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.

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 thatretail 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:

Awareness/consideration: the chatbot can field customer queries around product availability, sizing, etc., and even provide recommendations.
Purchase: customers can buy directly via the chatbot and get any queries answered before they buy, reducing friction and the chance of basket abandonment.
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.
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.

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.

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. An AI Chatbot gives customers a sense of priority and speeds up solutions they may have otherwise had to wait for.

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. An AI Chatbot can automate the entire tracking process in a way that improves things for you AND your customers.

Exchanges & Refunds

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.

Personalized Shopping Assistant

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.

Abandoned Cart Re-Engagement

AI Chatbots provide a whole new approach to abandoned baskets since they can proactively engage customers in a real conversation.

Examples of AI Chatbots in E-Commerce

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. The AI Agent also helped improve basket value, with chatbot users spending an average of 10$ more than those not using the bot.

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.

Design Around User Journeys

You need to know where your customers are, what devices they use, how they prefer to buy, and their problems.

Educate Human Employees

You must demonstrate potential AI integration to your team and explain how it will support them rather than replace them.

Monitor and Optimize

Your chatbot will become a source of valuable data and information about customer requirements. The chatbot can summarize interactions and identify 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.

Frequently Asked Questions

What Is the Difference Between a Chatbot vs Conversational AI?

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.