Retailers are using artificial intelligence (AI) chatbots in a variety of different ways, from dealing with queries to offering style advice.
Around the world, an estimated 2.6 billion successful retail chatbot interactions will take place this year and that number is predicted to reach 22 billion by 2023, according to new data from Juniper Research.
Its report, AI in Retail: Segment Analysis, Vendor Positioning & Market Forecasts 2019-2023, says that chatbots offer effective automated customer interactions for retailers. They can deliver high quality user experiences in a cost-effective way, boosting customer satisfaction and retention while also reducing operating costs.
Over the next few years, Juniper expects improvements in natural language processing to “dramatically reduce the failure rate” of chatbot conversations.
What’s more, the research firm argues that retailers who do not adopt chatbots will face strong challenges from more technologically-adept rivals who will use chatbots as an extension to the omnichannel retail experience.
The report highlights the potential to reduce costs when using chatbots for customer service, with deployments realising annual savings for retailers of $439m (£341m) globally by 2023, up from just $7m (£5.4m) in 2019.
With many retailers facing pressure on margins, these potential savings will act as a key ‘pull’ factor, Juniper suggests.
Research author Nick Maynard commented: “By embracing automated customer service with chatbots, retailers can act in a more flexible and efficient way. The wider retail market means that chatbots are no longer a luxury, they are essential.”
The research also found that by 2023 retailers will generate as much as $112bn (£87bn) in sales from chatbot-based interactions, up from $7.3bn (£5.7bn) this year. However, these sales are largely a result of migration from other channels, rather than a new revenue stream.
This means that the return on investment in chatbots will come from efficiencies, rather than new income.
In a survey for Next-generation connectivity report, 76% of senior executives said they see opportunities in the use of AI tools. Download your free copy to learn more!