complexity but high volume, such as ID&V. Once you begin, you can monitor the results, optimize the AI, and expand it to other processes. 

Understand the Limitations

An AI Agent is built with a combination of Conversational AI and Generative AI. The conversational side deals with human-facing interactions in real-time. Generative AI, on the other hand, allows the AI to produce unique, context-relevant content. An AI Agent needs to use both of these technologies to offer the responsiveness and automated problem-solving that is demanded in the e-commerce sector.   

Use Cognigy to Implement Conversational AI Solutions for Your E-Commerce Business

For AI to be effective, it needs to be trained to understand the needs of your business AND your customers. Cognigy can create an AI Chatbot solution for e-commerce that is pre-trained and unique to your business using extensive industry data – meaning it is immediately familiar with niche terminology and common processes. 

We’ll work with you to identify your unique use cases and scenarios, define the AI Agent’s tone of voice, and help establish the framework you need to succeed. Once launched, we’ll monitor and maintain your AI solution to ensure it remains effective no matter what the e-commerce landscape throws at you. 

If you’re interested in seeing just how impactful AI can be on your business, book a demo with our team today. 

Frequently Asked Questions

What Is the Difference Between AI and Conversational AI?

AI is the catch-all term for any type of artificial intelligence. Conversational AI is a specific type of AI that is used to read, understand, and interpret language to interact with customers. Other types of AI include Generative AI and predictive AI. 

How Does an AI Chatbot Work in E-Commerce?

An AI ‘chatbot’ allows an e-commerce provider to offer a responsive self-service option for customers using text or voice-enabled channels such as WhatsApp, social media, or even a chat window on your website. The AI can then answer queries instantly and either resolve problems or elevate them to a human agent. 

What are the Challenges of AI in E-Commerce?

Most of the challenges associated with AI in e-commerce are down to planning failures. If you don’t start with a narrow use case, you may struggle to get value from an AI implementation. Similarly, if you fail to account for all of your tech integrations, specific tools may not integrate well with the AI. The good news is that planning can easily solve these problems.