Chatbots in Retail: Overview, Statistics and Best Practices

With the advent of Artificial Intelligence (AI), every industry is witnessing a sea change in the way they traditionally did business. Chatbots, the newest kids on the block, are revolutionizing the rules of commerce. These conversation-enabled virtual assistants are powered by AI and use Natural Language Processing (NLP) and Natural Language Understanding (NLU) to answer customers’ queries in real time.

Retail bots help customers find what they need and make purchases online with minimum effort on the latter’s part. They help customers avoid long queues and crowded stores. They also serve as virtual in-store assistants always ready to help you. All a customer has to do is tell the bot what they need and the bot finds it for them.

In the retail sector, bots have hugely simplified online shopping. They have done away with the need to type or manually select from drop down lists. Bots save time, are convenient, and furnish only the most relevant information.

And all of this is possible because of AI. AI harnesses information on customers based on their online search, purchase data, location and personal details, and bots use this information to suggest appropriate products, services and events to customers. This gives customers a sense of personalized service, care and attention. And that is the USP of chatbots.


Chatbots in Retail

Brands around the world today are racing to implement chatbots to engage with their customers. Here are a few examples of how businesses in the retail sector are using AI and chatbot technologies to get ahead in the race.


The Starbucks bot has made the ordering process incredibly simple. Customers can simply go to the Starbucks app and place their order through the in-built chatbot. The bot tells them when their order is ready and how much they need to pay. No interaction with human in-store assistant is needed till this point.


Leading stationary brand, Staples has developed a chatbot in association with IBM. Staples’ Facebook Messenger bot answers users’ queries pertaining to stock availability, order tracking and returns/exchanges, among others.

Whole Foods

Whole Foods’ Facebook Messenger bot allows users to order food and look up recipes with minimum hassle. What’s more, if a user is unsure of what they want to eat, they can simply tell the bot what their taste preferences and dietary restrictions are and the bot will automatically throw up a list of food options for them to choose from.

Statistics in Favor of Chatbot Technology in Retail

According to a recent study published in, chatbots are causing a digital revolution in the retail industry. For instance, French cosmetic giant Sephora saw an 11% hike in its bookings after it launched the Sephora Assistant, a chatbot that allowed customers to book makeovers. Estee Lauder, another leading beauty brand, flagged off its own conversational app that will help users select the right shade of lip color using augmented reality and facial recognition.

Personalization is key. An Accenture report showed that customers are 75% more likely to buy from a brand that recognizes them by name and suggests products and services based on past buying trends. A recent IBM report indicated that 48% customers prefer on-demand personalized online promotions from retail brands while 45% want the same experience when shopping in a store.

According to Dr Ken Siau, Professor of Business and Information Technology at Missouri University, chatbots may soon replace humans. He maintains that as the robots become more intelligent and intuitive due to access to large pools of customer data, they will be able to process the data much faster than humans, which will enable them to serve every single customer in a far more personalized manner.

Already, many conversational bots are gaining customers’ confidence worldwide. From booking cabs to ordering grocery to making dinner reservations, these apps are redefining customer experience. Siri, Apple’s in-house chatbot, handles an estimated 2 billion commands a weeks. 20% of Google searches on Android handsets in the US are through voice commands. Alexa of Amazon Echo and Facebook Messenger bot are other examples of versatile chatbots capable of carrying out any number of tasks.

According to Juniper Research, companies that use chatbot and AI technologies to serve their customers could collectively save up to a staggering 8 billion USD in costs per year by 2022.



Things to remember while developing a chatbot

Here are a few important factors to consider while developing a chatbot.

Lessen the load

Chatbots should make our work easy and simple. They should lessen the work load of companies and enhance customer service. They should also reduce the amount of effort put in by customers to look for goods and services. In short, chatbots should simplify the task in hand, not complicate it further. Gimmicky chatbots are useless. They are all show and rarely serve any real purpose.

Customers need chatbots that are intelligent, interactive and quick to respond with the most accurate and useful information. Therefore, designing a user-friendly and intuitive chatbot capable of contextual reasoning is paramount. It will pave the way for a lasting chatbot-user relationship. The better the user experience, the happier your customers will be. And the happier your customers, the greater your revenue and profits.

Transfer of ownership of chatbot to the client company

Once a chatbot has been developed by the IT service provider, it needs to be transferred completely to the client company for reasons of data privacy and security. It is critical for preventing misuse of confidential corporate data. From the cost point of view also, charging per number of interactions proves costlier in the long run than one time charge and transfer.

Coded chatbots for greater flexibility

Coded chatbots are any day better than those developed on online chatbot platforms. Although these platform-based chatbots are easy to build with simple drag and drop functions, they lack the versatility and flexibility of coded chatbots. This is because coded chatbots use AI and machine learning to constantly update their knowledge bank while platform-based chatbots stay limited. Basically click and drag chatbots is for someone who has a prototype in mind and wants to try hands on. Since this approach brings a lot of uncertainties.

Businesses that are serious about customer service and want to generate ROI as well must go for custom built chatbot which offers total control of customer data, work and more. Coded bots have a learning brain capable of absorbing new information which they use to serve the user better in future. Coding it is the way to go if your primary purpose is life-like conversation. Scripting it yourself rather than using a drag and drop platform gives you the most control. Code-based frameworks require programming languages to develop, but they provide the flexibility to store-data, produce analytics and incorporate A.I. Thus, it is good to build a code based customized chatbot that is scalable, filled with AI capabilities, get huge community of developers for support and guidance, and have complete control over data as well as security.

Value to the customer

The purpose of a chatbot is to serve a user in real time with relevant and useful information, and perform tasks as directed by them. If it is unable to do this, it is of no use. Simply having a chatbot in place is not enough. It must, at the end of the day, add real and measurable value to both the user and the business using it to serve its customers. There must be clear and palpable benefits arising from the use of a chatbot.

To conclude, we can say that chatbots are here to stay. They are the future of retail and ecommerce, and possibly a host of other industries as well. Chatbots are enormously resourceful and are expected to completely redefine the way brands and customers engage with each other.

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