What Is Conversational Commerce?: Driving Incremental Revenue With Generative AI
Picture this. You’re in a store, looking for… something. You aren’t entirely sure what, but the sales associate helps guide you in the right direction. The item you didn’t even know you were looking for is perfect.
Traditionally, that experience hasn’t been replicable online. Conversational commerce now makes it possible — and helps bridge the gap in conversion rates retailers typically see between brick-and-mortar and online.
Conversational commerce refers to how retailers use technology, like an AI shopping agent, to bring the in-store experience to ecommerce. AI shopping agents recognize shopping signals in real-time and help shoppers find what they need — even if they didn’t know they need it. By predicting those needs through pre-generated prompts, they anticipate shoppers’ questions to get them answers that drive more purchases.
In November, Bluecore acquired AI shopping agent alby. During our most recent Coffee & Commerce, alby co-founders Max Bennett and Kenny Teng explained how conversational commerce creates a better shopping experience and drives net-new incremental revenue.
“Human sales associates give you information, but not just any information: truthful information that drives sales,” Max explained. “Unlike the technology of the past, these conversational AI systems will look very different depending on whether you’re buying a fashion, consumer goods, or sporting goods product. Paired with Bluecore, we can make these experiences even more magical.”
AI shopping agents vs. chatbots
One common misconception about conversational commerce is that “AI shopping agent” is another term for “chatbot.” The two are fundamentally different.
Chatbots are reactive. They wait for customers to ask questions — and in many cases, they have to be the exact right question. That doesn’t work in the context of conversational commerce. People don’t know what they don’t know. They may not know the questions to ask, which is why chatbots are better suited for support than selling.
“The first thing we tested was a chatbot. We asked, ‘What happens if you take Chat GPT-type technology and add a product catalog and documents from a retailer’s website, make it into a chatbot, and put it on an ecommerce site?’” Max said. “It was bad.”
The click rate was extremely low — just 0.3% — and most questions people asked were about returns or other support-related issues. There was no revenue lift.
AI shopping agents have far more engagement and conversions. They’ve also proven to drive a 2.15% lift in revenue per session, translating to millions of dollars of incremental revenue for retailers.
“People go to chatbots for support questions like, ‘Where is my order?’ We needed to find a separate experience for sales-related questions, which is how we shifted toward the idea of embedding an agent directly into the page” he added.
Unlike chatbots, AI shopping agents are specifically built to drive incremental revenue and customer satisfaction.
They use live engagement signals, product data, and Generative AI in order to generate personalized prompts. These prompts guide shoppers through the buying journey, anticipating their needs and predicting their next questions.
AI shopping agents adapt and react in real time, using information from product catalogs, customer reviews, and community Q&A to refine responses.
Conversational commerce in action
Say you’re in the market for a pair of skis. “The difference between an advanced and a beginner skier dictates almost everything that’s purchased,” Max said. “Nobody wants to fill out a whole form on a website, but the prompt they engage with explains it.”
Evo’s website has 942 pairs of skis. This pair may catch a shopper’s eye for no other reason than they like the color green. However, the prompts embedded on the product page send important signals.
A shopper who clicks “How do these skis handle at speed?” is probably more advanced. Most beginners don’t want to go fast enough to care about that.
Prompt engagement compounds. The next ones that pop up — “What kind of rocker profile do these skis have?” — are questions suited for experienced skiers. Most beginners won’t know what rocker profiles are.
This, not a chatbot relying on a pre-programmed script, is conversational commerce. Though there are fields for shoppers to write their own questions, alby data found that 95% of shoppers engage with the pre-populated prompts.
Conversational commerce for Bluecore customers
Bluecore’s acquisition of alby will allow retailers to deploy their own conversational commerce capabilities. As Kenny said, “We have built a flexible platform that empowers both business and technical stakeholders to deploy and manage conversational commerce capabilities, without having to build their own.”
No matter the channel, alby’s AI shopping agent will take into account the context of the conversation and recommend alternative items by searching the catalog or using Bluecore’s product recommendations.
“Email today is one of the most profitable channels,” Max said. “It’s a billboard that shows up in your inbox. It hasn’t really been a two-way relationship building exercise, but by late February, we will embed conversation starters in email, like ‘Help me pick a summer outfit.’”
With predictive technology, abandoned cart emails will include questions a shopper is predicted to have. The prompts people engage with will give retailers tons of valuable data. Insights generated by conversational commerce generates insights that can be used to improve personalization.
This will ultimately create a more tailored shopping experience that boosts retention and drives long-term, profitable growth.
